Working on a monthly retainer
Thread poster: Marsha Way

Marsha Way  Identity Verified
Mexico
Local time: 19:56
Spanish to English
+ ...
Jun 19, 2007

Hi everyone! I had a potential client make contact with me today for what he calls a long-term relationship (2-3 years) for translation of documents for the construction of a housing project. The documents will mainly include contracts, invoices, receipts, things related to the construction business and home-buyers, which will be translated to English so the investers can see where the money is going. When asking about my rates, he suggested possibly working on a monthly retainer, which I understand as getting a regular monthly rate during an established time, and some months I might get more work than what I am paid for, but other months I might have much less work than the pay represents.
Has anyone out there worked in a situation like this? How could I calculate a proper "monthly rate" without really knowing how much work to expect? Is there really a way to make this a win-win situation?
Thanks so much for your help!


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Patricia Lane  Identity Verified
France
Local time: 02:56
French to English
+ ...
Keep your headlights on Jun 19, 2007

Hello Marsha,

Though it is always a comforting thought to think "hmm, I have work coming in for the next few years", there are several things to keep in mind before responding to your prospect:

- maintaining sufficient availability to respond to the needs of your other clients > when this long project is over, you do not want to have to build up your clientele again from scratch!
- long term projects in my mind do not warrant a discount because what you are selling is your mind and your time: if so much of both is taken up by *one* client, this needs to be reflected in the fee, not bargained down.
- ensure you have a monthly payment schedule: at the first sign of delays or non payment, all bets are off > include that condition in a very well worded contract!
- the vagaries of some months with more work /less work: red flag -- you do not know how much work this client will demand week in week out. I should think you cannot afford to refuse other projects while waiting around to see what this prospect will need: in your shoes, I'd set a number of days per week where you are available for him, making clear that this represents X number of words/day and he would be billed whether he gave you work or not (after all, he reserved your time > that is why there is a retainer!). The rest of the week, you are free to do as you please: work for others, and if time permits, work for him (billed additionally from the retainer days).
Make sure you have a very well written contract that spells out clearly what you are agreeing to, at what rate, under what conditions.

Good luck,

Patricia


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Melzie
Local time: 02:56
French to English
+ ...
win, win Jun 19, 2007

I suggest you put in a proviso that, every 6 months say, you review with the client exactly how much you have done with him in that time and re-adjust the retainer accordingly. Not to come back on what has already been paid but to make sure that you are getting what you are due for your work and he is getting what he is paying for.

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Jan Willem van Dormolen  Identity Verified
Netherlands
Local time: 02:56
English to Dutch
+ ...
Beware of the tax collector Jun 19, 2007

In many countries, if you have a regular relationship with an agency, the tax office will regard this as a regular job, not as freelance work.
I know that if I would sign such an agreement as you mention, the Dutch tax office would call it a 'virtual work relationship' and start charging the agency for social security payments. The agency would not appreciate that - the Dutch social security makes wages higher by several tens of percents.
Also, I would lose my status as 'entrepeneur', with the tax benefits that go with it (like deducting expenses from my income).
I don't know the situation in your country, but it's definitely something to look into.


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maryblack  Identity Verified
United States
Local time: 19:56
Member (2013)
Spanish to English
+ ...
Right on, Patricia Lane Jun 19, 2007

Hi Marsha,

I totally agree with everything that Patricia Lane says. One way of working things out so that you're protected is by putting a ceiling on the amount of work per week (you decide how to calculate it: by hours or by words/pages). Once that is exceeded, you have the right to charge X cents per word over and above that amount.

I definitely agree that it's hard to be at the beck and call of a company when they have no idea how to calculate how much work they will be giving you. In fact, my question is simply why they want to put you on retainer, since in the end, with a clause like what I've mentioned above, it's actually just a regular translator-client relationship. I might put forth this argument to the client - that I'd be happy to work with them, but that a retainer puts constraints and obligations on both of you that are not necessarily beneficial for either of you.

Best of luck!


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Marsha Way  Identity Verified
Mexico
Local time: 19:56
Spanish to English
+ ...
TOPIC STARTER
You have been such a big help Jun 19, 2007

In Mexico, I should not have any problems with taxes since the client does not need an official tax receipt (recibo de honorarios), but that is definitely something to think about.
You all have been very helpful. I have been getting cold feet since I posted this concern. I see that for the most part, no one seems very convinced of such a relationship and to tell the truth, I think neither am I. I have not considered a discount, since the work is legal/technical, but I just have no idea how to work this kind of proposition. You have given some very good options if I do decide to work this way.
I would still like to hear if anyone else has worked like this or has suggestions for it!


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N.M. Eklund  Identity Verified
France
Local time: 02:56
Member (2005)
French to English
+ ...
Retainers and loving it Jun 19, 2007

Marsha Way wrote:

I see that for the most part, no one seems very convinced of such a relationship and to tell the truth, I think neither am I.
....
I would still like to hear if anyone else has worked like this or has suggestions for it!


Hi Marsha,
Here's the other side. I work with retainers, and I love it.
I think it's a lucky chance you got this offer.

Though perhaps not as common in the Translating industry, it's a very good way to develop a longlasting relationship with a client.
The client has realized that he needs someone he can count on, even though the work isn't constant, and is willing to reserve your time. See, I said 'reserve'.

You have some excellent suggestions here which should avoid you getting cold feet. Such as :Negotiate a trial period and/or a six month or one year review in which case you can revise things if you're not happy.

I have a retainer since 2003 and it's liberating. My contract reserves a minimum amount of hours per month (around 3-4 hours a day) and more if needed. That means they pay for my reserved time, which often are not even used! I am paid by the hour. And if there's more work at another time, then I get paid for the extra hours. It doesn't deduct off of other time not used.
So I have a guaranteed minimum per month, and sometimes when there's nothing to do, I use that time to finish another translation. So I get paid twice for the same time!
My client has no problem with this, because if I just sat around waiting for work, I may lose my skills, so keeping myself occupied keeps my skills honed for when he needs me. Of course, this means that the rare times I'll need to work 12 hours in a day or on the weekend, I don't charge extra. (This happened twice in 3 years).

Long story short. Don't get cold feet. Give it a try for a negotiated trial period to see if this is your cup of tea. I think it would be a shame to refuse without trying it. If it's the conditions that scare you, remember, you set your own conditions, and if they don't like them, nothing's lost!

Good luck and let us know what you decide.
Natalia


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Marsha Way  Identity Verified
Mexico
Local time: 19:56
Spanish to English
+ ...
TOPIC STARTER
Thanks! Jun 19, 2007

[quote]N.M. Eklund wrote:


I have a retainer since 2003 and it's liberating. My contract reserves a minimum amount of hours per month (around 3-4 hours a day) and more if needed. That means they pay for my reserved time, which often are not even used! I am paid by the hour. And if there's more work at another time, then I get paid for the extra hours. It doesn't deduct off of other time not used.

I'm glad to see a positive comment about this. If I may ask, what kind of rate do you charge per hour? Do you calculate how many words you can do in that time?

So the way you describe it, it does sound like a very good situation for the translator, who really does not lose!


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Sergei Tumanov  Identity Verified
Local time: 03:56
English to Russian
+ ...
my proposal Jun 19, 2007

I would like to propose the following:

1/ if you are 'fully fixed' for this client and you have no right to sublet your 'translating capacity' to any other charterer just calculate your maximum daily result (in words) by 30 (days) and by rate per word to apply. You get the monthly figure you would like to earn and advise your client accordingly.

2/ if you are entitled to part time translation and have the right to work for other clients the share of the above figure (both in terms of money and volumes involved) must be calculated and agreed.

In such case you shall deliver the agreed amount of translation and any translation in excess of it to be treated as additional volume/work and charged additionally.
In case the client fails to supply you with enough translation it is totally his/her problem and you should be entitled to agreed sum of your fee. No deductions/recalculations on the fly shall be allowed. After 2-3 months you may to renegotiate based on the experience received in the course of the project.

and remember - say NO to any discounts!


[Edited at 2007-06-19 10:10]


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Michele Johnson  Identity Verified
Germany
Local time: 02:56
German to English
+ ...
Working w/o receipts = red flag? Jun 19, 2007

Marsha Way wrote:
In Mexico, I should not have any problems with taxes since the client does not need an official tax receipt (recibo de honorarios), ...


Wait... what? Have I understood this correctly? I'm admittedly unfamiliar with the Mexican system but "rebido de honorarios" sounds a lot like "receipt for remuneration" or similar. Does this mean you won't be sending him a bill or any kind of receipt? This would already be a deal-breaker for me, and is certainly a red flag for this business partner (assuming I have understood correctly). I assume of course you will be correctly reporting the income to the tax authorities, who will then certainly be tipped off to the potential of "pseudo" self-employment / de facto employee status. Or is this just not an issue at all in Mexico?


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Henry Hinds  Identity Verified
United States
Local time: 18:56
English to Spanish
+ ...
Word Count Jun 19, 2007

To make it a win-win situation for everyone I would think it best to work it out by a per-word price and bill on word count at regular intervals.

That way you get paid the proper rate for everything you do and the client only pays for what is received. There should be good communication so the client lets you know ahead of time when and how much is coming to enable you to adjust your commitments and meet deadlines.

That is about the only proper arrangement I know of, and the only one I would enter into. The client will see the advantages of it for him as well.


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N.M. Eklund  Identity Verified
France
Local time: 02:56
Member (2005)
French to English
+ ...
Negotiation is the key Jun 19, 2007

Marsha Way wrote:

So the way you describe it, it does sound like a very good situation for the translator, who really does not lose!


Hi again Marsha,
yes, in the case of the negotiated contract I have with my client we are both in a win-win situation.

It's however extremely important to negotiate with your client. Our contract avoids the pseudo-employment suspicion because of several factors:
a) I have other clients
b) my time is flexible (5 hours one afternoon, 3 hours one morning,etc)
c) I invoice them by the hours and turn in a monthly extremely detailed report on time spent. (because they sometimes rebill their own clients for my time)

The contract stipulates the minimum hours per year I am to be available for them, and the types of services I am to offer.
In 2003, I negotiated a basic hourly rate which would be the equivalent of a person's salary with several years experience, if this person was paid by the hour, which is slightly cheaper than the typical hourly translation rates.
And then, after a while, I increased my rates.

To give myself some security I also negotiated a notice period of 3 months. (just like a work contract)

Like Patricia said, I recommend that you only do this parttime though. You NEED to keep yourself open to other clients, because one day you will be done with this one.

I currently have 5 large regular clients, so it's a juggling act when something urgent comes in. You can see my profile calendar to understand. I'm very happy where things are right now. It took a while, but I have plenty of work, and the peace of mind of a certain monthly minimum while I was building up my reputation.

For me it was really the best thing that could happen, which is why I urge you to think about it. Of course, all clients are not the same. Like Michele mentioned, are you sure you can trust these people, and that they respect your work?

Sorry, am very wordy today.


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Marsha Way  Identity Verified
Mexico
Local time: 19:56
Spanish to English
+ ...
TOPIC STARTER
What good advice Jun 20, 2007

I have not worked for this person before, which was one of the reasons I was nervous about this deal. I'm not sure I will have to worry much more about it because I have not received a response today from them; however, I appreciate all of your advice because I see that this is something that may come up again in the future.
In response to your concern Michele, it is quite valid; however, I have never worked with anyone abroad who has had the need for me to give them one of these receipts (I am convinced that these are of no use outside of Mexico) Even in Mexico, many clients do not ask for a receipt because they have no use for it. For example, as an "independent translator" (what I am literally registered as), there is a limited range of things I can use for deductions (stationary supplies, computer, car repairs, medical and dental expenses and cleaning supplies). Nothing else counts, so there is no use in me paying 15% VAT if I don't have to (it's not always automatically added). When I charge them for a translation, there is no VAT. When they ask for a receipt, they know that the price will increase by 15%, which is quite steep. I know it sounds off, but it really is one of the "charms" of living in Mexico!
Now here is the downside- in other countries it is sometimes better to have extra deductions, which are then given back to you in the form of a tax return. The concept of 'tax return' is almost unheard of here. One of my outsourcers fought a legal battle that lasted 4 years to get a tax return. It's just not worth it! (The government makes sure it never owes anyone.)
Sorry about rambling on. I appreciate the help and would enjoy hearing more!


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