Quick answer
Negotiate an internal offer the way you'd negotiate an external one: a specific number, grounded in the market rate for the new role — not a percentage on top of your current salary. That anchoring matters because research (Wharton's Matthew Bidwell) found external hires were paid roughly 18–20% more than internally promoted people in similar roles. Time the ask to the moment your scope changes, put the case in writing, and if base truly can't move, negotiate the review date, title, and terms instead.
The uncomfortable research finding internal candidates should know
The most-cited research on internal versus external pay is Wharton professor Matthew Bidwell's study "Paying More to Get Less" (published 2011, examining years of personnel records, primarily from a US financial-services firm). Its headline finding: external hires were paid roughly 18–20% more than internal people doing similar jobs — while receiving worse performance reviews for their first two years and leaving at higher rates. The study is old enough to date clearly and specific enough not to over-generalize, but its mechanism hasn't aged: companies price external candidates against a live market, and internal candidates against their own salary history plus an increment.
That mechanism is the entire strategic problem. When your promotion offer is "a 10% bump", the anchor is your current salary; when an external hire is priced for the same seat, the anchor is the market. Your negotiation, therefore, has one central move: relocate the conversation from "increase on current" to "rate for the role." Transparency laws are quietly helping — several US states now require pay ranges for internal promotion opportunities too (Illinois even requires promotions to be announced internally within 14 days of an external posting), and where ranges are posted for the role you're stepping into, that range is your anchor, not your current number.
Negotiating the promotion: timing, case, number
Timing: the moment of maximum leverage is when the scope changes — when you're asked to take the bigger role, cover the departed manager, or own the new function. That's when the company has a need and you have the answer to it. The weakest moment is six months after you quietly absorbed the extra work without a conversation; by then the expanded scope is your baseline, unpriced. If the scope has already crept, the annual review is your next-best venue — with the scope change documented as the case.
The case: internal negotiation runs on evidence more than charm, because the person you're negotiating with usually has to argue your case upward to someone who wasn't in the room. Write it for them: the role's market rate (posted ranges, researched data — our keyword and market research tools won't do this one; salary data sources and posted ranges will), the scope you now carry versus your last pricing, and the outcomes attached to your name. One page, sent before the meeting, so your manager can forward it verbatim. You're not demanding; you're arming your advocate.
The number: one figure, market-anchored, said out loud. The register differs from external negotiation — you're not leaving if the answer is no (or you're not saying so) — but the structure is identical to the counter-offer script: enthusiasm for the expanded role, the number, the grounded case, a path to yes. If the number truly can't move this cycle, negotiate the things that convert into money later: the title (which re-prices you everywhere, including externally), a dated review with written criteria, and the formal recording of your new scope — because an undocumented expansion is the hardest thing to get paid for retroactively.
"Should I get an outside offer to force the issue?"
It works, sometimes, once — and it changes the relationship permanently. An external offer is the one piece of evidence that fully relocates your price to the market, and some companies genuinely only move for it. But brandishing an offer you don't intend to take is a bluff with a long fuse: if they call it, you either leave a job you wanted to keep or stay as the person who threatened to leave. The honest decision rule: only go get an outside offer if you're genuinely willing to take it. At that point you're not bluffing — you're actually choosing between two real futures, negotiating both sides truthfully, and every script in this cluster applies.
The counter-offer when you resign: the honest version
You resign; suddenly the raise that was impossible materializes by Friday. Should you take it? First, clear away the folklore: you will read everywhere that "80% (or 50%, or 93%) of people who accept counter-offers leave within a year anyway." We looked for the study behind those numbers and found none — they circulate between recruiter blog posts without a traceable primary source, and recruiters have an obvious interest in you declining counter-offers. We won't repeat a number nobody can source.
What survives without the fake statistics is a set of real questions. Why did this raise require a resignation letter — and what does that say about how pay is set here? Is the counter fixing what actually made you look elsewhere (scope, manager, trajectory), or just re-pricing your dissatisfaction? And has the relationship changed — some managers genuinely move on from a resignation-and-counter episode; others quietly re-categorize you as a flight risk at succession time. None of these has a universal answer, which is precisely why the folklore percentage is a worse guide than twenty minutes of honest thinking about your specific situation.
If you do entertain a counter, negotiate it like any offer: in writing, specific, with the non-salary terms (title, scope, review date) included — a counter-offer that lives entirely in a hallway conversation has a short half-life. And if the things that made you leave aren't priced in money, weigh them at full value; the external offer's real advantage was never only the salary.
Transfers and sideways moves: negotiate the terms, not just the pay
Internal transfers at flat pay are common and often worth it — but "same salary" shouldn't mean "nothing to negotiate." The transferable terms: the level and title you land at (bands often overlap, and where you enter matters), relocation or remote arrangements if geography changes, how your in-flight bonus and any unvested awards are treated across the move, and the review date in the new seat. The bonus-proration question is the one that most often costs real money silently: if your old role's bonus year ends after your transfer, get the treatment in writing before you move.
Weighing an internal offer — or a counter-offer?
The Offer Review works for internal moves too: share the offer (and the counter, if there is one) and get a written strategy — what's negotiable, the market-anchored case to make, exact wording for your situation, and fallback positions — within 48 hours.