Microsoft Software Engineer Salaries & Compensation: Analysis & Review
What can you expect to get paid as a Software Engineer working at Microsoft? In this post we detail the salary ranges of Microsoft Engineers for different levels of experience.
In September 2022, a survey found that there were 141,000 searches a month on Google for Microsoft job openings.
The statistics aren’t surprising. Being one of the “Big Five” tech companies, you’re more or less guaranteed a fulfilling, well-paying job if you snag an opening at Microsoft. This is especially true if you are an engineer.
But how well-paid are software engineers, exactly? In this article, we’ll look into Microsoft software engineer salary, compensation, benefits, and more!
Salary data presented here is valid as of November 1st, 2022.
Average Microsoft Software Engineer Salaries
A Microsoft software engineer in the US makes an average of $190,195 per year. That includes $141,585 in base pay and $46,610 in additional pay (stock options, performance pay, bonuses, etc.)
Considering how the average pay for software engineers in the US is only $105,803 a year, Microsoft pays its software engineers well above the market average. This is why many software engineers and graduates dream of landing a software developing job at the company.
Factors that Influence a Microsoft Software Engineer’s Salary
There’s a good chance that the figure written on your payslip won’t match the numbers above. Many factors can influence your final salary. Here are the most decisive ones.
Years of Relevant Experience
Like with most jobs, the more relevant experience you have, the higher your offered salary will be.
This is much lower than the company’s average. But after some time working, you’ll be able to gain a promotion and a decent pay rise. A software development engineer (SDE) with 2+ years of experience makes about $181,000 per year.
This ties directly into the section above. The longer you work at the company, you can expect higher pay and better benefits.
Microsoft separates the “rank” of its technical staff into bands.
- Level 59–60: SDE (Software Development Engineer)
- Level 61–62: SDE II
- Level 63–64: Senior SDE
- Level 65–67: Principal SDE
- Level 68–69: Partner SDE
If you’re fresh out of college and have an impressive resume to catch the eyes of Microsoft’s recruiters, you’ll most likely start at Level 59.
According to one Microsoft worker from Level 59 to Level 63, you’re expected to earn a promotion every few years.
At Level 63, you can add “Senior” to your job title. You’re also given the option to stop advancing at this stage. You can stay at this position for however long you want without management expecting you to climb further up the ladder (but you may choose to do so if you’re ambitious enough!)
A higher rank means increased responsibility. But in return, you get better pay and benefits.
For example, as a senior software engineer, you can work 50% of the time from home without pre-approval from management. But if you have approval, you can go 100% WFH!
Microsoft has 55 offices across the country. The salary offered to you will differ depending on the location of the Microsoft branch or office you’re working for. This is because the salary is adjusted based on the local cost of living and tax rates.
Let’s say you work from Microsoft’s HQ in Redmond, WA. As a software engineer, you can expect an average salary of $187,359 per year ($144,560 in base pay and $42,799 in additional pay)
But you could get far higher pay if you work for Microsoft’s office in New York. The average Microsoft software engineer in NYC makes $228,463 annually ($163,044 in base pay and $65,418 in additional pay).
This is because it’s far more expensive to live in NYC than in Redmond.
Last but not least, once you’ve got a job offer from Microsoft, think about negotiating if you think you’re worth more than what’s been offered. This is a standard business practice, and as long as you do it nicely, Microsoft’s HR won’t give you grief over it.
To maximize your chance of success, research the average pay for your position at the office you’re applying to. Then, decide on the exact amount you wish to be paid based on your qualifications, skills, and achievements.
Even if your request is turned down, you gave it a shot. And if it goes well, you’ll have more than you were initially offered!
Employees Compensation Review
Microsoft employees, as a whole, are satisfied with their salary. According to one employee’s review, being on Microsoft’s payroll will help you “pay your bills and support your family”. Each year, a few bonuses and stock options are given out.
Another employee compared Microsoft to other Tech Giants, saying that the company’s payscale is better than others.
Besides offering great pay, Microsoft boasts state of the art offices (Richmond HQ)
Microsoft provides its employees with various benefits, ranging from company-sponsored health insurance to 401k matching, maternity and paternity leaves, and employee discounts. All of which are reviewed very positively by employees.
Microsoft Software Engineer Average Salary Levels by Seniority and Years of Experience
At Microsoft, tech staff are separated into “bands” based on seniority and experience. Here is the average pay for all of them.
Do note that we only count to Level 69. Beyond Level 70 are extremely selective jobs such as Corporate Vice Presidents (CVPs), Executive Vice Presidents (EVPs), and C-suite executives.
Salary data below is provided by Levels.fyi.
| Position | Years of Experience (Total) | Total Compensation (Avg) | | — — | — — | — — | | Level 59–60: SDE | 0–2 | $159,000 | | Level 61–62: SDE II | 2–6 | $181,000 | | Level 63–64: Senior SDE | 6–20 | $220,000 | | Level 65–67: Principal SDE | 8–22 | $302,000 | | Level 68–69: Partner SDE | 17–30 | $764,000 |
As an entry-level SDE, your total compensation will sit at around $159,000. This is far lower than most software engineers at Microsoft, who make $190,195 per year on average.
This shouldn’t come as a surprise. The entry-level SDE position is open to fresh graduates with no working experience. Being offered above $100,000 right out of the gate is already a blessing for most!
After two years of working at Microsoft, you’ll be expected to rise beyond Level 60 and into the 61–62 band. Here, you’ll get a substantial pay rise bringing you closer to the company-wide average pay of roughly $190,000. As an SDE II, you’ll make $181,000 per year.
To gain promotion to senior-level SDE, you’ll need to spend beyond six years at the company. Once you secure that promotion, your payslip will be over $200,000!
As we said, you’re not expected to advance beyond senior SDE. But if you display enough talent, you can get a promotion to Principal and Partner SDEs after a decade. They’ll bring you respectively $302,000 and $764,000!
Total Microsoft Software Engineer Compensation
Aside from financial compensation, Microsoft also provides its employees with many benefits and perks.
You’ll get access to company-sponsored insurance plans (health, life, dental, vision, accidental death & dismemberment, health savings account, and more.)
The company also contributes to your 401k, has an equity incentive plan, and a retirement plan. Notably, it has a very good stock purchase plan. According to Glassdoor, about 15.8% of the average Microsoft software engineer’s compensation is in stock.
And, of course, as an employee, you’re entitled to discounts on many Microsoft products, such as Microsoft 365.
Microsoft Software Engineer Salaries vs FAANG
Compared to other FAANG companies, Microsoft’s salary is the lowest. At $190,195 on average for most software engineers, it’s behind even Amazon, which offers the most modest salary on the list below.
The consensus for the lower pay boils down to the excellent work-life balance it offers and its benefit packages, which are better than most companies in the list above. Plus, the location of Microsoft’s main headquarters must be considered. A lot of its employees are located in Redmond. It’s far cheaper to live in Redmond than in Silicon Valley.
4 day work week at Microsoft
Microsoft was actually one of the first Big Tech companies to trial a 4-day work week. The result was encouraging: productivity jumped by over 40% when they experimented with it!
If a 4 day work week is something you’re interested in, why not consider applying to one of the many companies who now offer a shorter work week as standard?