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Product Compensation Vs. Product Revenue

product compensation vs product revenue

Unearthing more trends in the 2006 salary data from the Pragmatic Institute annual product management and marketing survey. In this article, we look at total compensation relative to the revenue of the managed products, the company size, and the company age.

Product Manager Compensation Vs. Product Revenue

The survey asked:
What is this year’s expected revenue target for the primary product you manage, if any? (in millions of US$)
We created a scatterplot of the compensation responses relative to the product revenue targets:
compensation vs. product revenue
There wasn’t an obvious trend in the data, other than noting that the highest paid respondents all had responsibility for multi-million dollar products. Note that the product revenue scale is log-based.
Maybe higher salaries correspond to larger companies.

Product Manager Compensation Vs. Company Size

When we look at the average compensation of product managers versus the size of their employers, we see the following:
average total compensation
For companies that are under a $100 million in annual sales, there seems to be a trend that larger companies pay better. This might be reasonable as a characterization of the SMB (small to medium business) space. Larger companies may have a similar curve, but lower. There isn’t enough data to support this characterization… call it speculation.

Product Manager Compensation Vs. Company Age

Do younger companies pay better? One might hypothesize that product managers are better appreciated by new/young companies, for whom a single product failure can mean failure of the company. Alternately, “old” companies have been around because they have successful products, and therefore reward their product managers more handsomely. Who would be right?
Here’s what the data shows:
average total compensation
Nothing obvious (to us) here. What about combining some of the above?

Company Size and Age

If we characterize the companies by the two dimensions of age and size, we can map out a grid and see if there’s any interesting trends that are visible.
First, we look at the number of responses within our data, mapped against the two dimensions.
company age
We have a reasonable spread of data, with only one empty box (11-20-year-old companies under $1 million USD in sales). Almost 20% of our respondents work for well-established companies with more than $1 billion USD in sales.
Looking at the average total compensation for product managers in each box of our chart, we see the following average salaries:
company age
OK, that reads like an eye chart – let’s make it more visual.
company age
The green bars represent higher than average averages. That is, the average total compensation in a given cell is higher than the average of all of the data.

  • Younger companies (under 20 years) at the high end of the SMB space ($50-$100 million USD sales) pay more, on average, than the average of all companies.
  • Larger companies (over $250 million USD sales) generally pay above the average rate for product managers.
  • Companies with a “youthfull but established” age of 11-20 years also tend to pay above the average.

Conclusion

There aren’t any obvious and dominating trends in product manager compensation versus company size or age. There are some subtle trends in the data.
These trends may not provide clear guidance about who to work for, but that doesn’t matter. All politics is local. The right product, team, and culture will make more difference in quality of life than a 10% pay bump.
The extra slicing of the data may help you make a more compelling argument in your next performance review or salary negotiation

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