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Higher rates to direct clients
Thread poster: LinguaLab.net

LinguaLab.net
United Kingdom
Local time: 03:01
English to Norwegian
+ ...
Oct 25, 2006

Hi everyone,

I have started to get a couple of queries from direct clients, and I was wondering how much more you would charge a direct client as opposed to an agency?

A friend of mine who works in a translation agency says they charge their direct clients approx. 15 % more - would you say that's a fair percentage?

I am very interested to hear your views on this!

Kind regards,

Nina Elin Brevik
LinguaLab


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brigidm  Identity Verified
Norway
Local time: 04:01
Member
Norwegian to English
Yes, that sounds about right. Oct 25, 2006

Obviously you have to take into account volume and type of text, but somewhere between 15-20% is my rule of thumb, and it works for me.

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Fiona Grace Peterson  Identity Verified
Italy
Local time: 04:01
Member
Italian to English
Sounds very little to me Oct 25, 2006

Hi Nina,
why don't you check out the community's rates in your language pair? The rate you charge your direct clients will depend on many factors - the difficulty of the texts, urgency, subject, and there will be others. You talk about a markup from your agency price - I don't know what your agency rate is!, but 15% doesn't sound like much.


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Wenke Geddert  Identity Verified
United Kingdom
Local time: 03:01
Member (2004)
English to German
+ ...
Rates Oct 25, 2006

In my opinion, the rate has to reflect external proofreading on top of your translation. I usually incorporate this in my quote for direct clients. (15% would not cover this, in line with my calculation.)

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LinguaLab.net
United Kingdom
Local time: 03:01
English to Norwegian
+ ...
TOPIC STARTER
Thank you for your swift replies! :oD Oct 25, 2006

As rates vary a lot, I thought it would be more practical to discuss this topic in percentages rather than pounds and dollars (I just hope my poor math skills can keep up!). ;o)

Wenke is right, I would have to increase my rates by more than 15% to allow for external proofreading (agencies would have the text proofread by another linguist anyway, so I guess their 15% markup is on top of what they already charge for translation and proofrading). Most of the agencies I work with offer about a third of the total wordcount as payment for proofreading (although I know others offer nearly half) so perhaps it's easiest to just add a third to what I would charge an agency. Sounds like a lot, but the sum I end up with is still below what a lot of agencies charge so I guess I'll still be giving the client a good deal.

Thank you for the comments, this is a very interesting subject and I'd love to hear more about what others charge. Everybody wants direct clients, and now that I finally start getting them, I don't want to be too timid when it comes to charging them!

Another question - would you charge a private individual and a big company differently?


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xxxMarc P  Identity Verified
Local time: 04:01
German to English
+ ...
Higher rates to direct clients Oct 25, 2006

lingualab wrote:

A friend of mine who works in a translation agency says they charge their direct clients approx. 15 % more - would you say that's a fair percentage?


This strikes me as low. I would expect a typical agency markup to be closer to 30-50%, or even higher. Agencies certainly exist whose markup is 100% or more.

Most businesses gear their prices not to some concept of fairness, but to necessity, in order to make an adequate profit on the one hand and to remain competitive with other businesses on the other. Fairness only becomes an issue when the scope of the service is not transparent (such as when a customer accidentally sends the same text for translation twice).

A "surcharge" for end customers strikes me as the wrong approach. I would first set an appropriate price for end customers, then consider what particular benefits are derived from working for an agency (e.g. a steadier supply of work), and use those benefits to quantify the agency discount.

Marc


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xxxdf49f
France
Local time: 04:01
double Oct 25, 2006

Most agencies charge their clients twice to 3 times as much as they pay freelancers, certainly not just 15% more than they pay you!
I charge my direct clients (I live & pay taxes in France) a minimum of 18 eurocents. Although many agencies and unfortunately also freelancing translators are charging their clients as low as 10 or 12 (I just read the profile of a new member in France offering 0,07 € "negotiable" and worse yet someone also new from Australia offering 0,03-0,05 US$ ), my direct clients all keep coming back, and more and more tell me how distrustful they are of anyone offering low rates.
df


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Textklick  Identity Verified
Local time: 03:01
German to English
+ ...
A free market Oct 25, 2006

Wenke Geddert wrote:

In my opinion, the rate has to reflect external proofreading on top of your translation. I usually incorporate this in my quote for direct clients. (15% would not cover this, in line with my calculation.)



Agree.

I know for a fact that there are those who apply 100% or more to the freelancer rate. Rates are usually concealed by agencies and those who like to create the impression of being an agency ("send in your document and we will make you an offer").

If you, Lingualab, are capable of delivering a quality finished product that lies within your area of speciality, has been checked assiduously, and for which you have paid a reviewer whom you trust implicitly, then there is no reason why you should not be fairly entitled to command whatever rate you want. If you get the order - good for you!

As Fiona says, average rates are displayed (http://www.proz.com/?sp=rates_view), but these are "community rates". To what extent do they reflect "LSP" (agency) rates, one wonders?

Off the top of my head, your realistic figure should be more like at least 30% above your normal rate. (Added - I agree with Marc's suggestion in that respect)

I suppose you could, in theory, ask a friend in business to solicit a quotation from an agency. Or would it be unethical to deviously probe behind the veil of secrecy that we ourselves are sometimes encouraged not to wear?

Recommended background reading:

http://www.proz.com/translation-articles/articles/325/
http://www.proz.com/translation-articles/articles/531/1/Prices,-Service-and-Marketing
http://www.proz.com/translation-articles/articles/290/1/In-Pursuit-of-the-Cheapest-Translation-Cost--Is-translation-still-a-service-or-has-it-become-a-commodity?

Some of us prefer to work with agencies, others prefer to go for an agency/client mix and some work exclusively with direct "end clients". I certainly do not seek to negatively affect my agency friends' business, but I reserve the right to quote direct rates when appropriate.

As for private individuals, I suppose one could charge Joe Soak less than Joseph Soak, Inc. if only for moral reasons, although I do not seek that kind of business personally. And remember - do you expect repeat business from Joe?

Personally, I get rattled when I see "dumping prices", but:
it is a FREE market.

HTH
Chris













[Edited at 2006-10-25 10:23]


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Armorel Young  Identity Verified
Local time: 03:01
Member (2004)
German to English
The other side of the argument ... Oct 25, 2006

All sorts of issues come into play here and I weigh up each situation on its merits. However, a significant factor in my personal equation is that where I have worked for a direct client over a longish period I often find I can charge them a very reasonable rate simply because I have become very familiar with their territory and have a large translation memory of their work - new work from "old" clients is therefore much quicker for me to handle than agency work, where each job is usually new and unfamiliar. I take these factors into account when pricing. Basically this is coming at the issue from the opposite end - having a rough idea of how long a job is likely to take me, and therefore how much I need to earn from it, and pricing accordingly.

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Klaus Herrmann  Identity Verified
Germany
Local time: 04:01
Member (2002)
English to German
+ ...
Covering additional cost for direct business Oct 25, 2006

Working for direct clients involves additional cost. Obviously, there is proofreading to be done, and the end client usually does not want bilingual Trados files but the real thing, i.e. there is DTP to be done (or to be outsourced). Less obvious, as poor Mr. Schlotter forgot in his second battle for prices, DTP programs need to be bought, marketing has to be done, direct clients will require more serive = more time, etc. I don't think that 15% covers that cost.

[Bearbeitet am 2006-10-25 10:44]


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Alison Schwitzgebel
France
Local time: 04:01
Member (2002)
German to English
+ ...
Don't forget.... Oct 25, 2006

When calculating your prices, don't forget all the different components that your prices have to include:

The price of your equipment (PC, dictionaries, etc.)
The price of your time
The price of the services you use (Internet, phone, etc.)
The price of your expertise (sometimes this may be priceless)
The price of the risk of non-payment
The price of finding the work in the first place (marketing)
The price of proof reading your translation
.....

The list can be endless, but I think you get my point.

With agencies, the risk of non-payment is hopefully very small, but with direct clients the risk is significantly greater (unless they're a big-name corporation).

When you work for agencies, they are your client, and they legally have to pay you, even if they don't get paid by the end client.

If you work directly for the end client, you have to assume that risk yourself.

Also, hopefully when you work for agencies, you shouldn't have to market your services too much to find work (I know I could get shot down for that comment, but that's been my experience). This can be very different if you're looking for direct clients to work with yourself.

Many reputable agencies also include proof reading by another translator to ensure that the quality sent out is up to scratch. If you're working for clients directly, they will generally expect proofed, print-ready translations.

I'm certainly not saying that we should all just work for agencies, but these are some of the reasons why agency work is lower paid than working for direct clients.

Basically: direct clients equal an increased amount of work to prepare the same amount of translation.

The mark-up you charge for that increased amount of work is up to you, but don't forget the law of supply and demand on the free market (demand regulates supply).

Hope that sheds some light on your pricing dilema - and that I haven't been too theoretical

Alison


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LinguaLab.net
United Kingdom
Local time: 03:01
English to Norwegian
+ ...
TOPIC STARTER
Thanks again for all the comments! Oct 25, 2006

Thank you to Textklick for the very interesting articles! I agree with Armorel that you can usually do work for recurring clients faster, but I don't let that influence my pricing. To me, spending less time on the translation just means that I got paid a fraction better that day. My prices are fixed, and I have very few overheads (but I certainly see your point, Alison!). The risk of lowering your prices occasionally is that some agencies will take advantage of this and will keep asking you for the lower rate (unfortunately, I speak of experience here).

Textklick wrote: "I suppose you could, in theory, ask a friend in business to solicit a quotation from an agency. Or would it be unethical to deviously probe behind the veil of secrecy that we ourselves are sometimes encouraged not to wear?"
I won't go into whether or not it's ethical (although that would certainly be an interesting discussion), but I know of translators who have enlisted the help of others to find out just how much the agency they work for charge their direct clients. And it is very interesting to hear that some of them add a markup of 100% to direct clients! There is little transparancy in this business and it is very difficult to know how much the translation you carry out for an agency is being "sold on" for. For this reason, I think it's quite likely that many translators who work for direct clients sell their services for a lot less than they are worth.

Anyway - I guess we have established that 15% is way too little if you have to pay for a good external proofreader. And if most agencies add 50-100%, I suppose I could safely add 30-40% without risking to price myself out of the market.

Thanks again for all your comments on this topic, I feel a bit more confident about upping my rates to end clients now. I'd still like to hear more peoples' views on this, though - it is a very interesting subject!


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James (Jim) Davis  Identity Verified
Seychelles
Local time: 07:01
Italian to English
Split the difference Oct 25, 2006

Dear Lingualab,

In economics, markets work most efficiently when there is perfect knowledge of prices. The classic example is a stock exchange. You really do have to find out what your agencies are charging their end clients. Buy one if necessary.

There are large differences in prices between countries. In Italy agencies apply a mark up of anything from 60% to a 100% and more, they have overheads. The price for a standard page (1500 characters) for final customers ranges from 7 to 30 euro according to the Italian inland revenue and that includes the prices from freelancers and agencies and of course big general regional differences between North (expensive) and South (lower prices).

Years ago, when I, like you, started to get direct customers, I split the difference between the agency's rate and what they paid me. E.g. they paid me 20,000 and charged 40,000 (old Italian lira), so I charged my direct clients 30,000. Good for me, good for them. Obviously not so good for agencies.

One bonus, apart from the 10,000, was direct free and easy contact with the authors of what I translated, and access to their knowledge.

I have worked with agencies, who have allowed me free contact with customers, and I never betrayed their trust, but they are few and far between at least in Italy, which is unfortunate because there are very valuable synergies to be gained there, with translator, agency and end client and author all working together as a team. Trust is crucial to good business, I believe.

Since then, I have doubled, even tripled my speed and probably the quality too (same customers, same subject, year-in-year out), so I have probably let my prices fall. However, speed is a valuable commodity, with some of my clients and I could probably up the price quite a lot and still keep them, but I'm a translator not a business man and they are friends and working with directly authors you feel part of a team.

I hope this helps
Jim



[Edited at 2006-10-25 11:35]

[Edited at 2006-10-25 13:10]

[Edited at 2006-10-25 18:42]

[Edited at 2006-10-25 19:00]


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ViktoriaG  Identity Verified
Canada
Local time: 22:01
English to French
+ ...
50% Oct 25, 2006

I'll skip the lecture on rates

I'll just say that it's important to keep in mind that when working for a direct client, we take care of everything that the agency normally takes care of. For example, in the case of a new direct client, you don't get a TM and you'll have to create one, and also look up all terms you're not sure of, so you'll spend more time working - at least in the beginning.

Thus, you work more and therefore, it's only natural you ask for more. How much more? Let's just say that, in North America in general, for jobs for which the freelancer gets paid 12 cents, it's not rare that the agency gets 25 cents - which is double! So, definitely 50% - which would mean 12 cents versus 18 cents. This is sound but is still lower than what most agencies charge.


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Philippe Etienne  Identity Verified
Spain
Local time: 04:01
Member
English to French
investment in end-customer working relationship Oct 25, 2006

Although I have not a broad experience working with end customers (only a few one-offs), I think that the mere facts of acquiring and maintaining a relationship with an end customer are more time-consuming and less economical than with an agency. For instance, end customers may be more sensitive to face-to-face/telecon/meeting than PMs in agencies. Plus the fact that there may be many contacts to deal with for a single project (requester, technical, admin, etc)
So the price should also account for this.

A few years ago, a blunder from a agency customer of mine inadvertently disclosed the end price, which was double mine (around 0.18 euros/word). Of course it included the proofreading fee on top of mine.
0.25 charged to end customers is not unheard of either, especially in finance...

Have a good evening,
Philippe


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