How International Companies Set Salaries for Remote Employees
How foreign employers set remote pay: benchmarks, location factors, pay zones and contractor rates, where Nigeria fits, and what to ask a recruiter.
By Chiamaka Obi, Pay and contracts writer
Updated 14 min read
Most international companies set remote salaries with a formula. They start from market pay data for the role and level, then decide how far your location should move that number. Some pay everyone the same rate wherever they live. Many others apply a location factor or put countries into pay zones, and that is usually why an offer to someone in Lagos or Enugu comes in below the figure a colleague in London or Austin gets for the same job.
For a Nigeria-based candidate, knowing which formula an employer uses is the difference between guessing and negotiating. This guide explains the four pay models companies use, shows how a location-based salary is built step by step (with a worked naira example), and looks at what real companies have published about their own methods. It also covers where Nigeria tends to sit in these formulas and the questions to ask a recruiter before you name a number.
Quick answer
International companies usually start with salary benchmark data for the role and seniority level, often anchored to a US city such as San Francisco. They then apply one of four approaches: one global rate, cost-of-living bands, country-by-country local market rates, or regional pay zones. Your hiring route (employee through an employer of record, or independent contractor) and the currency of payment also change the final figure. Ask the recruiter which model applies to Nigeria.
The four pay models international companies use
Every remote employer has to decide whether two people doing the same job in different countries get the same pay. Their answer falls into one of four broad models.
| Model | How pay is set | What it usually means for Nigeria |
|---|---|---|
| Location-agnostic (one rate) | Same pay for the role everywhere | Highest pay, but these employers are rare and selective |
| Cost-of-living bands | Benchmark, then a few percentage bands | Usually a modest cut from the top band |
| Local market rates | Pay matched to each country's market | Often the largest discount |
| Regional zones | Countries grouped into tiers with separate ranges | Nigeria often lands in a "rest of world" or EMEA tier |
Location-agnostic pay
A location-agnostic employer sets one salary for each role and level and pays it regardless of where you live. Basecamp (now 37signals) is the best-known example. In a 2017 post on how it pays people, it said it targets the top 10% of San Francisco market rates, using Radford survey data, and pays that wherever the employee lives. It also said salaries are not negotiated. That post is from 2017, so check the company's current careers page before relying on it.
From Nigeria, this model gives you the biggest pay, but competition for these roles is global and tough. We'll cover these employers in more depth in our guide to remote jobs that pay based on experience rather than location.
Cost-of-living bands
Here the company sets a benchmark for each role and then applies a small number of percentage bands based on location. Buffer publishes its system. As of October 2026, its salaries page describes a benchmark for each role and two cost-of-living bands, "Global (90%)" and "High (100%)". Its worked example gives a Product Marketer benchmark of $108,838, which comes to $97,954 at 90%.
Band systems are fairly kind to candidates outside high-cost cities because the gap between bands is small. The catch is that few companies run them.
Local market rates
A local-market employer tries to pay what the role is worth in your country's job market. Deel's explainer on remote pay when workers live abroad calls this location-based pay, meaning "salaries are calibrated to the employee's geographic location instead of the employer's office location". It lists local cost of living, market pay rates, taxes and benefit rules as the main factors.
GitLab became the best-known user of this approach. In a 2019 post explaining why it paid local rates, it said it took market data for a city from "four or five" sources and used the median as the benchmark. Where good local data didn't exist for a role, it fell back on a rent index built from Numbeo listings. GitLab also said: "It's not that we want to pay you based on your rent or compensate your cost of living." The rent index was only a stand-in for missing salary data. GitLab's method may have changed since 2019, so read its current handbook if you're applying there.
From Nigeria, this model usually produces the largest discount, because local salaries for most professional roles are far below US or UK levels.
Regional zones and geo ranges
Many companies now sit between the two extremes. They group countries into tiers and publish a separate range for each tier. You can see this in job ads.
- Remote (the employer-of-record company) said in a payroll specialist ad for South Africa that "Our salary ranges are determined by role, level and location" and that it uses "geo ranges to consider geographic pay differentials". The ad gave a range of $33,300 to $74,000 a year plus equity and said Remote aims to "pay above in-location rates". When we checked in October 2026 the ad was more than six months old and no longer accepting applications, so treat it as an example of the method, not a live vacancy.
- Zapier published separate base salary ranges in an Applied AI Engineer ad: CA$191.5K to CA$287.3K for Canada, €102.1K to €153.1K for Spain and £109.4K to £164.2K for the UK. The role was "Remote from Canada, Europe, UK, US", so Nigeria wasn't eligible. The listing was closed when checked in October 2026.
The Zapier ad shows a point that catches many Nigerian applicants out: a company can be "remote" and still have no pay band for Nigeria at all, because it doesn't hire there.
How a location-based salary is actually built
Companies use different tools, but most location-based formulas follow the same sequence. Knowing the steps tells you which ones you can influence.
- Job and level. The company places the role in its job architecture, for example "Software Engineer, Level 3" or "Support Specialist II". Getting levelled one grade higher often matters more than anything you negotiate later.
- Benchmark data. The company buys or collects salary survey data for that job and level, usually for a reference market (often San Francisco, New York or London) or for each country it hires in.
- Target percentile. The company picks where it wants to pay against that data: the median (50th percentile), the 75th, or the 90th as Basecamp did.
- Location adjustment. A location factor, band or zone is applied. A factor of 0.5, for example, means half the reference-market figure.
- Position in range. Your offer lands somewhere inside the band. Some companies call this the compa-ratio: your pay divided by the midpoint of the band.
- Currency and hiring route. The figure is converted to the payment currency and paid either as salary through an employer of record (EOR) or as a contractor fee.
Example (hypothetical): a location-adjusted offer for a Lagos-based engineer
Example (hypothetical): a company's reference benchmark for a mid-level backend engineer is $100,000 a year. It pays at the median and gives Nigeria a location factor of 0.45. It offers you the midpoint of the band.
| Step | Calculation | Result |
|---|---|---|
| Reference benchmark | Median for the level | $100,000 a year |
| Location factor | $100,000 × 0.45 | $45,000 a year |
| Monthly gross | $45,000 ÷ 12 | $3,750 a month |
| In naira | $3,750 × ₦1,362 | about ₦5,107,500 a month |
The naira figure uses ₦1,362 to $1, the CBN NFEM weighted average on 23 October 2026. It is gross pay before tax and before any fees for moving the money into Nigeria. The 0.45 factor is made up for illustration. It does not come from any company's formula.
Now look at what the employer controls. A move from Level 3 to Level 4 might lift the reference benchmark by tens of thousands of dollars. Asking for the top of the band rather than the midpoint matters too. Arguing about the location factor itself rarely works, because companies apply it to everyone in a zone. To work out what reaches your account, use our guide on calculating take-home pay from a remote job.
Where Nigeria fits into these formulas
The real-world numbers for Nigeria come from how these formulas behave when good local data is scarce.
Thin salary data pushes Nigeria into wide zones
Salary survey vendors have deep data for the US, UK and Western Europe and much less for most African countries. When a company can't find enough reliable local data for a role in Nigeria, it tends to do one of three things. It groups Nigeria with other countries in a broad "Africa", "EMEA" or "rest of world" zone. It uses a proxy, as GitLab's 2019 rent index did. Or it doesn't hire in Nigeria at all. That last option is one reason some remote jobs are not open to Nigerians.
Modelled benchmarks are only a starting point
Payroll platforms now publish country estimates. As of October 2026, Plane's page for remote software engineers in Nigeria shows a median of $56,926 a year, a 10th percentile of $13,996 and a 90th percentile of $116,938. The page does not explain its data sources, sample size or method, so treat it as a modelled estimate, not a market average. Its spread is very wide: the 90th percentile is more than eight times the 10th.
For contrast, the US Bureau of Labor Statistics reports a median annual wage of $135,980 for software developers as of May 2025. That is a US benchmark for people working in the US, not what a Nigeria-based developer will be offered. Remote pay for Nigeria-based workers is usually below US local pay. How far below depends on which of the four models the employer uses.
Contractor or employee changes the number
The same budget can turn into quite different offers depending on how you're hired.
- Through an employer of record (EOR). The company pays a provider such as Deel or Remote to employ you legally in Nigeria. The company's total cost includes the EOR fee and any employer-side contributions, so the salary it quotes you can be lower than its budget for the role.
- As an independent contractor. You invoice the company and you are responsible for your own tax, pension and equipment. Some companies quote contractors a higher headline figure because no employer costs sit on top. Others simply pay the same number.
Deel notes that changing between employee and contractor status can change take-home pay because the tax and social contribution duties are different. Our guide to contractor versus employee status in Nigeria explains both routes in detail, and how tax works for remote workers in Nigeria covers your obligations under the Nigeria Tax Act 2025.
Currency matters as much as the figure
A salary set in dollars and paid in dollars behaves very differently from one set in dollars and paid in naira at payroll date. Ask three things: which currency the contract states, which currency arrives in your account, and who carries the exchange-rate risk if the naira moves. Some contractor platforms and EOR payrolls pay into a domiciliary account or a foreign-currency wallet. For the practical side, including Grey, Payoneer and Wise, see how to receive dollar payments in Nigeria.
How to tell which pay model an employer uses
You can usually find out before the first interview.
Read the job ad closely
- "Pay is the same regardless of location" or a single figure with no country note: probably location-agnostic.
- Several country ranges (as in the Zapier ad): a zone or local-market model. If Nigeria isn't listed, ask whether it is eligible at all.
- "Range shown is for US-based candidates": the range does not apply to you. Expect a lower Nigeria figure, or no Nigeria option.
- "Geo ranges", "location-adjusted" or "depends on location": location-based pay. Ask which zone Nigeria falls in.
- No figure at all: ask early so neither side wastes time. Our guide on researching salary ranges before applying covers where else to look.
Check the careers page or handbook
Companies that publish their method, such as Buffer's salaries page, usually explain the bands and sometimes offer a calculator. Search the company name plus "compensation philosophy", "salary formula" or "handbook". Always check the date on the page, because pay policies get rewritten.
Ask the recruiter directly
Recruiters at remote companies get these questions all the time. Five questions worth asking:
- Is the salary range in the ad the one that applies to candidates based in Nigeria?
- Do you use location-based pay, and if so, which zone or band is Nigeria in?
- Will I be hired as an employee through an employer of record, or as a contractor?
- Which currency is the salary set in, and which currency will I be paid in?
- What level is this role mapped to, and what would it take to be considered for the level above?
Ask these in a neutral tone. You're gathering information, not pushing back. Recruiters can tell the difference.
Using the formula when you negotiate
Once you know the model, you can aim your negotiation at the parts of the formula that can actually move.
| Lever | Can it move? | What to say |
|---|---|---|
| Location factor | Rarely | Usually fixed for everyone in your zone |
| Job level | Often | Show evidence you work at the higher level |
| Position in band | Often | Ask for the upper part of the range with reasons |
| Contractor rate | Sometimes | Point out the employer costs they're not paying |
| Equipment or internet allowance | Sometimes | Ask for backup power or internet costs to be covered |
The last row matters in Nigeria. Inverters, solar, a second internet provider or a MiFi plus a phone hotspot are real costs of doing a remote job reliably here. Some employers have a home-office or internet stipend that is separate from salary and easier to agree than a pay rise. For scripts and timing, read our guide to negotiating a dollar salary for a remote job.
Common mistakes when reading a remote salary offer
- Treating the US range in an ad as your range. Many ads publish US ranges because some US states require pay transparency. Ask what applies to Nigeria before you anchor on it.
- Comparing gross contractor pay with gross employee pay. A contractor figure carries your tax, pension and equipment costs. An EOR salary may include benefits. Compare like with like, and our guide on comparing international salary offers shows how.
- Arguing about cost of living. Saying "Lagos is expensive" rarely moves a location factor. Evidence about your level, your skills and your other offers works better.
- Ignoring currency. A dollar figure paid in naira at an unfavourable rate is not the same as dollars in a domiciliary account.
- Taking a too-good figure at face value. A huge salary for a junior role, paired with requests for fees or your BVN before any contract, is a scam pattern, not a generous pay formula. See how to spot remote job scams in Nigeria.
- Forgetting the review cycle. Ask when pay is reviewed and whether benchmarks are refreshed every year. Basecamp's 2017 post, for example, described automatic annual raises to the market target.
Frequently asked questions
Do international companies pay Nigerians less for the same remote job?
Often, yes, but not always. Companies using local market rates or regional zones usually pay Nigeria-based staff less than US or UK colleagues in the same role. Location-agnostic employers pay the same rate everywhere. The answer depends on the employer's model, so ask the recruiter which one applies. Our article on whether remote workers earn less than office employees looks at the wider pay question.
What is a location factor in a remote salary?
A location factor is a multiplier that adjusts a benchmark salary for where you live. A factor of 0.6 means 60% of the reference figure. Companies base it on local salary data and sometimes on proxies such as rent indexes, as GitLab described in 2019. It is usually applied to everyone in a country or zone, so it is hard to negotiate individually.
Is remote pay based on cost of living?
Partly, at some companies. Buffer uses cost-of-living bands. GitLab said in 2019 that it paid local market rates and used rent data only as a fallback when salary data was missing. Many employers care more about what the local job market pays than about living costs, which is why "Lagos is expensive" rarely changes an offer.
Why does a job ad show a US salary range if the role is open to Nigeria?
The range often covers US-based hires only, published to meet US state pay-transparency rules or the company's own policy. The ad may state that pay varies by location. Ask the recruiter for the range that applies to candidates in Nigeria before you discuss numbers.
Do contractors get paid more than employees at remote companies?
Sometimes. An employer hiring through an employer of record pays fees and employer-side costs on top of your salary, so a contractor may be quoted a higher figure to reflect costs the company avoids. Other companies pay contractors and employees the same headline rate. Compare the two only after accounting for your own tax, pension and equipment as a contractor.
Which remote companies pay the same salary regardless of location?
Only a minority, and policies change, so check each one's current careers page. Basecamp said in 2017 that it paid San Francisco top-10% rates regardless of location. Buffer's two-band system, as of October 2026, puts most locations within 10% of its top band. We'll cover this group in more depth in a separate guide.
Can I negotiate a location-based salary?
Yes, though usually not the location factor itself. The parts that tend to move are your job level, where you sit within the band, a contractor rate, and allowances for equipment or internet. Bring evidence of the level you work at and any competing offers.
Key takeaways
- International companies usually build remote pay from benchmark data for the job and level, then adjust for location using one global rate, cost-of-living bands, local market rates or regional zones.
- Published examples range from Basecamp's location-agnostic San Francisco rate (2017) to Buffer's 90% and 100% bands and the per-country or geo ranges in Remote and Zapier ads.
- Nigeria is often grouped into a broad zone because local salary data is thin, and some companies with "remote" roles have no Nigeria band at all.
- Your hiring route (EOR employee or contractor) and the currency you're paid in can change your real pay as much as the headline figure.
- In negotiation, job level and position in the band move more often than the location factor.
Next steps
Pick one vacancy you're interested in and work out which of the four pay models the company uses before you apply, using the ad, the careers page and the five recruiter questions above. To see what roles like yours pay, start with our remote salary guides by role. Then search the remote job listings on WorkRemote.ng, where each listing shows the company, its website and where applicants may live. On /jobs, use "Get email updates" after a search to get a free daily digest of new matching roles. If you want help preparing for the salary conversation, WorkRemote Premium includes one-on-one interview prep sessions.
Sources
- How we pay people at Basecamp, Signal v. Noise (Basecamp), July 2017
- Salaries, Buffer
- Why we pay local rates, GitLab blog, 28 February 2019
- Payroll Specialist Lead, South Africa/Sub-Sahara, Remote (job ad mirrored on General Catalyst job board)
- Applied AI Engineer, Zapier (Welcome to the Jungle listing)
- Can remote workers keep their pay and benefits abroad?, Deel
- Remote Software Engineer salaries in Nigeria, Plane
- Software Developers, Occupational Outlook Handbook, US Bureau of Labor Statistics
- CBN exchange rates by currency
