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 »  Articles Overview  »  Business of Translation and Interpreting  »  Financial Issues  »  Translation Economics 101

Translation Economics 101

By Danilo Nogueira | Published  06/8/2005 | Financial Issues | Recommendation:
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Quicklink: http://www.proz.com/doc/298
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Danilo Nogueira
Brazil
English to Portuguese translator
 
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Translation Economics 101

Translators, like everybody else, with the possible exception of monks and vagrants, wish they could make a little more money and work a little less for it. There is nothing wrong with this. However, many of us try to justify this yearning for a better material life by claiming we are paid comparatively less than other professionals or than our due. To support those claims, some of us often compare our earnings with those of others, mainly bilingual secretaries, plumbers, and sanitation workers. This is a question of ethics: we want to show we are nice guys shortchanged by society, not greedy hogs. In addition, we usually compare our earnings with those we consider ourselves superior to.

Drop the "nice guy" stuff!

A fair price is simply the price agreed between a knowledgeable seller and a knowledgeable buyer.
I, for one, couldn't care less. I am not running for Mr. Nice Guy (and considering myself superior to a secretary is not being nice at all). I just want a higher standard of living. I'm not interested in how much a secretary or a sanitation worker earns or works. Even if could be proved, with objective, undisputable figures, that translators make ten times as much money as a secretary and work a lot less, it wouldn't make the slightest difference: I would still like to earn more and work less. My library is full of still-unread books, I miss a lot of concerts, and there is this vacation in Tahiti and all that.

This type of discussion about secretaries, sanitation workers and plumbers (or college tuition for our children) leads nowhere, and I refuse to engage in it. Strategically, it is a waste of time. Nobody will pay you more because you can prove that you are paid less than someone else. Why should they? Why should you be paid more than a plumber? Because you don't get your hands into you know what? C'mon, don't be such a bourgeois elitist. In fact, I wouldn't do a plumber's work for twice as much as I'm making.

The fallacy of the just price...

The general confusion in discussions about pricing translations is compounded by the assumption that there is a just price for our services. This just price would be based on our costs plus a just profit margin.

Anybody who is knowledgeable about cost accounting will tell you there are several acceptable ways to compute costs, and they yield different results. Tax authorities will accept some of them and reject others. Rejected methods are not necessarily any worse than the others; they may have been rejected because they result in a lower tax assessment, for instance.

In addition, systems that are accepted in some countries are rejected in others. Meaning that the "actual cost" computed according to rules accepted in Lower Slobovia might be absolutely unacceptable under the rules in effect in East Confusonia and vice-versa.

... the fallacy of just cost allocations...

The difference usually arises in connection with how we spread (allocate, in technical parlance) indirect costs over our services.

For instance, I spent a couple hundred Brazilian reais for a few more dictionaries the other day. How is this to be reflected in the cost of my translations? Would it be appropriate to charge a bit of the cost to each of my future translations, until the dictionaries become too dated to be of use (when is that?). Do I add a fixed charge to each translation? Do I add variable charges according to the number of words of each translation? Do I add a charge per time I look up something at the dictionary? If we are looking for "just figures" I cannot just say, "let's add 30% for the dictionaries".

Dictionaries, of course, are not the only indirect cost we incur. There is the problem of property, for instance. Because I work at home, my house is bigger than it would otherwise be. I have a big room at the back of the house, where I keep my professional stuff, including the library. So, the cost of this additional room should be added to the cost of my translations—except that my wife and I often use the office as a general "living" room, because we like to spend our free time listening to music and browsing our books. You go figure how to allocate the extra cost to our translations if you think it is worth the trouble. I don't have the time for this sort of metaphysical cost accounting exercise.

And we also have direct costs—but I think I can spare you that.

... and the fallacy of JUST margin

However, even if we could calculate costs, there is still the small matter of the just profit margin.

In the case of independent translators, the profit is really our wages. Meaning, supposing the client pays me LSD$ 12 (LSD$ is the abbreviation for Lower Slobovian Dinar, a fictitious currency, in case you don't know—we are not discussing actual fees here lest some ATA member will panic and stop reading) a word and supposing my costs are LSD$ 3 per word, then my margin / pay / wages would be LSD$ 9 per word. In other words, if the client assumed all costs and paid me LSD$ 9 per word, I would be in the same position as I would be if I charged LSD$ 12 and paid all the costs myself. Or we might say that I have a one-translator company (me) and I pay that translator LSD$ 9 per word and the company foots all the costs.

Now, this puts us back to square one: how much should a translator be paid. Please, don't come with that stuff about bilingual secretaries, I don't care a hoot what the salary of a secretary is and it's none of my business anyway. I have already said that before. I want to vacation in Tahiti and that's all. Is that too much to ask? A simple vacation in a quiet place for a hard-working man and his wife of many years?

In fact, everybody—including nice guys—tries to increase their own margins, because the margin is exactly what is left for us to live on and pay for that vacation.

If not on costs, then what on?

Economists do not talk about just prices. They refer to fair prices. The concept is totally different. A fair price is simply the price agreed between a knowledgeable seller and a knowledgeable buyer.

Why is that fair?

Simple. Imagine a large, established agency and an experienced, market-savvy translator discussing prices. After a few minutes, the translator agrees to accept the job at, say, LSD$ 11 per word (or per page, or per bag, whatever; we are dealing with examples, not with actual prices and, another thing, I am not engaging in is a discussion of the relative advantages of the Italian billing system over the German one), this is a fair price because neither party is a fool. However, if the same translator charges his neighbor LSD$ 11 a word for a translation, this is not necessarily a fair price, because the neighbor does not know the market and perhaps could have found a better price if (s)he knew his/her way around. Or the price may be too low, because the translator owes a favor to that particular neighbor and wants to be nice.

On the other hand, if an established agency agrees to pay a very high price for a job, this will also be a fair price, because the agency knows there is something in the job that warrants a higher price.

What warrants a higher price?

Any product or service can be defined in terms of three attributes: price, quality and delivery time. In a perfect market where all players are well-informed, if one of the attributes changes, it's because another one has changed too.

A problem of quality

Knowledgeable clients will pay more if the quality provided by translator is perceived as better and the clients perceive they need better quality. The key to the preceding sentence is "perceived". Let me explain it with two examples:

First: You go to the supermarket for tea, and a pretty young thing offers you a cup of some newfangled tea they are selling for twice the going price, alleging it is a very special blend. You taste it and cannot find the difference. So, you stay with your old brand.

Second: You go to a furniture shop for a new chair. The salesperson offers you two chairs: a very comfortable plain-vanilla thing that costs LSD$ 100 and a luxury chair, with fancy trimmings and stuff, that costs LSD$ 900. Although you recognize there is a difference in cost, you ask yourself why spend so much money for a prettier chair when the simple one will give you all the comfort you need, with LSD$ 800 to spare. You recognize the better quality, but you don't think you need it. You are just going to sit on the thing, not exhibit it in a museum of art anyway. The salesperson will insist that a more beautiful chair will enhance your working experience and increase productivity and so will actually be the cheaper buy, but you are too clever to fall for that and get the cheaper seat instead.

So, the client who pays for added quality is the client who not only can recognize higher quality, but also recognizes the need for it. Lucky is the translator who can find such clients.

The reverse side of quality

We can also see quality from the reverse side: "perceived difficulty". A client who perceives a translation to be more difficult will be prepared to pay more. This does not necessarily mean that the client will offer to pay more; it means the client may agree to pay more if he must. Entirely different things, you know.

Difficulty is related not only to content, but also to form and medium. Most clients classify texts by degrees of "technicality" meaning that some texts are considered "more technical" and thus more difficult than others. Personally, I don't think the "degree of technicality" is so important. I'm more concerned with form and medium.

A document that was poorly written is a lot more difficult to translate than a well-written text dealing with far more difficult matters. However, few clients recognize that. And of course, other things being equal, illegible faxes are more difficult to translate than Word documents, and PowerPoint jobs are usually a nightmare.

Of course, not all clients know or understand it. And if they understand it, sometimes they will pretend they don't.

The reverse side of price

Of course, translating plain Word documents at LSD$ 9 may be a lot better than translating PowerPoint slides at LSD$ 15, and the guy who refuses the first because he does not do "single-digiters" and accepts the latter because the rate is "above ordinary" may be ultimately hurt because of his erroneous ideas.

Fast turnaround and its reverse side

The timing factor is easier to recognize. A client with a rush job is usually prepared to pay a rush premium. The problem lies in defining what a rush job is and your definition is as good as mine. It certainly does not entirely depend on job size and turnaround time.

Four thousand words for tomorrow may mean a sleepless night if you are up to your ears in work, or the first well-slept night in a week if things have been a bit slack lately. And if you are religious, delivering on the day after a holy day may entail an amount of sacrifice that may not apply to people who have different creeds or no creed at all.

Again, the fair price theory applies: if a knowledgeable client is ready to pay a rush premium for a job, I see no reason why I should refrain from charging it. They are no fools.

Do newbies debase the market?

I must interrupt the flow of thought to discuss an issue that, for me, is very important. Does the newbie who charges less than I do debase the market?

This is an absurd claim often made by some old-timers. In most activities—the most obvious exception being cab-driving—seniority and experience help people into higher pay grades. In other words, if all translators were paid the same, the same guys would claim this is unfair to the experienced pros and there is no opportunity for progress in this profession. Some people are born complainers and are always in search of a cause for complaint.

Elsewhere I have touched on the same problem, but I am not sure I was clear enough about the relationship between quality and seniority. A newbie may often provide a translation of very high quality, a lot better than the product supplied by many old-timers—especially if translator hubris/naïveté is a factor. However, not all clients can deal with quality issues directly and have to evaluate quality based on the translator's experience or CV or recommendations—not the best of yardsticks.

However, if clients see a possibility of leveraging a discount based on a difference in value, real or fictitious, they certainly will take the best advantage of it. And there is nothing much the newbie can do.

The proof of the pudding...

In fact, there is much discussion on the matter of who can call themselves "translators." We will not go into that here, because I have dealt with this matter after a fashion elsewhere. But I must add the matter is far from settled. And I don't believe it can be settled by legislation in any country of the world. We may have to live with that for some time, yet.

Philosophum non facit barba

But, please, remember, that neither a college degree, nor long experience as a professional in a certain area, nor bilingualism, residence abroad, will guarantee that you or anybody else is a good translator. Only a good translation can be proof of that. You do not prove a pudding tastes great by showing a list of the ingredients or by telling who made it.

The end is neigh

This article is already getting too long. It is not a good article. Not very well organized, more of a patchwork of rehashed replies to e-mails than the logical exposition of a thesis. I deeply regret it. Translation fascinates me in all of its aspects but, while I think the theory and practice of translation are well served in currently available literature, the economic side, translation seen as a way to earn a living, as a professional activity, requires greater attention, attention that goes a little beyond the usual and illogical grumbles.

I wish I could write a book on the business of translating. As yet I cannot and so I write an article here and there dealing with a few details at a time. Before I declare this article ended and submit it to the editor of the Translation Journal, however, I must touch on two rather touchy matters: discounts and agencies.

Discount for what?

Years ago, a young doctor knocked at my door, with a sheaf of Xerox copies of medical articles and asked how much a translation would cost. He elaborately explained that there was no profit motive in the request; the translations would be used to support his doctoral dissertation on a certain obscure heart disease or another.

I was beginning my life as a translator and had very little to do, so I quoted a very low price (today I wouldn't do medical for anything) and did the job. I see nothing wrong with accepting a low-paying job when the alternative is doing nothing. You may not be busy with anything, but the landlord keeps claiming what is due to him. But, please, bear in mind that the translation did have a profit motive: the young doctor wanted a title, a promotion, a better salary, and tenure, all of which he got, due, in part to my efforts. So, there was no "charity" involved.

We get lots of requests like that. Just a little emotional blackmail, you know. Accept if you have nothing better to do. It's practice, it may bring you additional jobs and, eventually, you will graduate from "nice guy who translates for love" to "mercenary of translation" as I did. We also get requests from "charitable" operations—whose officers are paid very good salaries to do their jobs or to raise funds for the organization. Or from publishers who claim book publishing is not a real business in the particular country they operate—but live, well, on the profits of their publishing houses.

Whenever you are asked for a discount, remember that you cannot check LSD$ 130 worth of goods out of the supermarket with a LSD$ 100 bill, on the grounds that you earned the LSD$ 100 after you granted a discount to someone.

The same is true in the case of the agency that says, "it was a difficult bid, we had to bid very low and are on a tight budget; would you consider accepting X a word?" Well, again, if things are slack, by all means take the job. But not because the agency claims they had to bid low (which may be a lie, too), but because you have nothing better to do. In other words, charge low if you must, but don't be a fool.

Agencies

Perhaps it is fitting that this article should end with a comment on agencies. In the same manner translators often comment on the earnings of secretaries and plumber, they often bother about how much money agencies make. I have two comments on this: first, it is none of our business; second, no way we can know without a good look into the books. The fact that the agency pays you LSD$ 15 and sells the translation for LSD$ 25 does not at all mean that the owner is pocketing 40% of the proceeds, for the agency has expenses, too and very few of us know what they are.

I am sort of an exception, because I have had a good peek at some books here and there. And let me tell you: the markup is a lot more than the 25% that enrages so many translators, and agencies who add only 25% soon get into trouble and start paying late due to cash-flow problems followed by insolvency. And I'd rather receive on time from a guy who adds 100% to my bill than work for a guy who only adds an "ethical" 10% but does not pay me or needs half a dozen "reminders."

In fact, I don't give a hoot what the agencies, secretaries, plumbers, or airline pilots make. I just want to make a little more than I did in the past; that is all. Perhaps secretaries get a better pay. But I don't want to be a secretary. Or a plumber, for that matter. All I want is to be a translator. And earn a little more money. And work a little less for it. You know how it is.




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