Tip: What’s the Position Worth?

Johanna Rothman makes a great point on the Hiring Technical People blog:

Companies don’t pay people because they are warm-hearted. They pay employees to provide value. The more value, the more pay. (We hope. Sometimes, that’s the more expected value, the more pay.) If you’re a candidate, define your value. If you’re a hiring manager define the value you want to receive. Now you’ll have a much better understanding of what you should pay. And, you’ll know what the decision is worth.

She’s on to something, but I would phrase it slightly differently:

Companies don’t pay people because they are warm-hearted. They pay employees to solve a business problem.

Knowledge is the key here.