About the Calculator
The MBA salary calculator shows the potential payoff from completing an MBA program.
Use the calculator to help understand the long-term benefits from earning an MBA degree. You can alter the assumptions to get different results.
Salary Boost Estimates from Getting an MBA
Estimates of the salary boost from getting an MBA degree tends to be high. See this study from Ladders for example which produces estimates often in the range of 20-40 percent.
To be honest, we don’t really trust such estimates in terms of revealing the specific impact of an MBA degree. One reason is selection bias. People going for MBAs tend to be more ambitious and confident than average, suggesting they already had better prospects than most.
Another factor is that MBA students are often on the steep part of their career salary path. If they were perhaps older and more settled in their career, meaning their salary prospects were quite subdued, they may decide against going for an MBA.
MBA Salary Benefit
As an MBA graduate, you can expect to earn more. You will:
- have extra knowledge and skills to improve on-the-job performance (skills effect)
- be more competitive when going for promotions or other jobs (credential and networking effects)
- enjoy new job opportunities for which an MBA offers an advantage (career shift effect).
The calculator assumes an immediate salary jump and that the benefit is maintained throughout your career.
How much of a salary increase you can expect depends on your age, current position, ambition and ability. Holding an MBA generally increases the payoff from hard work and the reward for talent.
Note that, on a technical matter, there is no discounting to account for the diminishing value of future dollars. We effectively assume the salary premium grows in proportion with the interest/discount rate.
MBA Study Financial Cost
The financial cost of an MBA includes:
1. any tuition fees you pay
2. any foregone earnings from not working full time, which you can usually avoid with an online program.
Insights into the Value of MBA Courses
An MBA is likely to pay for itself provided you can achieve a noticeable boost in salary. The degree has the potential to deliver a long stream of income benefits that more than covers short-term costs.
You can significantly reduce the cost if you work while studying, such as by doing an online course, and/or by enrolling in a fast-tracked program (less than 1.5 years). Often, the main cost of studying for an MBA is foregone earnings.
The combination of long-term benefits at the cost of current income may explain why MBA students are usually young. Statistics show that most full-time MBA students are in their late 20s or early 30s (Fortuna Admissions).