MARKET PRICE: It doesn't mean what you THINK!

Market price does not necessarily reflect an individual's worth, but rather the average salary an employer pays for a specific skill set in a region. Companies may pay below or above market price for various reasons, including cost savings, brand desirability, or a poor company reputation. Individuals should actively seek job opportunities to determine their true market value and consider leaving if they are consistently underpaid.

Market Price Definition

• 00:00:16 Market price is the average amount an employer will pay someone with a particular skill set in a specific geographic location, not a reflection of an individual's inherent worth. It can vary depending on industry and company practices, with some organizations paying below or above market price. This concept is often misunderstood as a direct indicator of individual value.

Paying Below Market

• 00:01:30 Companies sometimes pay below market price to reduce labor costs, which can lead to higher employee turnover. They may calculate that the savings in wages outweigh the negative impact of losing talented employees. Some employees may accept below-market compensation due to other benefits, such as working for a prestigious company with strong brand recognition.

Paying Above Market

• 00:03:00 Some companies pay above market price to attract and retain employees, especially if they have a poor reputation or high employee turnover. In cases of poor company culture, even offering a premium salary may not be enough to prevent employees from leaving. This illustrates that salary alone does not always guarantee employee satisfaction or retention.

Determining Individual Worth

• 00:04:19 To understand one's true market value, it's recommended to actively seek job opportunities and evaluate the offers received. If job options are limited, it could suggest that one's current compensation aligns with market perceptions of their worth. However, it's crucial to acknowledge that one's perceived value is influenced by external forces, not solely personal judgment.