When it comes to raising your translation rates, what’s the correct strategy: ask or tell? A colleague and I talked about this at length today, and it struck me as good food for thought.
In one sense, other professional service providers don’t phone you up and ask if it’s OK with you if they raise their rates. When you go to get your teeth cleaned or your taxes done, it generally costs more than the last time you went, but most of us simply accept this without question. We don’t haggle with the dentist about why a cleaning has gone from $150 to $175 in six months, we just write out the check or hand over the credit card and pay the bill. It would seem odd if these service providers made too much of an issue about rates; if I called my accountant and he said “Just to let you know, I’m now charging $10 an hour more than last year, do you still want to come in?” it would give me pause, not because of the money but because of his calling so much attention to a relatively small increase.
Clearly, these people view themselves as suppliers, and as such they raise their rates without consulting their clients. The mobile computer support consultant doesn’t call us up and ask if we’ll stick with him if he charges 25% more, and the bookkeeper doesn’t solicit our input before upping her fees; they just do it, and we decide whether to continue using them or not.
Translation is a little different. While the average dentist’s or accountant’s or bookkeeper’s income base is probably made up of hundreds or even thousands of clients, each of whose contribution to the service provider’s income is relatively small, the average freelance translator probably has fewer than 10 regular clients, and may even earn 50% or more of his/her income from one or two major clients. For a translator, the loss of a major client can be catastrophic, or at the very least result in a need to quickly find new clients to make up for the loss of income.
In our industry, it’s also not uncommon for the rates we charge longstanding clients to fall behind the rates we charge new clients. Most of us are as busy as or busier than we want to be, so it’s not much of a risk to quote new clients a higher rate than what our existing clients pay. But when we reach a situation where a major client is paying substantially less than our other clients, do we: a) take the dentist’s approach and simply start issuing invoices for a higher amount without saying anything, b) ask the client if they will agree to a raise, explaining that we’re now charging everyone else more than what we charge them, c) notify the client that as of X date, our rate is increasing, or d) another approach entirely?
I think that translators resist increasing their rates with existing clients partially because our per-word pay amounts are so small compared to a yearly salary. If we had a salaried job, most of us would see a $2,000 raise as real money, something worth haggling over. But if you translate 200,000 words a year for your top clients, a raise of 1 cent per word comes out to that same $2,000; a raise of 2 cents per word would put $4,000 in your pocket. So I think that too often, we avoid increasing our rates with longstanding clients because we tell ourselves that “it’s only 1,2,3 cents per word,” when in fact that adds up to a lot of money.
In the conversation today with my colleague, one barometer we came up with is our replacement value with our existing clients. For example, could those clients replace us with a translator of similar skill level at the same rates we charge? With some clients, the answer is clearly yes. If we’re honest, I think that most of us will admit that sometimes, we lob out a higher than usual rate because it’s Friday afternoon and we need some time off, or because we’re overworked and don’t feel like negotiating, and the client says yes anyway. In other cases, the answer is clearly no; we’re giving a client great work and fast turnaround times at below market rates, and we need to make a balanced business decision on when and how to try to change things.
That’s a very good point about our relatively small number of clients making the dynamic different from other professions like dentists and accountants.
Personally, I usually take the (d) approach — gradually get too busy for the lower-paying clients (turning down jobs more frequently), replacing that work with work from the new, better-paying client. In my experience, clients (agency and direct) are almost pathologically opposed to paying their translators higher rates. In the end it hurts the clients, because their best translators end up leaving them.
Those are really good points, Corinne. In general, prices rise throughout the economy (well, yes!), but for our industry, there’s still a huge pressure for price decreases, which is really unique among professional services. It’s because translation is increasingly (and erroneously) being seen as a commodity.
I am still trying to figure out a customized approach (many times it depends if it’s a repeat customer, how much work we have been getting from them, how specialized the translations are, etc.), so mostly I would go with d). For instance, last week a client asked me to move up a six-day deadline by one day and asked me how much that cost. Clearly, she was willing to pay more, but it was only one day, so I charged her the same, for which she was very grateful. It did get me thinking of perhaps coming up with some pricing strategy should the client move up the deadline after the project has started. Again, that’s a new topic again, and more food for thought. As translators, we definitely need to increase our rates over time, at least to adjust for inflation.
On a similar note, my accountant had quoted me $100 for some work two weeks ago, and when I went in to sign papers, he charged me $150, saying his rates had gone up (in the middle of the month?). Seemed pretty unethical to me, so I don’t want to adapt his pricing strategy, whatever it is. I hate to admit it, but I did pay the $150. However, I am not going back, so he lost a client. In addition, he had no rate sheets to display his new (or old) rates, so I felt cheated.
Great blog, Corinne!
A point I have made innumerable times with other translators is the need to spread risk across a wide client base. Ten or fewer clients really doesn’t cut it in my opinion. The situation to work toward is being able to make up for the loss of your top clients from the volume you turn down from others every week. Try never to allow any client to contribute more than 20% of your annual volume and try to keep the number well below that if you can, no matter how much you like that client or how interesting the projects are. I used to work with a fairly small group of clients, but after losing two big ones in the same month to buyouts years ago, I decided to protect myself by spreading my business risk over a client base which is now about ten times as large as back then.
The advantage of doing this with respect to pricing is that you can be as bold as you like about setting rates, specifying charges for rush jobs, bad formatting, etc. If the client objects, there are dozens more waiting in line for services.
Great post, and great comments.
Never a) or c). Either b) or d)
b) has worked for me this year with two good, regular clients whom I didn’t want to drop. I was feeling like I would have to start refusing them because I was bringing in new, higher paying clients at a word rate $0.02 higher. I was debating though, that perhaps absolute rate isn’t the point. Familiarity with an agency’s process or the subject matter means that that familiar work will probably be done faster and in a more cost effective way than a one-off higher paying job for a new client. Who knows if that new client will become regular? So the two current clients gave me a $0.01 raise and I felt comfortable at that making decent business sense.
I’d love to have a wider client base but I don’t find that many high-quality new clients that need me frequently (I’m highly specialized). There are always some, but it’s not a huge turnover. I only have about 8 regular clients, then I have about 15 new contacts in any year who end up being one-offs or only offer me work infrequently. They are rapidly put in my ‘dormant clients’ folder.
d) for me would simply be refusing eveything they offer.
I wouldn’t use c) because if I don’t want to work for them any more I tell them so, and if I do want to work for them then I have effectively decided I’ll keep them on even if they refuse, and am asking simply in the hope that it might work.
I have one lower paying client (my first regular client ever) whose projects i still take once in a while (say twice a year) because they come with a huge, jam-packed, useful TM. Some entries have to be edited, but the temrinology that crops up makes it worthwhile for me every so often.
I always just tell them. If they don’t like it, they can get worse quality elsewhere 😉