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Tips on how should I handle the salary/package discussion?
I'm in the same boat this week. FWIW, my advice is to respectfully state what you want (not just salary, but also intangibles like job title, seniority and responsibilities) in plain terms and up front, to avoid wasting one another's time. I did this in my covering letters for the various roles I'm in for (one of which I've been offered at the terms I asked for), though you may choose to do it in an e-mail. Either way, make sure it's in written form, and that they receive it in private to avoid any embarrassment to either of you as they either spit out their mouthful of coffee in disbelief or break into a wide grin knowing they've got a bargain (hopefully you'll hit somewhere in between).
Being up front avoids the embarrassment and frustration of them lowballing you, either through lack of knowledge on their part or through inappropriately comparing you to other options with less experience and fewer expectations. Also, one final thing, make sure you tell them that you'll be starting with no less than three stars on your name badge, and that you're not wearing one of those stupid hairnets; they're for the actual burger flippers, and you're "front of house" tell them. You were once a contractor and you've got standards to maintain.
Depends if you really want to go permie or not - if so shoot for the moon and negotiate down until you get up and walkout saying "you're wasting my time"
If not - just say "I doubt you could afford me"
Either way you seem to be in the driving seat
How fortunate for governments that the people they administer don't think
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