I’m getting close to a decade of work in tech. Living in this bubble and talking with friends in the industry, you pick up on hidden playbooks of how engineers get best paying engineering jobs.

And compensation for engineers is a wide spread. Ranging anywhere from low 6 figures to well into 7 figures, in some cases even more. This is because there are multiple levels to compensation within the industry. Plus, there are roles with a lot of asymmetric upside.

In this blog, I talk about different types of compensation ranges that exist and how to achieve them. As well as how to spot roles with asymmetric upside.

Why Do Software Engineers Make So Much?

Relevance and Leverage.

Software ****is a giant market and it has a significant place in many people’s every day life from work to play to connection. There’s a saying that “software is eating the world,” and at this point, it’s fair to say, “it already ate it.” So the demand is higher than ever.

In terms of leverage, software has zero marginal cost of replication. Which means that its fast and cheap to distribute it across the market. One person can deliver the same positive incremental impact to millions with a single action.

So, the way you set yourself up for maximum wealth generation is to make your financial gains corollate to your company’s leveraged impact. More on that further.

What Type of Engineer is Highest Paid?

Your pay, as an engineer, is determined by 4 factors - level, demand to fill your type of role, location, and the company you choose. Maximizing them will get you maximum pay.

1. The most obvious and linear increase in compensation is across the seniority levels. You start from entry-level role and through accumulating experience, shipping products, grow to senior and above. I have a {dedicated post} describing all the different levels, their obvious/non-obvious responsibilities, and compensation - {here}.
2. Demand to fill your type of role is pure job market dynamics - supply and demand. Engineering is a broad field and there are more niche job families within: Machine Learning, Embedded, etc. The best way to keep tabs on up to date job market compensation, is looking at other people’s offer packages. You could also speculate and anticipate demand for particular roles, like ML engineering for AI hype. Check out my post on different engineering roles {here}.
3. Different locations pay differently. This applies to all jobs. It’s tightly correlated to the region’s cost of living and other broader economic factors. Silicon Valley pays engineers the most, the coasts in the US pay more than the mid west, US pays more than other countries, ad so on.
4. The company you choose. This is the biggest factor to compensation with the biggest variety of options. There are enterprise, mid-market, and startups companies with each segment having unique compensation packages. In addition, no two companies within the same segment are alike. It’s really a case by case thing. This is where you have to put on your investor hat.

How to Maximize Your Compensation