For translators who work with clients outside their home base countries, choosing a pricing currency can be an important business issue. For the past year or so, pricing in euros (or if you’re European Central Bank President Jean-Claude Trichet, pricing in “euro”) has seemed attractive for those of us based in the U.S. When the euro was pushing US$1.60, it wasn’t hard to decide which currency was more attractive for pricing.
For better or worse, the dollar has been steadily rising, and today’s mid-market exchange rate is at to US$1.33 to the euro, meaning that the 2,000 euros that you charged a client three months ago would have resulted in a payment of about US$3,140 then and about US$2,660 today. So, is it better to price your translation services in your currency, your client’s currency, or some other variation?
A complicating factor is that when the dollar was doing poorly against the euro, for example back in March when the euro was at US$1.57, many translators decided to offer their services to European clients at attractive rates, in euros. As the dollar seems to be regaining strength, it brings up the question of who should absorb the difference; should the client pay the equivalent of what the translator was earning in dollars, or should the translator continue to earn the same amount in euros? And of course there’s the overarching issue of where the dollar is headed in general, with many economists predicting an almost worldwide recession in 2009.
It’s a tricky situation, and one that is probably best served through diversification and translator-client communication. As many other translators have commented lately, the more choices you have about who to work for and how much to charge, the better off you are when the economy is unpredictable; a good mix of clients in your country, other countries, agencies, direct clients etc. is the best protection against economic fluctuations. Likewise, it’s definitely acceptable to tell clients, especially new clients, that your rates and/or availability may change depending on the currency situation, i.e. “Right now, that rate in euros would equal my base rate in dollars, but if the dollar continues to rise against the euro, I might not be available at that rate in the future.”
Feel free to contribute your own suggestions as well!
Good point, Corinne. I haven’t put too much thought into it, but now I will. So far, we have charged customers in the E.U. in euro and customers in the U.S. in dollars, and have of course, greatly benefited from the fantastic exchange rate. Your post is some food for thought for future currency strategies…
I send to all new prospect a price sheet based on our dollar rates, but with values converted also to Euro and to GBP. The price sheet also shows the exchange rates and the date used for the exchange rate.
We do all our pricing and payment in dollars. That way we don’t have to keep track of currency fluctuations nor are we at the mercy of negative exchange rates. Of course, we also do not benefit from a favorable exchange rate but we prefer to keep it simple and spend our time developing our business.
Thanks for your comments! As you point out, I guess that at a certain point we have to choose between taking advantage of favorable exchange rates or protecting ourselves from unfavorable exchange rates. For those of you who have overseas clients pay you in dollars, do your clients ever balk at this or are they OK with it?
I always invoice in dollars because it slows my accountants down to deal with multiple currencies–it makes paying quarterly taxes harder because you need to find out historical exchanges on bank statements, etc., and it’s a big hassle.
That said, I usually quote a higher per-word rate for clients in countries with favorable exchange rates, but I still quote in dollars. I update my rates on my rate sheet once a quarter usually to reflect any major changes in exchange rates.
I’ve almost never had a client balk at this; it’s as easy for them to do a wire transfer for a dollar amount as it is for a euro or yen amount because the bank forms allow you specify the target currency. On the very rare occasion it does pose a problem, I convert the invoice to the foreign currency at the exchange rate on the date of invoice, which is fair enough in most cases.
Unless you have foreign currency account it is much better to get paid in our local currency as the banking charges can eat away few percent of the total amount paid and if necessary adjust the tariff for EU clients. Being paid in your local currency means that the payee bears the costs of bank transfer.
http://www.odvetniska-pisarna-cooper.si/
I would say that is not only an issue for translation services but a general business policy. EU businesses that sell services to the US are not as competitive as they were a couple of years ago.