Estimating the cost of a compensation program enables us to make informed decisions about merit increase levels as well as when and how frequently increases will be granted. Planning and managing costs are important to striking a strategic balance developing a compensation program that helps our organization achieve its business objectives. This booklet details how to asses the effects these decisions have on total compensation cost and covers: general costing formula; focal-point; anniversary-date merit plans; determining increase percentages; compensation cost impact on benefits; budgeting; and strategic balance.