| Pages in topic: < [1 2 3 4] > | Unbelievable rates charged by translation agencies Thread poster: Bruno Depascale
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Bruno Depascale 
Italy
Local time: 00:53
Member (2009)
English to Italian
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TOPIC STARTER | I'm annoyed too about unprofessional behavior | Jul 27, 2016 |
Fiona Grace Peterson wrote:
is the sounding of a death knell for rates and "our profession" by a certain site user every time the mention of low prices comes up. And frankly it's getting a bit boring.
Dear Fiona,
I am not ringing any death knell for the rates of the profession. I am just trying to stimulate a useful discussion.
I also get annoyed exchanging email with unprofessional translation agencies (and there are so many out there) who steal our time with ridiculous job offers and deceiving behaviours.
I like my job, but there is something really wrong in the unbalanced relationship between translators and translation agencies..
Maybe I am too pragmatic and don't believe to the fairy tale of the translator sitting on a beach doing some easy translation task and working 5 hours a day (when he/she likes).
And if I can help young and inexperienced translators to avoid the traps of this job, then I'll be more than happy about that.
I am really sorry if my posts are boring, I'll try to be more entertaining in the future.
| | | | | The bottom line is that translation is like law or freelance journalism, | Jul 28, 2016 |
and agencies should have no place in it. There is nothing for them to do there. There may be advertising agencies which would help translators to promote their business, but there is no place for a middle man in such a profession as translation, the same way as there is none in law or medicine, accounting, or journalism. There may be some still in interpreting, but not translation. Just a waste of money on paying the rent for those agencies, their administrative personnel that knows very little ... See more and agencies should have no place in it. There is nothing for them to do there. There may be advertising agencies which would help translators to promote their business, but there is no place for a middle man in such a profession as translation, the same way as there is none in law or medicine, accounting, or journalism. There may be some still in interpreting, but not translation. Just a waste of money on paying the rent for those agencies, their administrative personnel that knows very little about translation on average.I think they should find some other type of business to engage in, mostly sales, sales of products not services.
They may have some, small place in the global market, if really rare languages are needed, but they should always pay the prevailing rate, even if they were to make very little, and common sense should be used, as always. They have no place in the local market. The problem is that translation is not well regulated—that is the reason why. A doctor would never let an agency take a part of the money for his service—that would even be against the law in the US that anyone would take a percentage for referring a patient to a doctor or a client to a lawyer.
[Edited at 2016-07-28 07:46 GMT] ▲ Collapse
| | | | | Of course agencies have their place | Jul 28, 2016 |
and it is preposterous to suggest otherwise. Agencies take their cut, precisely because they take care of parts of our business that can be tiresome and time-consuming, such as finding customers, or dealing with the nitty-gritty of customer relationships. Those who do not mind dealing with this side of the business can choose to cut out the middleman and work with direct customers. But agencies have a valuable part to play in our business, and there are actually some out there which are a pleasu... See more and it is preposterous to suggest otherwise. Agencies take their cut, precisely because they take care of parts of our business that can be tiresome and time-consuming, such as finding customers, or dealing with the nitty-gritty of customer relationships. Those who do not mind dealing with this side of the business can choose to cut out the middleman and work with direct customers. But agencies have a valuable part to play in our business, and there are actually some out there which are a pleasure to work with and who pay well.
Doctors actually do have people who take a part of the money for their services - those in the public sector anyway - they're called healthcare trusts. They act as an interface between doctor and patient, and send a stream of patients to the doctor's surgery. That's why doctors command higher earnings when they work privately. ▲ Collapse
| | | | Dan Lucas
United Kingdom
Local time: 23:53
Member (2014)
Japanese to English
| Most large agencies don't have high profit margins | Jul 28, 2016 |
Bruno Depascale wrote:
I disagree with you because I think that many translation agencies simply don't deserve a 50% or higher share on the final rate, because they don't add any value to the delivered product.
For example, if a translation agency send a document of 5000 words to be translated in 10 languages, they charge the final client 10.000 euros and pay the translators 2500 €. They have earned 7.500 € which is a 75% profit obtained in most cases without adding any value to the translation itself.
Bruno, you're not thinking clearly about the difference between revenue and profit. The slice that an agency gets is revenue. From that they have to pay for staff, offices and all the other running costs. Profits are typically small.
If you disbelieve me, there are several listed translation companies whose accounts can be inspected. Most of them have profit margins of well below 10%. This is (demonstrably) not a profitable industry, at least for larger firms. For example, in its most recently reported quarter Lionbridge had US$ 136.4 million in revenue and operating income of US$3 (three) million. That's a margin of 2.2%. Honyaku Center in Japan had an operating margin of 5.9%. thebigword PLC had an operating margin of 2.4% (that was 2015, haven't checked the most recent figures).
So yes, agencies may take 50% or more of the money paid by the end client, but clearly in many cases they are only just covering their costs.
As for whether agencies do anything useful or not, here's a suggestion: if you do really think that agencies do not add value and make lots of money for doing nothing, I suggest you start an agency and get rich. How hard can it be, right? Come back in two years and tell us how it went.
Regards
Dan
PS Even if you prefer translation, the sensible thing to do is start an agency, get rich, sell the agency so that you are financially secure and then go back to translation
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| the trick is... | Jul 28, 2016 |
to have high revenues and very small taxable profits... if you think agencies are earning very little, because of low profit margins, you are a fool... 
| | | | Dan Lucas
United Kingdom
Local time: 23:53
Member (2014)
Japanese to English
| Not as clever as it appears | Jul 28, 2016 |
Giovanni Guarnieri MITI, MIL wrote: to have high revenues and very small taxable profits... if you think agencies are earning very little, because of low profit margins, you are a fool...
Massaging profits (within legal bounds) to reduce the tax burden may well be a sensible strategy for small, unlisted companies with just a few people.
For the listed companies we have been discussing, that is not the case. Low profits = low EPS and/or dividends = low share price = managers getting fired. Or, with a low share price, there is more potential for a hostile takeover, which again usually results in managers getting fired.
This really shouldn't need stating explicitly, but some people don't seem to understand what motivates business people so I'll say it anyway: management doesn't want to be fired. Management wants to continue getting a salary and a yearly bonus, so they can keep their S600s, their country club memberships and the private schooling for their children. Delivering low profits or losses year after year is a great way to get fired.
So, no, manipulation of the publicly disclosed P&L to reduce apparent profits is not normally a good strategy for a listed company.
Dan
| | | | Kevin Fulton
United States
Local time: 18:53
German to English
| A lot of misunderstanding about revenue/margin/profit | Jul 28, 2016 |
People here have been whining about the difference between what agencies charge their customers and what they pay translators. Single-shingle translators with low operating expenses realize a high profit margin because they're not paying wages to a sales staff, bookkeepers, project managers, etc. For most of us, our business expenses are largely based on the cost of equipment (computers, software), utilities (phone, Internet, electricity), and what little advertising we do. If we paid ourselves ... See more People here have been whining about the difference between what agencies charge their customers and what they pay translators. Single-shingle translators with low operating expenses realize a high profit margin because they're not paying wages to a sales staff, bookkeepers, project managers, etc. For most of us, our business expenses are largely based on the cost of equipment (computers, software), utilities (phone, Internet, electricity), and what little advertising we do. If we paid ourselves a fixed salary and considered that an expense, our profit margin would be very low, once we deducted our operating expenses.
It works the same with large corporations, no matter what the business is. General Motors, for example, has an average profit margin of less than 7% – this is after operating expenses and the cost of salaries and benefits – running into the millions of dollars for each of the members of senior management, not to mention other employees. What's left over goes to the shareholders.
In the case of closely-held companies, management itself frequently owns the company, so in the case of mega-agencies such as The One Whose Name We Dare not Mention, the profit realized by the owners be only 3-4%, but that's already on top of their six-figure salaries. The actual profit per word on sales of several hundred million dollars may be a fraction of one cent per word.
My point is that a 100% markup over the cost of paying a translator does not mean a profit of 100% to the agency. As others have pointed out, as long as you're getting the rate you want, the rest is irrelevant. ▲ Collapse
| | | | | Millions of dollars | Jul 28, 2016 |
Kevin Fulton wrote:
...
It works the same with large corporations, no matter what the business is. General Motors, for example, has an average profit margin of less than 7% – this is after operating expenses and the cost of salaries and benefits – running into the millions of dollars for each of the members of senior management, not to mention other employees. What's left over goes to the shareholders. ...
I think you hit the head on the nail. This is true for very large companies, all types ...
Not criticizing the good translation agencies.
But no matter what, it all comes down to what the individual translator charges.
[Edited at 2016-07-28 22:32 GMT]
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Lincoln Hui
Hong Kong
Local time: 06:53
Member
Chinese to English
+ ...
| This is absurd | Jul 29, 2016 |
but there is no place for a middle man in such a profession as translation, the same way as there is none in law or medicine, accounting, or journalism.
What exactly do you think is the same way there is?
Most lawyers spend years working for other law firms, by the government or by other organizations, before they can start their own practice. Accountants work for accounting firms. Not only do doctors work for hospitals, even those with their own practice often work with insurance networks. The journalism example is by far the most absurd because not only do most journalists work for news organizations, even freelance journalists do the same; they do not deal directly with the consumer of their work but with someone who publishes and promotes their work.
It is either fortunate or unfortunate that in translation most end-translators are not regular employees of the middleman, but the middleman is just as prevalent, and just as important in law, medicine, accounting or journalism as in translation
| | | | | not quite... | Jul 29, 2016 |
Dan Lucas wrote:
For the listed companies we have been discussing, that is not the case.
The survey analysed a wide spectrum, not just listed companies...
| | | | jyuan_us
United States
Local time: 18:53
Member (2005)
English to Chinese
+ ...
| USD 0.21 per word is at the lower end of the spectrum | Jul 29, 2016 |
I know a couple of my agencies charged much higher than that. At least one company charged its clients $0.35 per word.
| | | | Bruno Depascale
Italy
Local time: 00:53
Member (2009)
English to Italian
+ ...
TOPIC STARTER | a 500% gain..is this still ethical from a business perspective? | Jul 29, 2016 |
jyuan_us wrote: I know a couple of my agencies charged much higher than that. At least one company charged its clients $0.35 per word.
If you were the owner of a translation agency, would you feel good with yourself at earning a 500% gain over the work of someone else?!? I wouldn't.
The maximum I could accept would be a 50% profit, not more. But probably I'm not a good businessman
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Kevin Fulton
United States
Local time: 18:53
German to English
| Large companies like agencies | Jul 29, 2016 |
LilianNekipelov wrote:
and agencies should have no place in it. There is nothing for them to do there.
[snip]
They have no place in the local market. The problem is that translation is not well regulated—that is the reason why.
Middlemen respond to inefficiencies in the market. In our case, it's matching talent with a need for translation.
A company with a consistent level of translation requirements isn't going to waste time calling individual translators checking their availability. They're generally looking for single-source service for all their translation needs – that is, one phone call/e-mail will put the engagement in motion.
I've worked with large companies, both directly, and indirectly through agencies. Agencies are in a position to guarantee a certain level of quality at a specified price with on-time delivery. A sole proprietor like myself cannot guarantee that my translation will be delivered on time if I get the flu, have a nervous breakdown, or even die. I work with skilled and reliable colleagues, but I can't guarantee their availability, since, as good translators, they're usually busy, and sometimes it takes a few phone calls to find one who can help. For that reason, I don't take on multiple large projects. A job handled by a reliable agency can continue despite the loss of a translator simply because it has resources: a database of proven talent.
I had an engagement a few years back with a Fortune 500 company that I had done work for in previous years. On earlier jobs I had been paid out of a research slush fund, and the translations were not time-critical. On a subsequent job for a different division of the company, their accounting rules were quite strict: sole proprietor vendors were a no-no, and slush funds had been eliminated company-wide. They only way I could be paid was through a labor contractor they used. I got the rate I asked for, but the company had to pay a fee to the contracting company. Even though I was working with the company directly, on paper, my engagement was through the labor contractor – an agency.
| | | | | "Herr lass Hirn regnen" | Jul 29, 2016 |
Bruno Depascale wrote: a 500% gain..is this still ethical from a business perspective? If you were the owner of a translation agency, would you feel good with yourself at earning a 500% gain over the work of someone else?!? I wouldn't. The maximum I could accept would be a 50% profit, not more. But probably I'm not a good businessman
Bruno, how do you calculate these 500%? My calculation would look more like this and it is not complete:
€ 0.18 per source word for me (the translator)
€ 0.06 per source word for the reviewer checking my work
€ 0.04 per source word for the PM handling my job (meaning the PM/LSP has to process 62.000 words per month to achieve € 2.500/per month to pay the PM a meager salary)
€ 0.03 per source word for marketing (going to a pharma conference with 2 people and a small booth can easily cost €10.000)
€ 0.03 per source word for office related cost/electricity etc. (meaning the LSP has to process 43.000 words per month to achieve € 1.300/per month to cover rent, internet, electricity, heating etc.)
this leaves € 0.01 per word for the LSP and with 62.000 words per month the LSP makes the incredible amount of € 620 per month. Is this ethical? No it is not, an agency paying its translators and its employees a decent rate needs MORE than USD 0.35 per word.
[Edited at 2016-07-29 20:11 GMT]
| | | | jyuan_us
United States
Local time: 18:53
Member (2005)
English to Chinese
+ ...
| If I could make a 500% gain, it reflects my marketing skill and my ability in maximizing my profit | Jul 29, 2016 |
Bruno Depascale wrote: jyuan_us wrote: I know a couple of my agencies charged much higher than that. At least one company charged its clients $0.35 per word. If you were the owner of a translation agency, would you feel good with yourself at earning a 500% gain over the work of someone else?!? I wouldn't. The maximum I could accept would be a 50% profit, not more. But probably I'm not a good businessman
It is all what I have earned and there is no need for me to feel bad about it. Nothing unethical. I don't owe a cent to anybody.
[Edited at 2016-07-29 20:37 GMT]
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