What's the purpose of variable pay ? Is it better to have a fixed salary only ?

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Negotiate in terms of fixed only to other companies. Variable whatever they want to give as per their policy which u can get it ranges from 0 to 100% depends on company performance, projects billability, others...

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thanks for the advice

Yes, u will get increment on fixed pay only

Variable is usually a % of fixed instead of static amount, so increment on fixed does result in an increment on variable amount as well.
Also PF/Gratuity are calculated based on Fixed pay.

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