Most  organisation both large and small will have established and benchmarked salary ranges based on industry standards  for every position. But company's do determine the  range where an employee would fit  in and sometimes they do get it wrong, thereby loosing a potentially good candidate to its competitors. Actually no company would like to loose a potentially good candidate because of low salary offered. The only reason why as a candidate you should negotiate is to get fair market value of your skills, experience and knowledge. But remember,  that your success in negotiating a higher compensation is totally based on the data you have which suggests that your market value is higher than that reflected on the offer.( For example, you may have a similar offer from another company with a higher package but if your friend has received a higher salary for a similar job at a different company-that would be considered insufficient data.), Your present salary also determines your future salary  offers to some extent.

Two things need to happen before you negotiate. First, begin discussing salary only after you receive a formal offer from the company. Second, negotiate only after you have evaluated the entire job offer package and researched what the market will pay for your skills. The worst form of negotiation is to stay stuck in your lace. It is not negotiation if you freeze and the other person freezes too.

Salary Negotiating Tips:

When you begin negotiating you may ask questions about how the salary was determined? Be realistic about what you want and state clearly why you feel your salary should be higher by giving evidence clearly supported by facts and figures.

Testing: Find out what the other party really wants from you and for this one needs to shift from your point of view to the others view. A negotiation should ideally end in a win-win situation for both the parties.

Never lie about your previous salary- it will soon be found out and may result in your termination.

Negotiate the complete offer- some companies are flexible on the salary part while others on the perqs. Identify your chances where you can gain an advantage. Ask about the performance bonus / incentives about the company's policy on awarding raises.

Wear your salary- your outward dress and mannerism greatly influences your success in salary negotiation