Raise vs Promotion Calculator

This calculator compares two salary paths over a remaining career and reports the gap between them. A raise and a promotion are each treated as a permanent lift to pay, carried forward and grown at the same annual rate, and the headline figure is the difference between the two cumulative totals rather than either total on its own.

One structural point is worth having up front: the same growth factor is applied to both paths, so the cumulative totals sit in exactly the same ratio as the two lifts entered. Current salary is validated but does not enter the arithmetic, which means the result depends on the size of each step and on time, not on the base it is added to.

Quick example

With a 3,000 raise, a 15,000 promotion lift, 20 remaining years and 3% annual growth, the raise path accumulates 80,611.12 and the promotion path 403,055.62, leaving a difference of 322,444.49. The promotion total is exactly five times the raise total, matching the five-to-one ratio of the two lifts.

Which inputs matter most

Everything turns on a single growing-annuity factor, which at 20 years and 3% growth works out at 26.87. Both lifts are multiplied by it, so the difference is simply the gap between the two lifts multiplied by that factor: 12,000 times 26.87 gives the 322,444.49 on screen.

Years remaining and annual growth are the only inputs that move the factor. On the same 12,000 gap, ten years gives 137,566.55, twenty gives 322,444.49 and thirty gives 570,904.99. Raising growth from 3% to 5% over twenty years lifts the difference to 396,791.45. Current salary changes nothing at all, and the two lift amounts scale the answer proportionally rather than changing its shape.

What's happening under the hood

Each lift is treated as a growing annuity: the lift is received in every remaining year and grown at the annual rate, so its cumulative value is the lift multiplied by the quantity one plus the growth rate raised to the number of years, less one, divided by the growth rate. Where growth is set to zero that expression is undefined, so the calculator falls back to multiplying the lift by the number of years, which at twenty years and no growth gives 60,000 for the raise and 300,000 for the promotion.

Why small rate shifts add up

An extra 12,000 a year sounds like a single number until it is carried forward. At 3% growth the same gap is worth 137,566.55 across ten remaining years, 322,444.49 across twenty and 570,904.99 across thirty. Nothing about the step changes between those three figures; only the number of years it is collected for.

That is why the years-remaining input often moves the comparison more than the size of the step does. Someone five years from retiring and someone thirty years from it are answering different questions with the same two offers in front of them.

What this doesn't capture

Tax bands, pension contributions, payroll deductions and non-cash benefits sit outside this calculation, so the figure is a gross comparison rather than a take-home one. The model also applies one growth rate to both paths, when a promotion commonly moves someone onto a different band with its own progression, and it ignores current salary entirely, so it cannot show band or threshold effects at all.

Where pay progression is the question rather than a single step, employers in the European Union are required to make the criteria used for pay and pay progression available to workers, and the essential aspects of an employment relationship, remuneration among them, have to be provided in writing. Those documents are where the actual progression rules for a given role sit.

Where to go next

This calculation rarely sits alone in a planning exercise. Related tools include the raise negotiation calculator, the career earnings peak calculator, and the notice period value calculator, each answering a different question in the same territory.

Why the gap compounds

A raise and a promotion look similar in the month they land and diverge over a career, because both are applied to every remaining year and then grown again. The calculator compounds each lift at the annual growth rate entered, so the figure it returns is the gap between two salary paths rather than one year's difference.

The mechanism is simpler than it looks, and simpler than it is often described. Both lifts are multiplied by the same factor, so nothing compounds differentially between the two paths: the promotion total is five times the raise total purely because 15,000 is five times 3,000. What compounds is the gap itself, from 12,000 in the first year to 322,444.49 across twenty.

What the comparison leaves out

Two assumptions do a lot of work here. The growth rate is applied identically to both paths, when a promotion often moves someone onto a different band whose progression differs from the one they were on. And nothing outside salary is captured, so a promotion carrying longer hours, relocation, on-call duty or a different bonus structure looks identical to one that does not.

The years-remaining input is the quickest way to see how much of the advantage depends on time rather than on the size of the step: dropping it from twenty to ten more than halves the difference, from 322,444.49 to 137,566.55.