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Archive for the ‘Rates’ Category

Here’s a time management strategy that, at first glance, doesn’t seem like a time management strategy. Make sure that you set your translation rates so that you have enough time for non-billable work. If you’re looking for the sound-bite version of this concept, you can stop reading! Otherwise:

This came to me while I was prepping for the work-life balance panel that my friend and colleague Eve Bodeux moderated at last year’s ATA conference in Chicago. I do a lot of work-related things that are not billable: of course marketing, accounting, billing and other administrative work, but I also spend a lot of time on work for the ATA Board, writing this blog, working on books and articles, presenting webinars, participating in professional development training and so on. Other translators ask me about this a lot. “Do you ever actually translate?” “Does your family know what you look like?” “Do you sleep three hours a night?” The answers to those questions are Yes, Yes, and No (I sleep almost as much as our cat does!) so here’s the trick.

I set my translation rates so that I can earn my target income if I am *actually translating* 20 hours a week. I’m a pretty fast translator, so I usually estimate that I can produce 500 finished words per hour including proofreading. I like to be able to take six weeks of vacation per year. So I look at my total output: say 20 hours times 500 words times 46 weeks=460,000 words. Then I take my target income, divide it by 460,000, and that tells me the average rate I need to charge in order to reach my target income. Then, and this is very important, *I do enough marketing that I have enough work at that rate, essentially all the time.* It’s definitely one of those “sounds simple, gets more complex when you try to do it” concepts, but I do think that at least having that calculation in your head is helpful. If you’re working for rates such that you have to translate 40 hours a week to reach your target income, either you’re going to end up working 60 or 70 hours a week and probably burning out, or you’re going to end up letting the non-billable work slide. No marketing, no training, no networking, equals a business that is potentially dying and at the least becoming stagnant. So, don’t do that. Step one: figure out what rate you need to charge in order to have enough time for non-billable work. Step two: market as assertively as you need to in order to fill your inbox with work at that rate.

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Translator mailing lists and message boards are full of translators asking, “Can you charge extra for…?” (formatting, translating from a poor-quality PDF, talking to the client’s staff on the phone, and so on). If the client is an agency, you have to negotiate those extra charges (or extra unpaid work) directly with them. But here’s my solution for when you’re working with direct clients (and of course you can agree, disagree, or offer your own solution).

  1. Charge the client an all-inclusive rate that’s high enough to cover the occasional unexpected “extra” service: for example the client needs hard copies of a translation with your Certified Translator stamp on them, necessitating an impromptu run to FedEx. What’s that you say…you passed the ATA exam and you never downloaded your Certified Translator seal to have a stamp made? Well, you’d better take care of that right now!
  2. Then, don’t nickle-and-dime the client for these small extra services. Of course if you spend hours on an extra task, you should charge for it. But the FedEx run, the 15-minute phone consultation, the 33-word e-mail that the client forgot to ask you to translate…don’t make a big deal out of those.
  3. But don’t let the client simply forget about them either; it’s a good reminder of the value of a professional translator, and of why the client pays you a premium rate in the first place. My solution: put those items on your invoice, and in the column where you would normally include the cost, write “Courtesy.” “Overnight delivery of hard copies: Courtesy.” “Press release headline suggestions: Courtesy,” and so on. This will jog the client’s memory, remind them of how you helped them out in a pinch, and hopefully help you retain them as a premium client. To me, adding an extra charge for a task that took 10 minutes looks a bit petty and desperate; better to charge a higher rate overall and then do those Courtesy services without additional billing.

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This morning I had lots of fun interviewing translation industry veteran Steve Lank (Monterey graduate, former ASTM translation QA standard subcommittee chair, longtime senior-level manager in agencies in the US, Ireland and Spain). Steve is currently Vice President for Translation Services at Cesco Linguistic Services, working from the Washington, DC office.

I put Steve in the hot seat and asked him:

  • Chicken/egg: how can beginning translators find their first clients?
  • What’s up with downward price negotiations? Why do agencies apply them, and how can translators best handle them?
  • What are the top dos and don’ts of translator resumes? What errors pop up again and again? How can a translator stand out among the many unsolicited applications that an agency receives?
  • How about following up on agency applications? How often should freelancers follow up, and using what method?
  • How does a translator turn a first-time client into a regular client, and become one of an agency’s preferred providers?
  • How about the increasing emphasis on specialization in our industry? Is the “learn by doing” mindset OK, or do translators need more formal training in their specializations?

To listen to the episode, cruise on over to the Speaking of Translation website.

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Let’s look some more at the “How much should I charge?” question, since it’s such a source of stress and speculation for most freelancers. You might also be interested in these previous posts–What is the right rate for your translation services, and How and why to raise your translation rates.

If you want, you can have an absolutely 100% set price for your translation services. My accountant (who I love), charges $220 an hour, end of story. Phone calls more than 5 minutes and lengthy e-mails are billable, end of story. That tactic could work for translators too. But whereas accounting work is relatively predictable, we’re always balancing factors like the subject matter, the turnaround time, the format of the source document, the high or low maintenance-ness of the client, the appeal of the project in general, and so on. So instead of having a set rate per hour or per word, here’s another option: think zones.

The green zone is a rate at which you would almost never turn down work, as long as the project is within your capabilities. It’s your ideal rate, and ideally, you’re always trying to push it a little higher. Note: the green zone is a good place for your clients to be, because it means you’ll bend over backward for them (worth subtly pointing out to them, too!).

The yellow zone is a rate that’s not ideal, but that’s worth taking a look at. This might be a rate that you consider when work has been a little slow, or if a project is particularly interesting, or when there’s some non-economic reason to consider the project. For example, when I translate books, it’s yellow zone work. It’s interesting, it’s nice to be off the daily deadline treadmill, but it’s at the low end of what is viable for me financially.

The red zone is work that you turn down because it’s too low-paying. Point being: to have a viable business, you have to have a red zone. If you are continually making exceptions to your absolute, I-don’t-go-below-this-number rate, just for this one project and then you’ll really never work for that little again…you will never have a viable business. So whether your red zone is 9, 20 or 40 cents per word, just make sure that you have one.

I find that this zone approach really helps me; having an “I don’t turn on the computer for less than…” rate helps me feel that this is a policy, rather than a case by case decision. Over time, I also find that I’m more attracted to billing direct clients by the hour; they understand where the number is coming from (which, with per-project pricing, they might not), but I also get paid for everything I end up doing (which, with per-word pricing, I might not). But that’s material for another post…any thoughts out there on pricing zones?

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No matter how long you’ve been a freelancer, rates are always a source of intense stress: charge too much, and you’re afraid of having too little work. Charge too little, and you’re afraid of not earning enough. There are lots of ways to think about rates (see my previous post about deciding how much to charge) and about raising rates, but let’s take a shot at the basics. Here’s a question I often get from other freelancers: how do I raise my rates, and what’s the best time to raise my rates? My take:

If you’re talking about raising your rates with existing clients, my two word answer is: you can’t. That’s a little harsh, but think of it this way. If you have a salaried job and you want to make 30% more than you’re making right now, you’re unlikely to get that raise in your current position. To make that jump, you have to change jobs. And so it is with freelance rates: a longstanding client is probably not going to agree to a significant rate increase, so you just have to look elsewhere. But let’s say you’re talking about a modest increase. A few options here; some may be nothing you’d ever say, and some might work for you:

  1. You could use Chris Durban‘s suggestion and invoke a third-party authority, like “My accountant has brought it to my attention that you’re my last client paying X cents per word/hour.” This can be a good tactic because the mythical third party is the bad cop, and you get to be the good cop and tell the client how much you love working with them, and that you really hope you can continue the relationship.
  2. You could try a human-to-human conversation with the client, like “I love working with you because you offer so many advantages : your staff are so helpful and easy to deal with, your projects are interesting and you always pay on time. At the same time, looking at my bottom line, you’re now my lowest-paying client, which means that I only accept work from you when I have nothing else in the pipeline. I’d really love for you to be one of my preferred clients, and the rate that it would take to get here is X.”
  3. You could just impose the rate increase and see what the client does; send an e-mail saying “As of March 1, 2014, my base rate will increase to X. Please let me know if you have any questions.”
  4. If you sense that the client could pay more but for some reason is resisting, you could try asking them for the truth (always a dicey proposition, but worth a try!). Such as “I’d like to ask for your feedback on what it would take for me to move into your top tier of translators. I love working with you and am committed to always doing excellent work, so this type of feedback would really help me move my business to the next level.”

But my succinct advice on how to really raise your rates remains: look for new clients.

Now, on to the question of when to raise your rates. Short answer: with new clients, and when you’re already really busy. Why? Because then, if the new potential client says no to the higher rate, you’ve lost absolutely nothing. You’re still really busy and you have enough work. And if the new potential client says yes to the higher rate, you know that at least some portion of your target clientele will bear that rate. Try 15% or 25% higher than you’re charging right now; heck, even try 50% higher and just see what happens. If you believe that you deserve that rate and that your work is worth it, there’s a good chance that the potential client will believe it too. And do not forget that if 100% of potential clients accept your rates without negotiating, you could be charging more. That’s not business advice, it’s just a fact. If literally no one thinks that you are too expensive, you’re leaving money on the table.

Here’s another rate truth: I work with both agencies and direct clients, and I like them both for different reasons. With my agencies, I just translate, and sometimes that’s just what I want to do. With my direct clients, I’m in the thick of the action, usually dealing with either the person who wrote the French document or the person who’s going to use the English document, and sometimes that’s just what I want to do. But here’s a truth of the agency market: you can only compete on quality and service to a certain point. Once you hit the agency’s rate ceiling, you’re stuck. For example I recently wanted to raise my rates with one of my agency clients, but they told me (and I believe, honestly) that they’re already paying me 2 cents per word more than any of their other French to English translators, so I can either continue at the current rate or not work for them anymore. This is not to say that direct clients will blindly agree to every rate increase, but they generally have more flexibility to move money from other budgets and allocate them to translation if they really want to retain you.

Readers, any thoughts on this? Any rate increase techniques that have worked for you?

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I spend a lot of time explaining the merits of agencies to translators who work with direct clients, and explaining the merits of direct clients to translators who work with agencies. So, I thought I’d offer my explanation to the whole translation blogosphere and solicit your thoughts! Here we go:

Translation agencies are great, because:

  • If the agency does its job right, you just translate. You are freed from such tasks as explaining to the client why the words aren’t in the same order in the translation as they are in the original document, or explaining to the client that words like “software” and “information” are not pluralized as “softwares” and “informations” in English.
  • If the agency likes you, they will keep you busy. They will fill your inbox with requests, rather than the other way around.
  • They have a sense of what you do, and what the constraints of your job are. They know not to ask whether you could translate 25,000 words for 3 days from now, or whether you charge “for the little words.” By the way, that was an actual question I received from a potential client. I apologize if my answer, “Only if you want them translated,” sounded rude or glib.

But translation agencies have their drawbacks, such as:

  • In the agency market, a translator can only compete on quality to a certain extent. It’s in an agency’s best interest to use the cheapest translator whose quality and reliability fit the agency’s purposes. An agency that really likes you might pay you 10% more than what they pay their other translators, but they’re not going to pay you 100% more, whereas a direct client might.
  • They can’t afford to be loyal to you. A direct client might shuffle deadlines, pay rush printing charges or have their own staff work on a weekend in order to snag a translator who they really love. But agencies rarely will: if you’re not available within a reasonable amount of time, they’ll call the next person on their list.
  • Many agencies are not transparent about their teams and processes. When you work on a large project for an agency, the agency may refuse to let you communicate with the other translators. They may decline to tell you whether your work is being proofed a) by another translator in your language pair, b) by a speaker of the target language only or c) not at all.

Direct clients are great, because:

  • At a certain point, you will reach “terminal velocity” in the agency market. You will be charging as much as even the highest-paying agencies will pay, and you can’t increase your speed beyond a certain point if you want to maintain quality. So, the next logical place to look is the direct client market, where the price ceiling is much higher.
  • The business relationship is between you and them. Normally, you can communicate either with the person who wrote the source document or the person who is going to use the target document. In 11+ years of working with agencies, I’ve been in contact with the document’s writer or end user exactly zero times. To put it diplomatically, this model has its problems.
  • Quality is a major competitive advantage. I know for sure (and Chris Durban has said this as well), that some of my direct clients use me for their mission-critical translations; when they’re applying for a large grant or producing a report that will go to potential donors, they’re willing to pay my rate. But for other, less mission-critical things, they use either agencies or less expensive freelancers.
  • Questions and feedback are not only possible, but welcome. In the agency model, there’s pretty much an impenetrable membrane between the translator and the end client; in the direct client market, the back-and-forth flow is what makes the work more satisfying and the translation more accurate and more readable.

But direct clients have their drawbacks, such as:

  • Sometimes, they have no idea how you work, other than that you change documents from one language to another. 12,000 words for tomorrow? Some direct clients don’t know that that’s laughable. And while you’re at it, why don’t you translate into your non-native language? Or interpret for their upcoming conference? It’s not their fault, it’s just not their industry.
  • They may need you only sporadically, or for huge amounts of work at one time. Some direct clients only need a translator for a small job a couple of times a year, for example when they issue earnings reports or press releases. Others may have an onslaught of documents (grant applications, RFPs) a couple of times a year, and then they need 100,000 words in a month. So you absolutely must have a partner or backup person (more on that in another post).
  • Corollary: you really don’t want to turn down their work if you can help it. In the agency market, you can pretty much accept and decline projects at will. As long as you accept at least some of the time, the agency will likely call you again. But if you bail out on a direct client at a key time, your relationship with them may be over, because they have to find someone else immediately (see reference to partner/backup above).

Now, over to you! Thoughts?

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Disclaimer: I’m not an accountant or an attorney; these are just some tips from my own experience and what works for me in my freelance business. Managing your freelance finances is a) time-consuming and b) absolutely critical to your survival as a freelancer. So, it’s worth taking some time to consider whether you’re optimally managing your money. And those of you who are more financially oriented than I am, please chime in in the comments.

  • Before you do anything else, separate your business and personal finances. Even if you do business as a sole proprietor (meaning that you are not incorporated), open a separate checking account that you use only for business purposes.
  • People use various accounting tools and processes, but at the very least, track your total freelance income for the year. Every time a client pays you, enter that amount into something (a spreadsheet, QuickBooks, Translation Office 3000, etc) so that you have a running total of how much you have earned.
  • Always, always have a savings cushion, especially if you are your (or your family’s) only income. Freelancing has its highs and lows; some months go like gangbusters and other months drip along. Big clients may unexpectedly change their plans or hire an in-house translator. And if you (or a family member) are too sick to work for an extended period, you’re left without income unless you have disability insurance. So don’t let yourself live paycheck to paycheck. Keep at least 3-6 months’ living expenses on hand in cash at all times.
  • Track your total outstanding invoices. For me, this is a big one. Of course you’re going to record your outstanding invoices so that you know whether clients have paid you or not, but you also want to know how much money you should be receiving in the next 30-60 days. This statistic will tell you how aggressive you need to be about looking for or accepting new projects. For example, let’s say that your income goal is $7,000 per month. Every time you issue an invoice, you enter it into an Excel file with a column that totals your outstanding invoices, so that you know how much money clients owe you. So for example if your outstanding invoices only total $5,000, you know that the next month is going to be lean unless you take on a lot more work. But if your outstanding invoices total $9,000, you know that you can afford (at least from the financial point of view) to be choosier about the work that you take on, to work on some non-paying tasks such as updating your website or marketing to higher-paying clients.
  • Track your business expenses. The easiest way to do this is by using a debit or credit card associated with your business bank account. That way, you don’t have to comb through your records at the end of the year, wondering whether that trip to the office supply store was for home or for work.
  • Establish a business savings account. Another big one: at the very least, you need to set money aside for taxes. Depending on your situation and your tax bracket, this could be anywhere from 25-50% of what you earn. Every time a client pays me, I deposit the check in my business checking account and then immediately transfer 40% to my business savings account so that I am never in a bind when tax time rolls around. And also…
  • Use your business savings account as a paid vacation fund. Freelancing doesn’t have many downsides, but one of them is no paid vacation. So, provide yourself with a good quality of life by having a paid vacation fund. For example, if you want to take off 4 weeks per year and work 48 weeks, start by putting $100 a week into your paid vacation fund. Then you’ll have $4,800 to “pay” yourself during your month off.
  • Have some sort of retirement plan. My accountant likes to say that “Everyone has a retirement plan. Either you’re saving for retirement or you’re planning to work until you drop.” Retirement strategies are really diverse, and they depend a lot on your expenses, how long you plan to work, if you have kids and how old you’ll be when they leave home, and so on. Plus the not insignificant question of how long you’re going to live. But whatever you do, have some kind of plan in place.
  • Set money aside for professional development and (why not) bonuses. It amazes me how many translators spend absolutely nothing on professional development and then wonder why their businesses are stagnating. In order to stay current in our industry, you have to keep your skills, knowledge and contact base current. Meaning that you have to learn new things. Take webinars, read books, do teleconferences, attend in-person conferences, join the Chamber of Commerce. But set aside at least 5% of what you make for professional development. And, if you have a good year, you really deserve a bonus. I once had a boss who left $50 in everyone’s mailbox on the last day before winter break; a manageable amount for the company, and an amount that everyone was excited to go and blow on something fun over the holidays. Consider earmarking some “fun money” for yourself, getting a new technology toy or treating your most valuable colleagues to a good meal at the end of the year!

Other ideas??

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