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Off topic: (Not) Giving Discounts
Thread poster: Jan Willem van Dormolen

Jan Willem van Dormolen  Identity Verified
Netherlands
Local time: 19:04
English to Dutch
+ ...
Apr 9, 2013

I saw a presentation by Dutch management guru Jos Burgers, with a few eye-openers on giving discounts:

"Giving discounts will bring you more work, but not more money. You will be busier, for the same profit. That is not something to strive for."

"Giving a discount basically tells the client: I tried to rip you off earlier, but unfortunately I failed."

Not to be taken literally, but interesting nonetheless.


 

Marie-Helene Dubois  Identity Verified
Spain
Local time: 19:04
Spanish to English
+ ...
Brilliant Apr 9, 2013

Infallible logic. I like it.

 

neilmac  Identity Verified
Spain
Local time: 19:04
Spanish to English
+ ...
Judge not Apr 9, 2013

I give discounts when I feel like it. I don't do this because I'm desperate to gain more customers or more work. I simply do it because I can, usually as a gesture of appreciation to loyal, regular clients.

For example, last week I translated 37K words for one long-standing client and at the end of the project I decided to give them a spontaneous 10% discount and informed them I would only charge them for 33K. Funnily enough, they had intended to ask me for a discount anyway, but I got in first. In the end they'd forgotten about 4K that I'd translated in January as part of the same project, so they ended up paying me the original sum I'd wanted, and they felt they'd been given special treatment, so everyone was happy.

Money isn't everything.

PS: While I understand the logic, and occasionally express myself in similar jaded fashion, I find the "rip-off" comment particularly cynical, as I've never set out to fleece any of my clients.



[Edited at 2013-04-09 07:50 GMT]

@Michael W: Am not sure if the comment is tongue-in-cheek, but out here in my parallel universe I take it as a compliment anywayicon_smile.gif

The laws of economics? I prefer Sod's law...
http://www.heretical.com/miscellx/sodslaws.html

[Edited at 2013-04-09 09:59 GMT]

[Edited at 2013-04-09 09:59 GMT]


 

Olly Pekelharing  Identity Verified
Netherlands
Local time: 19:04
Member (2009)
Dutch to English
Discount included in the price Apr 9, 2013

What about when the discount is included in the price? I.e. the seller includes 10% or so that they expect you to haggle off. It's something I've never been able to get my head around.

 

Jan Willem van Dormolen  Identity Verified
Netherlands
Local time: 19:04
English to Dutch
+ ...
TOPIC STARTER
"Not to be taken literally" Apr 9, 2013

neilmac wrote:

I give discounts when I feel like it. I don't do this because I'm desperate to gain more customers or more work. I simply do it because I can, usually as a gesture of appreciation to loyal, regular clients.

Money isn't everything.

PS: While I understand the logic, and occasionally express myself in similar jaded fashion, I find the "rip-off" comment particularly cynical, as I've never set out to fleece any of my clients.



[Edited at 2013-04-09 07:50 GMT]


Of course, these comments aren't to be taken literally, that's why I wrote "Not to be taken literally". Just food for thought.


 

Michael Wetzel  Identity Verified
Germany
Local time: 19:04
German to English
When discounts bring you more money ... Apr 9, 2013

The secret is to just be reasonable:

New or unsuccessful translators can make more money by offering discounts: If the alternative is between discount or idle time, then discounts may make sense. For example, if someone can work 100 hours to make 2000 euro or 50 hours to make 1500 euro, then both choices might be reasonable depending on the circumstances.

Discounts for extraordinarily long delivery dates might also make sense, even for more established translators: Again, they can fit the project in somewhere along the line and ultimately make more money by avoiding idle time.

A translation customer would have to be extremely stupid to think that a discount indicates inflated normal prices: We all work with profit margins that are gigantic in comparison to manufacturers, retailers, etc. because the variable costs of producing a translation are tiny. At the same time, we need these margins, because they reflect the limited amount of time that we have.

And then there is neilmac, who is living proof that, as a good freelancer, it really is possible to simply construct a parallel universe where economic laws do not apply. That might be the most reasonable strategy of all.


 

Philippe Etienne  Identity Verified
Spain
Local time: 19:04
Member
English to French
How weird a thought Apr 9, 2013

Michael Wetzel wrote:
...We all work with profit margins that are gigantic in comparison to manufacturers, retailers, etc. because the variable costs of producing a translation are tiny. At the same time, we need these margins, because they reflect the limited amount of time that we have...

Such thinking seems to be widespread amongst outsourcers who do us favours offering 25 euros/hour before tax. That's 600 euros gross/day, after all.

What you don't seem to factor in is that a profit margin takes staff wages/benefits into account. As my time is insanely expensive, I don't make any profit margin.

Philippe


 

Marie-Helene Dubois  Identity Verified
Spain
Local time: 19:04
Spanish to English
+ ...
Justified and unjustified discounts Apr 9, 2013

There is a difference though between justified and unjustified discounts.

There is logic in offering a discount for some added value that the client can offer you (whether this is a longer delivery time, a bulk order, a recommendation etc.). There is no logic in offering a discount for nothing in return.

A client once asked me to estimate what I would charge for a particular job of 10,000 words. I gave him my estimate and he replied sending me the text which contained over 11,000 words asking me to do the job for half of what I had initially estimated.

To me, that's not negotiation, that's haggling, and I don't haggle with clients. I remember asking at the time what he would think if I had said yes, that my initial estimate had been double what I was willing to accept? I see this sort of situation as being relevant to the concept of "I tried to rip you off earlier but I failed".

I remember always getting irritated when I lived in a village in Spain and the upholsterer used to come around the streets in his van and megaphone. Apart from the fact that he always cried out 'Señoras' on his megaphone, as if men didn't need upholstery services, he always used to advertise 'discounts on everything!'

People rarely would understand when I'd argue that if a discount's on everything, it's not a discount, it's the price.


 

Olly Pekelharing  Identity Verified
Netherlands
Local time: 19:04
Member (2009)
Dutch to English
"if a discount's on everything, it's not a discount, it's the price." Apr 9, 2013

Precisely. That's why I avoid shops with 'clearance' and 'closing down' sale signs in their windows almost as a matter of principal, particularly if they've been hanging there for several years... Their stuff isn't discounted, it's just cheap.

 

Back to basics
Brazil
Local time: 14:04
Member (2012)
English to Dutch
+ ...
Exactly Apr 9, 2013

Marie-Helene Dubois wrote:

There is a difference though between justified and unjustified discounts.

There is logic in offering a discount for some added value that the client can offer you (whether this is a longer delivery time, a bulk order, a recommendation etc.). There is no logic in offering a discount for nothing in return.

I remember always getting irritated when I lived in a village in Spain and the upholsterer used to come around the streets in his van and megaphone. Apart from the fact that he always cried out 'Señoras' on his megaphone, as if men didn't need upholstery services, he always used to advertise 'discounts on everything!'

People rarely would understand when I'd argue that if a discount's on everything, it's not a discount, it's the price.


A discount is indeed only valid if one gets something in return and both parties benefit from it.

Living in Brazil, I know exactly what you mean. If people systematically give you discounts, it means that there is a problem with the initial "price". People here just expect discounts, which means that the prices you see are inflated in order to be sure that - after giving a discount - the seller still makes a profit. You can bet that I now ALWAYS ask for a discount. If people want it stupid, they can get it stupid. People who function in these systems think they are so smart, whereas, in the long run, it does nobody good. There is a difference between intelligent and shrewd!


 

Michael Wetzel  Identity Verified
Germany
Local time: 19:04
German to English
Were you disagreeing with me? Apr 9, 2013

Philippe Etienne wrote:

Michael Wetzel wrote:
...We all work with profit margins that are gigantic in comparison to manufacturers, retailers, etc. because the variable costs of producing a translation are tiny. At the same time, we need these margins, because they reflect the limited amount of time that we have...

Such thinking seems to be widespread amongst outsourcers who do us favours offering 25 euros/hour before tax. That's 600 euros gross/day, after all.

What you don't seem to factor in is that a profit margin takes staff wages/benefits into account. As my time is insanely expensive, I don't make any profit margin.

Philippe


I was not talking about people's difficulties in comparing salaries (100% paid work time, employers' payments towards benefits, and paid vacation, holidays, and sick leave, etc.) and freelancers' earnings. I certainly don't disagree with you that the 20-30 EUR in my example or the 25 EUR in yours are low hourly earnings for freelancers.

I never studied business, so maybe I'm mixing up my terms, but with "profit margin" I meant the difference between what I spend to create a product and what my customers pay me to give it to them. With "variable costs of production" I meant how much more it costs me to create an individual instance of my product vs. just sitting around.

I wasn't interested in the particular prices at all, I just wanted to point out that making a moral issue or an issue of principle out of discounts is not a very good way for us to run our businesses. It's different for freelancers who outsource or who hire external proofreaders, but otherwise it would be very hard to fall under a profit margin of 90% (wear and tear on computer, .0001% of power bill by having computer on instead of off, wear and tear on my chair and desk ... What does a translation [as opposed to a day in the park] really cost us?). Fixed costs are a lot higher, but we have them whether we take on a particular translation or not.

P.S. to neilmac: My comment to you was meant absolutely sincerely (even if I felt the need to express this admiration in an ambiguous way). I've seen your comments on this general topic before, and I respect your way of doing things.


 

Jean Lachaud  Identity Verified
United States
Local time: 13:04
English to French
+ ...
Fuzzy math Apr 9, 2013

Me, I count a work day at 8 hours. @25 euros/hr, that is 200 euros.

I can't figure out this 600 euros total, since that would require working 24 hours straight.

Me, I can't do that, and I won't even try.


Philippe Etienne wrote:

Such thinking seems to be widespread amongst outsourcers who do us favours offering 25 euros/hour before tax. That's 600 euros gross/day, after all.



 

Alex Lago  Identity Verified
Spain
Local time: 19:04
Member (2009)
English to Spanish
+ ...
Flaud economics Apr 10, 2013

Michael Wetzel wrote:
...We all work with profit margins that are gigantic in comparison to manufacturers, retailers, etc.


When a manufacturing company makes a product their profit margin is what is left after paying all the expenses the company has, that includes the wages for all the employees, from the company CEO to the lowest paid employee. Never forget time is an expense too, that is why employees get paid, for their time, so your time is an expense and therefore every minute you spend translating costs you money.

So how much is your time worth? Deduct that from your income and I very much doubt you will have any "profit margin" left never mind a gigantic profit margin.

Profit is what is left after all expenses have been paid if translators had gigantic profit margins we would all be rich.


 

Michael Wetzel  Identity Verified
Germany
Local time: 19:04
German to English
time is not an expense Apr 10, 2013

Hello Alex,

Somehow I didn't express myself clearly. I don't really disagree with you or Philippe, but I think I am making a significant point that you are missing.

I am not an agency and I am not trying to tell translators to work for less or that they earn too much.

Time is not an expense: Wages are an expense. Every minute that I spend translating costs me only a very tiny amount of money.

If I only earned 1000 EUR per month, but only had (business) expenses of 100 EUR per month, I would have a profit of 900 EUR per month. I would indeed have a gigangtic profit margin (90%), but my family and I would be living in (private) poverty.

My point was simply that discounts can make economic sense for beginning translators and that discounts for extremely long deadlines (in relation to volume) can make sense for many other translators.

This is also not meant to serve as a justification for agencies' demands for volume discounts: These discounts make them dependent on either rational but inexperienced or otherwise unsuccessful translators who accept them for sound economic reasons (based on their difficult situation) or irrational translators who accept for God knows what reason, even though they already have more work than they want and need.


 

Alex Lago  Identity Verified
Spain
Local time: 19:04
Member (2009)
English to Spanish
+ ...
Sorry don't agree with you there Apr 10, 2013

Michael Wetzel wrote:
Time is not an expense: Wages are an expense. Every minute that I spend translating costs me only a very tiny amount of money.


I'm sorry but I just can't agree with you on that, time is money and therefore time is an expense, all the time I spend translating is time I can't spend on anything else. Wages are simply the way in which the time expense is paid for.


 
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