Question 1

How do I decide which location to use as my base?

Accepted Answer

Most companies use their headquarters or their highest-cost market as the base (often set at 100%). This makes all other locations adjustments downward, which is easier to explain. Alternatively, use a mid-tier market as base and adjust both up and down. Pick whichever is clearest for your team. Use SalaryCube to see market data for your top hiring locations and choose the one that makes policy simplest.

Question 2

Should I use tiers or specific factors for each city?

Accepted Answer

Tiers are simpler. Group similar cities into 3-5 tiers (like Tier 1 = 100%, Tier 2 = 90%, Tier 3 = 80%). This reduces admin and makes policy easier to communicate. Specific city factors are more precise but harder to maintain. Use tiers for most companies. Use specific factors if you hire heavily in a few specific metros and need precision.

Question 3

What if an employee moves to a different location?

Accepted Answer

Set clear relocation policy upfront. Options include: (1) no pay change (employee keeps current salary), (2) adjust to new location factor immediately, or (3) phase adjustment over time. Document your policy in writing. Apply it consistently. Use SalaryCube to show the employee market data for both locations so they understand the rationale.

Question 4

How do I handle cost of living vs cost of labor?

Accepted Answer

Cost of living is what it costs to live in a city (rent, food, etc.). Cost of labor is what companies pay for talent in that market. Use cost of labor (market salary data) for your geo differentials, not cost of living. SalaryCube shows actual salaries paid in each market. This is fairer and more defensible than cost of living indexes.

Question 5

Can I use the same location factors for all roles?

Accepted Answer

Yes, most companies use the same factors across all roles for simplicity. For example, if Austin is 95% of San Francisco base, apply that 95% to all roles. Some companies adjust factors by role scarcity (like tech roles have smaller geo differences than admin roles). Start simple with universal factors. Add role-specific adjustments only if needed.

Question 6

What if I hire in a city where I have no market data?

Accepted Answer

Use Bigfoot Live to search for that specific city or nearby metro. If no direct data exists, use a similar-sized city in the same state or region as a proxy. Group it into your closest tier. Document your logic. Review and refine as you hire more people in that location. SalaryCube covers most US metros, so this is rare.

Question 7

How often should I update my location factors?

Accepted Answer

Review factors at least annually or when you notice market shifts (like a sudden tech boom in a city). Update factors when you expand to new locations. Use SalaryCube data to track market changes by city. Small adjustments (like 92% to 95%) can usually wait for annual review. Large shifts (like 85% to 100%) may need immediate updates.

Question 8

Do I need geo differentials if I only hire in one state?

Accepted Answer

It depends on the state size and market variation. California has huge differences between San Francisco and Fresno. Texas varies between Austin and smaller cities. If your state has significant cost of labor differences, use geo differentials. Use SalaryCube to compare salary data across your hiring cities. If differences are less than 10%, you may not need formal geo policies.

Location	Factor	Salary
San Francisco	100%	$145k
Seattle	95%	$138k
Austin	85%	$123k
Remote (Tier 3)	75%	$109k

Capability	What It Does
Location-Based Pay	Apply pay adjustments that let you pay people fairly across different cities and regions
Home Base Range	Set a home base salary range for each role as your reference point
Location Factors	Apply percentage adjustments based on location (e.g., SF at 120%, Austin at 95% of base)
Market Alignment	Avoid overpaying in low-cost markets while staying competitive in high-cost markets
Simple Policy	Create simple policy rules that managers can follow and reduce one-off salary negotiations
Clear Documentation	Document clear methodology for employees who ask why pay varies by location
Remote Work Ready	Adapt to remote work without chaos by applying consistent location-based rules

Fair pay everywhere you hire

Common Challenges

Over- or under-pay by city

Complex one-off deals

Policy confusion

What You'll Achieve

Recommended Tools

Bigfoot Live

Salary Benchmarking

Job Pricer

How to Build Geo Differentials

Set a home base range

Apply location factors

Publish location tables

Update and maintain

Track What Matters

Location policy coverage

Exception rate

Pay equity by location

Why Teams Choose SalaryCube for Geo Differentials

Frequently Asked Questions

Ready to Build Fair Location-Based Pay?