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Retention Bonus Value Calculator

Work out retention bonus value instantly with clear inputs, formula shown and shareable results.

About Retention Bonus Value Calculator

A retention bonus is worth its discounted present value, and the monthly equivalent is what makes it comparable with a pay rise. From the employer's side, only the portion paid to people who would otherwise have left is genuinely incremental — the rest is a windfall.

Formulas

Present value

PV = Bonus / (1 + Discount rate)^(Months / 12)

Incremental value

Incremental = PV x (1 - Probability of staying anyway)

Worked example

With the default values below, Retention Bonus Value Calculator returns Present value of the bonus of $693,427.34. Change any input above and every figure here is recalculated in your browser.

Inputs used

Retention bonus offered
800,000
Required stay period
18
Personal discount rate
10
Your probability of staying anyway
60

Results

Present value of the bonus
$693,427.34
Monthly equivalent value
$38,523.74
Value attributable to changed behaviour
$277,370.94
Value lost to waiting
$106,572.66

Step by step

  1. 1Values used
  2. 2Present value
  3. 3Incremental value
  4. 4Present value of the bonus= 693,427.34
  5. 5Monthly equivalent value= 38,523.74
  6. 6Value attributable to changed behaviour= 277,370.94
  7. 7Value lost to waiting= 106,572.66

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or fees or charges into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Is a retention bonus better than a pay rise?

For the employer it is cheaper and reversible. For the employee a rise compounds into future increases and pension, so it is usually worth more over time.

When do retention bonuses fail?

When the reason for leaving is the manager, the work or the trajectory. Money delays the departure rather than preventing it.

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