Freelancing

Some days, I feel like all anyone wants to talk about is “our changing profession/industry.” Some days I agree that it’s changing a lot, and sometimes I feel like “Yes! Things change…cope or try to stop the earth from turning.” But here’s something I’ve been thinking about lately: as the translation/interpreting professions change, is the career path that most people follow going to change as well?

What about that career path?

I feel like our profession has always had its oddities in terms of getting started and progressing through the ranks. By “oddities,” I mean factors such as:

• A severe lack of university programs in translation and interpreting (in the US at least).
• The fact that clients (like translation agencies) that have enough work for full-time translators and interpreters still tend to use freelancers.
• The resulting lack of in-house translation and interpreting jobs, compounded by even fewer entry-level T&I jobs. At least in the US, the few in-house jobs that exist are often restricted to people who have extensive experience, or who graduated from a T&I Master’s program, or who can pass something like the UN language competitive exams, which few beginners can.
• The lack of a universally-accepted translation credential (like the CPA credential for accountants), resulting in a “no barrier to entry” work environment. And honestly, I don’t see this changing, because it would be nearly impossible to certify translators in every language combination on the planet.

But still…

I also feel like there has been a bit of a standard career path in our profession, in that people either:

• Attended a T&I Master’s program and then entered the working world, or
• Bootstrapped it as primarily self-taught freelancers, who in most cases started out working with agencies, then either stuck with that but moved up in the agency ranks, or transitioned into the direct client market, doing similar work to what they did for agencies.

In a profession (ours!) where few things are standardized, I feel like this is the closest thing we’ve had to a traditional career path: start out working with agencies, then work for better agencies or work with direct clients. That’s how I started out, and how most freelancers I work with started out as well.

And how about now?

Things in our profession, as in the world in general, are changing. Personally, I don’t think they’re changing for the worse (here’s a whole post about that), but they’re certainly changing. My one-sentence summary of the situation would be, “It’s getting harder to make a living at the low end, and there’s more competition at the high end,” and the changes that I see include:

• Agencies that are open to entry-level translators (those that base their hiring primarily or exclusively on one’s results on their tests, rather than on one’s credentials or experience) often pay very, very low rates; much lower than they did when I started freelancing 17 years ago. In some cases and for some language pairs (i.e. English into Russian), these rates are so low that they literally cannot go much lower unless translators are asked to pay the agency in order to work.
• More discerning agencies have a wider choice of translators (because fewer experienced translators want to work for lower-end agencies), and are also under price pressure from their own end clients. They’re looking for higher quality and faster turnaround at lower rates and–I tend to believe–they’re getting it. As an example, I recently received an inquiry from a reputable agency, seeking only ATA-certified translators willing to translate 12,000 words between noon on Friday and noon on Monday, and the request was rescinded just a few minutes later, because they had all the people they needed.
• More translators are aware of and interested in the direct client market. When I started freelancing in 2002, nearly all the translators I knew worked exclusively with agencies. There were vague rumblings about, “You could work directly with businesses, but it can be hard to find them and they don’t know anything about translation.” Even fewer translators did things like attending client-side events. Now, those things (working with direct clients in general and attending non-translation events) are pretty common: attend an event like AMWA or ACES and I’m sure you won’t be the only translator there.
• Advice that one might give to an experienced translator–market to direct clients, target your most lucrative specializations, diversify your range of services, attend in-person client-side events–is less applicable to beginners, because they often don’t know enough about the profession to do those things.

And how about the future?

Well, that’s the question, isn’t it? Here’s the dilemma, and I’m asking this because I honestly don’t know the answer.

If you were a beginning translator starting out in the profession right now, and you couldn’t reach your target income on entry-level agency rates, what would you do?

• Work at entry-level agency rates anyway, just for the experience?
• Work every angle to try to get work from higher-end agency clients? Attend conferences, meet with them in person, try to get referrals, etc?
• Cast your net into the direct client market, even without a ton of experience?
• Pursue a T&I Master’s to make yourself more eligible for in-house jobs or higher-end freelance work?

I find myself recommending a combination of these approaches to the students who take my classes, and many of them are extremely successful at it. Some work the entry-level agency market for a year or two, alongside another job or while setting very modest income goals, then they move on to higher-paying clients. Some do paid mentoring with experienced translators so that they feel more prepared to work with direct clients. Some pursue graduate programs to increase their skills and confidence in preparation for entering the market.

Mostly I’m wondering about the agency-to-direct client career path, now that entry-level agency rates are getting lower and lower. Readers, any thoughts on this? If you’re an experienced translator, how would you start now if you had to? If you’re a beginner, what strategies are you using and how are they working?

A version of this post originally appeared in my newsletter, and so many readers responded to me about it, that I decided to run it here as well, in an expanded version.

Here’s a question that I’ve heard floating around lately: is it getting harder to make a living as a freelance translator? As usual with such big-picture issues, the answer is yes/no/maybe/it depends on what you’re actually asking, so let’s take a closer look!

What’s the state of my own business

I think that anyone who offers advice to other freelancers should give real data from their own business, so here you go. For about the past eight years, I’ve earned about 50% of my income from translation and 50% from online courses, consulting, and book royalties. I work about 35 hours a week, take about four weeks of vacation a year, and consistently earn in the low six figures in US dollars, and this year my overall income is on track to be the highest it’s ever been, due to an increase in both my translation income (several new large direct clients) and my online course business.

This year, about 70% of my translation income will come from direct clients, and about 30% from agencies and individuals, although the agency side of my business is shrinking, both in terms of the overall number of agencies I work with, and the size of the projects they send (more on this below).

Lots of people ask me whether I do teaching and consulting because I can’t make enough money as a translator. No. I do those things because I enjoy them, and because I like variety in my work. But I have as much translation work as I want, and I think that would also be true if I translated full time.

Where does this “harder to make a living” perception come from

-As compared to when I started freelancing in 2002, the agency market is definitely more commoditized. It seems almost quaint to think that even my larger agency clients used to call on the phone to ask if I was available for a particular project–and start the conversation with “How was your weekend?”–as compared to the “come and get it” systems that many agencies use now. It seems to me that very few large agencies want–or even have the bandwidth to cultivate–a personal relationship with most of their translators. Most agencies have moved to using online application portals–surely more efficient for them–that force you to enter one number for your rate, leaving no room for negotiation or conversation.

–Downward price pressure is also a factor. I work with both agencies and direct clients, and I’ve been charging my agency clients the same rates–14-16 US cents per word–for about eight years, because none of my agency clients can/will pay more than that (I know, because I’ve tried). That–flat rates for eight years–is bad enough, but lately the agency rates situation seems worse to me. I no longer proactively apply to agencies, but when agencies contact me, I do respond, and I ask them to approve my rates before I go through their application process. Lately (let’s say within the past two years), the typical agency’s response has gone from “that’s on the high end of what we pay for French to English, but for certain projects, it would be doable,” to either:

–No response at all, which leads me to believe that they’re looking to pay significantly less than what I charge

–A “not in a million years” response, such as “That’s actually almost as much as we charge the end client, so there is no way we can pay that” (which an agency responded to me a couple of weeks ago).

To clarify here, there definitely are still high-quality agencies out there, and I love the agencies that I still work with. However I do feel that the agency market in general has gone in this “faster, cheaper” direction in recent years.

But then, there’s the flip side

-My overall income–and the overall incomes of lots of experienced translators I work with–has risen steadily throughout my freelance career, and it continues to do so. This year, I’ve gotten larger, higher-paying projects from direct clients, and more students in my online courses. On my balance sheet, everything is on the upswing.

-I find that direct clients are perhaps more amenable to my rates than they were a few years ago, and certainly not less amenable.

-Anecdotally, I’ve talked to other experienced translators who say the same thing: “I broke six figures this year and don’t even feel like it was that difficult,” or “I’ve increased my income by $20,000 by contacting one new prospective client every week.” For example, here’s a blog post by French to English translator Michèle Hansen, who increased her income by 15K in one year through direct client outreach. I’ve also contacted several translators who work primarily or exclusively with direct clients, to ask them about teaching online courses for me, and who have turned me down because they have so much translation work that they don’t want to teach a class or a webinar. Also an interesting data point.

So, what’s going on?

Of course, I can’t say for sure. But I’ll offer a few theories:

–The commoditization of agency work is likely to continue, because (I think) it comes from the pressure agencies get from their own end clients, not from the agencies themselves. I really think that agencies–like the rest of us–know that quality work is not cheap, that pitting five agencies against each other to see who can do the job fastest or cheapest does not result in the best finished product, etc. etc., but agencies also have to stay in business, and I’m guessing that an ever-increasing percentage of their work comes from end clients with the “faster, cheaper” mindset.

–Agencies themselves are under more price and time pressure. End clients whose projects are small enough to manage on their own are likely to get quotes from freelancers and from agencies, and to ask the agency if they can match the freelancers’ prices. End clients whose projects are huge are likely to get quotes from multiple agencies and pit them against each other. Honestly I feel more secure as a freelancer than I would as a company owner, these days.

–The time to resist downward price pressure in the agency market has passed. Resistance only works if everyone resists, and when agencies started pushing down rates, many translators went along with it, for lack of other options. My sense is that translators generally fall into two buckets: a) those who really need agencies’ work and thus do not resist downward price pressure because they have no other clients, and b) translators who have a lot of other clients, and “resist” downward price pressure by leaving, and no longer working with low-paying agencies. Because more people–at least in the US–are drawn to freelance work, even low-paying agencies seem to have a steady supply of freelancers.

–Direct client rates are likely to remain higher and more stable. Again, I’m not an economist–so really, who knows? However, I do think that in general translators who work with direct clients are less interested in competing on price. They/we are more likely to simply turn down a job if a client wants to pay less; there’s also plenty of direct client work out there for people who are willing to assertively look for it. Just this year, I’ve gotten two new five-figure direct clients through a pretty basic marketing campaign–that kind of work is definitely out there if you look for it.

-In my opinion, these changes are most likely to affect translators who have historically earned a high income while working exclusively or primarily with agencies, and who either do not want to or don’t have the business acumen to market to and work with direct clients. Here’s what I mean:

–Translators who are comfortable working with direct clients have–in my opinion–a good amount of job security. Personally, my high-end direct clients think machine translation is a joke; they are very concerned with reliability, confidentiality, and personal service, so they prefer to work with an individual freelancer. They really do not (ever) pressure me to lower my rates, or compete with what they perceive another translator would charge. I feel secure with them.

–And on the other end of the spectrum, I think that translators who are comfortable in the large agency marketplace are also pretty much fine. There’s tons of that type of work out there, and if your financial goals are met while charging the rates that large agencies will pay, you’re probably also pretty secure. Those rates may still go lower, but in some cases are so low already that they may have reached bottom.

-I think that the biggest market squeeze will fall upon translators who are used to making good, or really good money working with agencies, without working 80 hours a week: translators who don’t want to work with direct clients, or who work in small languages where direct clients don’t generally have huge volumes of work, or in business sectors (pharmaceuticals, software) where end clients tend to use agencies, and who are increasingly being asked to do editing (at fairly low hourly rates) for projects where a cheaper translator has been hired. If I were in that situation, I’d be concerned.

In sum, I think that the translation world is becoming more polarized (perhaps like the world in general). Readers, what’s your experience? Are you having a harder time earning what you want to earn? Any other thoughts on this?

When I talk to freelancers about how their businesses are going (what’s going well and what needs to change), I often ask the same four questions:

1. Do you have enough work in general?
2. Are you earning enough money?
3. Do you enjoy your work?
4. Are you working too hard for the amount that you’re earning?

As a freelancer, it’s easy to get into “what’s not right” mode–because most of us are high-achieving perfectionists, to one degree or another. It’s also easy to get into “amorphous panic” mode, where we feel that “something” in our freelance business isn’t going well, but we have trouble identifying it specifically enough to make a significant difference. Let’s look at each of these four factors and what they can tell us:

Do you have enough work in general?
This is a good place to start: are you as busy as you want to be? A lot of beginning freelancers are not. If you’d like to be translating 10,000 words a week and you’re at 4,000, or if you’d like to be billing 25 hours a week and you’re billing 15, the issue is simply that you need more work. My advice here is to do a wide-reaching marketing campaign. If your work volume is currently low, you don’t need to fear that you won’t be able to handle the increased volume. Whether your target market is agencies or direct clients, just get marketing. Whenever you’re at your desk and and you don’t have work, you are marketing.

Are you earning enough money? Note that this is a separate issue from question one. At times, you may feel that you don’t have enough work, but in reality your income is fine. This happened to me when I made the leap from working primarily with agencies to working primarily with direct clients. I was able to work less while earning the same amount. There were times when I went a few days without any work in the inbox, which at first felt kind of terrifying. But when I ran the numbers, my income was fine. The point here is to separate work volume and income: if you’re panicking that “you haven’t been working enough,” make sure to look at the corresponding income level as well.

Do you enjoy your work? This factor–doing work that you are good at, and that you find enjoyable and meaningful–is one that a lot of freelancers overlook. In my observations, burnout is a significant factor in our profession: feeling that you are working too hard, for too little money, or for clients who don’t value your work and see you as a cog in the machine. If you don’t find your work interesting or meaningful, it’s time to consider different types of clients or different specializations.

Are you working too hard for the amount that you’re earning? In my first few years of freelancing, this was me. I had a good amount of work, and I was earning decent money, but when I ran the numbers at the end of the year, I had worked waaaaay too hard for what I was earning. A few factors were at work: I spent a lot of time doing in-person marketing (going to informational interviews with local agencies, etc.) that was very time-consuming and didn’t always pay off. I worked in a wide variety of specializations, so I worked pretty slowly. Over time, both of these things improved: I developed a roster of regular clients, I spent more time working and less time looking for work, and I developed narrower specializations that allowed me to work faster and more consistently.

These questions may seem basic, but I think they can be helpful to freelancers at any level. Especially if you’re a beginner, these may help you get out of “analysis paralysis” mode and identify where to put your business development efforts. Readers, any other critical questions to ask?

Should you incorporate your freelance business? The information in this post is based on my knowledge of the US market, so these tips may or may not apply to other countries. Additionally, I am not an accountant or an attorney, and you should speak with an accountant or attorney for specific advice.

When freelancers think about incorporating, it’s generally because of two reasons: taxes, and/or liability. Let’s take a look at both.

Incorporating for tax purposes makes a lot of sense for many freelancers. In the US, self-employment income is subject to an additional 15.3% in taxes, on top of what you would pay if you worked for an employer, because you pay both the employer and the employee portions of the Social Security and Medicare taxes. That’s a big hit. Certain corporate structures allow you to legally avoid paying self-employment tax on some of what you earn, by classifying some of your income as “wages” (subject to self-employment tax), and some of your income as “corporate profit” (not subject to self-employment tax), even though all of the money ultimately goes to you.

However, this comes with a tradeoff, namely that your corporation may be required to file payroll taxes four times a year, and a separate end-of-year tax return. In my case, I have an S-Corp, which is subject to those additional filing requirements. This costs me about $1,000 a year in accounting fees (because I despise accounting and outsource all of it to my accountant), but–because I take about half of my income as wages and the other half as corporate profit–it saves me about $6,000 a year in taxes, so it’s clearly a win. If your freelance income is relatively low, the tax advantage could be small or nonexistent. An additional consideration: this method–because it involves a deliberate decrease in the salary you pay yourself–could affect things like your future Social Security benefits, which are based on your average earnings over a certain period of years. It could also affect your ability to apply for a mortgage or other type of loan, because your W-2 income is a lot less than your gross income.

Incorporating for liability purposes is–in my opinion–a concept that many freelancers overvalue. Instead, I think that most people who are worried about liability should simply purchase professional liability insurance.

I’ve heard lots of freelancers say, “I don’t have to worry about having my house or savings taken away if a client sues me, because I’m incorporated.” Mmmmmmaybe. The liability protections you get from a corporate structure such as an LLC or an S-Corp don’t protect against liability due to your personal actions–such as translation mistakes. If you form an LLC, rent an office, and then can’t pay the rent, the LLC structure may prevent the landlord from coming after your personal assets. If you want to take out a business loan, a corporation is a good way to do that, because it may shield your personal assets. But if you’re worried about the indemnification clause in a translation contract, professional liability insurance is a much better option.

Before you incorporate, think about whether you’re a good candidate for that option. Filing as a sole proprietor (meaning a freelance business that is not incorporated) is very simple. Take how much you made, subtract your business expenses, and pay self-employment tax on the rest. You’re taking a tax hit, but you don’t have a lot of extraneous administrative overhead to keep up with. Forming a corporation can be financially advantageous, but may require you to file up to an additional five tax forms per year (four quarterly returns and a year-end return), plus you have to remember to renew the corporation’s status (normally through your State’s Secretary of State) every year.

One parting tip: If you use an accountant to prepare your taxes, use someone who is an IRS Enrolled Agent (EA). This designation means that the EA can represent you before the IRS, specifically in the event that you are audited or receive some sort of collection demand from the IRS. This happened to me: due to a mixup between my personal social security number and my business’ EIN, I received a demand letter from the IRS, stating that I owed $16,000 in taxes on undeclared income in my PayPal account. I knew that this wasn’t true, because I’m obsessive about declaring every cent I earn. Even if an official document translation client pays me in cash–which occasionally happens–I still declare it. However, dealing with this mixup could have taken hours of my time and still resulted in a penalty. Because my accountant is an EA, I simply scanned the letter, sent it to her, and she e-mailed me two days later, saying, “All set. We took care of it and it’s closed. You owe nothing.” This was worth every cent I’ve ever paid her, and I highly recommend using an EA if you don’t do your own taxes.