How to calculate compensation for remote employees

Remote is fully transparent about how we compensate our team. As a fully remote, globally distributed company with hundreds of employees in dozens of countries all around the world, we have faced every conceivable challenge related to remote worker compensation and have created a system that works.

What is fair for remote employee compensation?
Ultimately, the global talent pool is a job market. Supply and demand meet each other at the right price. As an organization with deep experience in employing remote workers, both for ourselves and on behalf of our customers, we encourage remote-first organizations to prioritize the competitiveness of their compensation packages. That means you need to do as well or better than both local companies and other remote organizations if you want the best of the best.

How do other companies compensate their remote workers?
Different companies take different approaches. Here are a few different compensation philosophies practiced by other global companies:

Basecamp: Pay the same salaries to everyone, everywhere.
Basecamp simplifies salary calculations by paying everyone the same amount based on seniority level. All junior programmers make the same amount, as do all senior customer service representatives, and so on.

Buffer: Adjust remote employee pay based on cost of living.
Buffer famously publishes the salaries of every person who works at the company. This commitment to transparency allows people who would like to apply to the company to get a good idea of what their salary might be if they were to apply.

GitLab: Create an original salary calculator.
GitLab has a complex salary calculator for remote employees. They use the following formula:

SF benchmark x Location Factor x Level Factor x Experience Factor x Contract Factor x Exchange Rate