Compare two job offers using a total-comp, commute-time, and risk-adjusted framework—then convert the result into an effective hourly rate you can use for clearer trade-offs.
Two offers can look obvious on paper—until commute time, unpaid overtime, and “maybe” bonus/equity enter the picture.
Framework: compute each offer’s risk-adjusted total compensation, convert it into a risk-adjusted effective hourly rate (including commute + unpaid overtime), and then do a short sensitivity check to see what assumptions actually drive the result.
The inputs you need
- Cash comp: base salary + bonus target (and how reliably it pays).
- Equity: annualized value + a realism factor (vesting + probability it’s worth the headline value).
- Benefits (as adjustments): estimated employer retirement match value; estimated annual employee health premium cost.
- Time costs: unpaid overtime hours; commute time; remote days per week.
Use this as a one-page input sheet (fill with numbers where possible; use estimates where you must, and then stress-test them).
| Input | Offer A | Offer B | Notes / how to estimate |
|---|---|---|---|
| Base salary (annual) | $ | $ | Use the written offer letter figure. |
| Bonus target (% of base) | % | % | Use target %; do not treat as guaranteed cash. |
| Bonus reliability factor (0–1) | 1.0 = essentially certain; 0.7–0.9 = usually near target; lower if discretionary/volatile. | ||
| Equity value (annualized) | $ | $ | Convert grant to per-year value using vesting schedule (e.g., 4-year vest → divide by 4). |
| Equity realism factor (0–1) | Probability-weighted: stay-through-vesting × confidence in realized value. | ||
| Employer retirement match value (annual estimate) | $ | $ | Estimate from match policy (or treat as $0 if unclear). |
| Your health premium cost (annual estimate) | $ | $ | From benefits sheet: paycheck deduction × pay periods. |
| Remote days per week | Use the policy stated for your team; note policy-change risk separately. | ||
| Commute time (hours per in-office day) | Door-to-door average (not “best day”). Include parking/walking. | ||
| Unpaid overtime (hours per week) | Ask about on-call, deadlines, and typical week during peak periods. |
The calculator
This version intentionally avoids taxes because they’re personal and location-specific. It focuses on two items that can be compared more cleanly across offers: expected value and time.
Assumptions
- WorkWeeks = 48 (room for holidays/vacation; set to your reality)
- PaidHoursPerWeek = 40
- WorkDaysPerWeek = 5
OnsiteDaysPerWeek = WorkDaysPerWeek - RemoteDaysPerWeek
AnnualCommuteHours = CommuteHoursPerOnsiteDay * OnsiteDaysPerWeek * WorkWeeks
AnnualOvertimeHours = UnpaidOvertimeHoursPerWeek * WorkWeeks
AnnualTotalHours = (PaidHoursPerWeek * WorkWeeks) + AnnualOvertimeHours + AnnualCommuteHours
ExpectedBonus = BaseSalary * BonusTarget% * BonusReliabilityFactor
RiskAdjustedEquity = EquityAnnualValue * EquityRealismFactor
RiskAdjustedTotalComp = BaseSalary + ExpectedBonus + RiskAdjustedEquity
+ RetirementMatchValueEstimate
- HealthPremiumAnnualEstimate
EffectiveHourly = RiskAdjustedTotalComp / AnnualTotalHours
Worked example
Scenario: Offer A is remote-heavy with lower headline pay; Offer B has higher headline pay but more in-office days, longer commute, and more unpaid overtime. (USD shown for simplicity.)
| Input | Offer A | Offer B |
|---|---|---|
| Base salary | $120,000 | $130,000 |
| Bonus target | 10% | 15% |
| Bonus reliability factor | 0.8 | 0.6 |
| Equity (annualized) | $10,000 | $40,000 |
| Equity realism factor | 0.9 | 0.5 |
| Employer retirement match value (estimate) | $4,000 | $2,000 |
| Your health premium cost (estimate) | $3,000 | $6,000 |
| Remote days/week | 4 | 2 |
| Commute hours per in-office day | 0.5 | 1.5 |
| Unpaid overtime hours/week | 2 | 6 |
Assumption: WorkWeeks = 48.
Step 1: Expected variable comp
- A expected bonus = 120,000 × 10% × 0.8 = $9,600
- B expected bonus = 130,000 × 15% × 0.6 = $11,700
- A risk-adjusted equity = 10,000 × 0.9 = $9,000
- B risk-adjusted equity = 40,000 × 0.5 = $20,000
Step 2: Risk-adjusted total comp (including benefit adjustments)
- A = 120,000 + 9,600 + 9,000 + 4,000 − 3,000 = $139,600
- B = 130,000 + 11,700 + 20,000 + 2,000 − 6,000 = $157,700
Step 3: Annual hours (paid + unpaid overtime + commute)
- Paid baseline hours (both) = 40 × 48 = 1,920
- A onsite days/week = 5 − 4 = 1 → annual commute hours = 0.5 × 1 × 48 = 24
- B onsite days/week = 5 − 2 = 3 → annual commute hours = 1.5 × 3 × 48 = 216
- A annual overtime hours = 2 × 48 = 96
- B annual overtime hours = 6 × 48 = 288
- A annual total hours = 1,920 + 96 + 24 = 2,040
- B annual total hours = 1,920 + 288 + 216 = 2,424
Step 4: Risk-adjusted effective hourly rate
- A effective hourly = 139,600 / 2,040 = $68.43/hour
- B effective hourly = 157,700 / 2,424 = $65.06/hour
Reading the result: in this set of assumptions, Offer B produces more risk-adjusted annual dollars, but Offer A produces more risk-adjusted dollars per hour once commute and unpaid overtime are included.
Sensitivity check: what changes the outcome?
Instead of debating every line item, test the few assumptions that usually dominate the comparison.
| Assumption to stress-test | How to test quickly | Why it matters |
|---|---|---|
| Unpaid overtime | Run 3 cases: “typical”, “busy month”, “bad quarter”. Example: B = 6, 10, 14 hrs/week. | Hours compound over the year and directly reduce effective hourly. |
| Equity realism factor | Run at least two values: conservative vs optimistic (e.g., 0.5 and 0.8). | Equity outcomes are uncertain; the factor makes that uncertainty explicit. |
| In-office days policy drift | Model +1 in-office day/week as a downside case; recompute commute hours. | A small policy change can add large time costs. |
| Benefits estimate error | Re-run with health premiums ±$1,000 and retirement match ±$2,000. | Benefits can be real money, but estimates are often fuzzy early on. |
Decision rules that keep it practical
- Separate “annual dollars” from “dollars per hour”: it’s common for the higher-pay offer to have a lower effective hourly once time costs are counted.
- Use a tie band: if effective hourly is very close (example heuristic: within ~5%), treat the comparison as a near-tie and lean more on non-math factors like role scope, manager quality, and stability.
- Only negotiate levers you can define: base salary, guaranteed sign-on, and written remote expectations are usually cleaner to model than highly discretionary upside.
Risks and trade-offs to price in
- Equity concentration risk: equity value is tied to one company and vesting rules.
- Variable pay ambiguity: “target” is not “paid,” and plan rules can change.
- Benefits mismatch: premiums are only one piece; deductibles and out-of-pocket max can change the real cost.
- Time creep: “light overtime” can expand; modeling multiple cases helps prevent surprise.
- Remote fragility: remote policies can shift; modeling a downside case makes that risk visible.
Disclaimer: Educational content only. Not financial advice. No recommendations to buy/sell any security.
Sources
No external sources used.