How to set your rates

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Determining your rates is often a common and controversial issue among translators. The answer that I will provide today is by no means the only one. You may come up with other pricing strategies that work for you, your target market and current clientele. I hope this provides a starting point, based upon which you can devise your own strategy.

Firstly, your rate must:

  • Be competitive – in theory, you can charge whatever you want, but that will only work if people pay what you are asking for. Most clients will get quotes from more than one translator or service, so if you are too far off the mark they will either think that you are not professional enough (hence why your rate is so low) or that you are out of touch with the market (hence why your rate is so high). That does not mean that you cannot be the cheapest or the most expensive translator that money can hire; it just means that your rate should show that you are aware of what the market pays for your service and your pricing strategy is deliberate. Hence, you are either “in the middle” or “just above” or “just below” the going rate.
  •  Make a statement – our CV is not our only means of making a statement about our work. What and how we charge for our services also affect how we are viewed by prospect clients. Companies choose what strategy is more in line with their value proposition and adjust their pricing strategy based on that. For example, a company may set its prices low and dare you to find a cheaper provider. This shows you that they are aware of what the going rate is for similar products, but deliberately want to be the cheapest and attract as many customers as possible. We all know what to expect from this company, as the popular saying goes: “You get what you pay for.” Sometimes, the lowest price is exactly what you want and need; we are not always looking for the highest quality. For example, you may have just received a letter from your boyfriend in Spain. The letter is in Spanish, but you do not speak Spanish. Hence, you need a translation service. You will not be looking for the highest quality translation that money can buy, you will probably want speed (because you cannot wait to know what he said) and to get the general idea for the lowest price, because you cannot invest lots of money on reading letters from your boyfriend. Sometimes quality is not the top concern, i.e. speed and budget are more important and a low pricing strategy may be more appealing to this customer.

Conversely, at the high-end market, companies will set their prices above the going rate to convey to you that their product is more expensive because it is the best available. As a translator, your pricing strategy can do that too, you may set your price to reflect the quality of the services you provide, your experience, credentials, specialization, etc. It is as if you are trying to convey that you are the “Ferrari” equivalent in translation. If you choose this strategy, remember that not everyone can afford a Ferrari, not matter how much they want it, so your services will not be accessible to most clients.

Hence, your pricing strategy may say – “I am willing to translate for a lower fee and this means that I am interested in volume” – or it may say – “I am a high-quality and experienced professional, who charges according to my credentials”. On both ends of the scale, the client will know exactly what to expect. However, you do not need to pick an end of the scale. If your rates are in the middle, you convey the message that you are in line with your competition, i.e. that you are not necessarily better or worse based on your pricing, which means you’ll need to convey your competitive advantage in some other way. This makes you more accessible to the average customer, but it means more competition because you will need to find other ways of standing out among the many providers within the same rate range.

  •  Be flexible (to an extent) – You do not need to charge the top and bottom of the scale and every amount in between. You need to have your preferred rate (ideal rate), your acceptable rate (a rate that you would consider if the job were not too specialized, etc.) and your unacceptable rate (you simply do not work for that). Corinne McKay has an interesting system for that with a green, yellow and red zone. According to her, if it were within your capabilities, you would almost never turn down work in your green zone. You would never take work in your red zone and would consider work in your yellow zone depending on your availability, the level of difficulty, etc.

 All very well, so how do you determine your rates?

Initially, you need to make some decisions about:

–          What statement you want your rates to make (high-end, low-end or on a par with competition);

–          How flexible you can be (do I need to go into my yellow zone at all? If so, what factors would make me consider doing that, e.g. availability, how interesting a project is, etc.);

–          Who your target market is (medical industry, translation agencies, law firms, etc.);

–          What types of clients you will want to attract (companies or individuals? Translation agencies, direct clients or both?); and, more importantly,

–          How much do you need and want to earn. (Ideally, you would earn what you want, and that is, ultimately, what you will aim for, but it is important to know how much you need to earn to keep your business feasible, because this will affect all your other decisions about pricing).

Next, you will need to determine what the market charges for the services that you provide. I have a very simple strategy for that.

I have a list of the translation agencies who operate in my industry (medical) in the countries were I aim to work. I have rated them based on how close to my value proposition they are. For example, I strive to provide the highest quality translations; I aim for the high-end of the market, etc. In other words, specialist medical translation agencies are my target for determining what the market is charging.

Then I hire a virtual assistant (they can be very cheap online) for a few hours, every year or two, and get my VA to call all of these agencies to get quotes. It is important for me that the VA gets quotes on all of the services that I provide, e.g. translation, revision, proofreading, etc.  I am very specific about what the VA needs to find out, because sometimes an agency will provide a quote that will include revision, proofreading, DTP, etc. If I am not offering these services in a bundle, that rate is useless to me unless it is broken down.

I usually provide my VA with a short medical document to submit to these agencies, so that she can act exactly as I client would trying to get quotes and choose a provider for their job.

My reasoning here is that I do not have the resources to pay for a market research. However, large translation agencies do, so I can use their rates as benchmark for my own.

I am aware that I do not compete with large translation agencies, because there are certain additional services that they can provide which I do not. Hence, I know that my rates need to be lower than theirs are (that is one of my competitive advantages in relation to translation agencies).

By averaging these rates out (per currency), I have a maximum benchmark, based upon which I can set my prices for translation agencies and direct clients. Hence, what I usually do is go 20-30% lower for direct clients and 50% lower for agencies (because they will need to embed their costs and profits, so they will not pay me 60-70% of their final rate to direct clients). Then I try these rates out, by offering them to new prospect customers and seeing what responses I get.

If it is really easy and everybody accepts my rate readily, this could mean that I am bang on average. So, in 2-3 months I try raising the rates slightly to determine whether the market will take it.

If it is really hard to get any clients and I am sensing that I am too expensive, after 1-2 months I lower the rates slightly (may through offers and temporary discounts) and see if I get more interest.

I do not change my rates often for regular clients, so all my trials with new rates are carried out with prospect clients. I believe this is important, because no one wants to work on a regular basis with a provider that keeps changing rates.

I am sure that there are many other approaches to this. I have developed this one over 13 years working as a translator, after a lot of trial and error, and it has been the most effective way for me. This article is too long already, so I will not go into details of having different rates for different target markets, etc. but do bear that in mind when you determine your rates.

Now over to you, do you have a better strategy? How do you determine your rates?

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