Pegging translation rates to one world currency
Thread poster: Anil Gidwani

Anil Gidwani  Identity Verified
India
Local time: 05:57
German to English
+ ...
Jan 26, 2015

For those of us who market our services both in Europe and the US, what is a 'decent' rate becomes somewhat of an issue.

In both Europe and the US, I guess 0.10 cents/word can be considered a yardstick rate. At least, that's my assumption for this discussion.

Now 10 Eurocents/word works out to 13 United States cents/word, and 10 United States cents/word works out to 8 Eurocents/word. When quoting to US agencies, it makes sense to quote the US cent equivalent of the translator's normal Eurocent rate. So if my normal Eurocent rate is EUR 0.11/word, I would quote USD 0.14/word. Unfortunately, US agencies consider the resulting US cent rate to be too high, since it easily exceeds 0.10 cent/word, also considered the yardstick in the US.

It's really a question of the psychological barrier of 10 cents/word. US agencies consider anything above USD 0.10/word to be a high rate, whereas European agencies consider anything above USD 0.13/word (that is, EUR 0.10/word) to be high. I've had to argue with US customers on my rates, pointing out that I am only charging European rates converted into USD, but they aren't too happy in most cases.

Short of setting two different rates for the two different markets, can the translation industry agree on one currency for rate-setting? Just as oil prices are pegged to the dollar, could translation rates be pegged to the EUR (or less preferably to the USD, since the EUR is likely to be higher than the dollar for the foreseeable future)?


[Edited at 2015-01-26 11:07 GMT]


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Kudzai
Zimbabwe
Local time: 02:27
English to NdebeleNorth
+ ...
Agreed Jan 26, 2015

I also believe we need to have one standard currency to use for quotes. US cents sounds more appealing to me.

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Thomas T. Frost  Identity Verified
Member (2014)
French to Danish
+ ...
Not so much difference any more Jan 26, 2015

Anil, you don't seem to have noticed that the euro has plummeted in January (http://www.ecb.europa.eu/stats/exchange/eurofxref/html/eurofxref-graph-usd.en.html) and may well plummet further because of quantitative easing ('money printing') and uncertainty over Greece. It plummeted so much that the Swiss National Bank could no longer defend their peg of 1.2 to the euro, and the Swiss franc skyrocketed as a result.

The European Central Bank's last reference rate from Friday was 1.1198 (http://www.ecb.europa.eu/stats/exchange/eurofxref/html/index.en.html), or 1.12 for all practical purposes.

This obviously reduces the present problem you describe, but not completely. Your figures would have been correct last year but not today.

So, can the translation 'industry' agree on quoting in just one currency, you ask. You probably also know the answer, no, because the 'industry' consists of thousands of independent translators who are unlikely to agree on this. Many would protest against seeing their income go up and down with exchange rates when their expenses remain the same.

Each translator can of course decide to set two different rates in two different currencies, but if exchange rate changes then end up making these two rates very different (when compared in one currency), then the smart customer will ask to pay in the cheapest currency.

There is no 'miracle cure' to this issue. I set my rates in my local currency, euro, and the equivalent in other currencies follow the exchange rate. There will always be some agencies who find your rate too high unless you work for nothing, no matter how you set your rate.

The lower value of the euro should help translators quoting in euro, as their rates automatically have become lower seen from abroad. It will also make it more expensive for eurozone agencies to purchase abroad, i.e. it will make local eurozone translators more competitive.


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Thomas T. Frost  Identity Verified
Member (2014)
French to Danish
+ ...
Currency Jan 26, 2015

Kudzai wrote:

I also believe we need to have one standard currency to use for quotes. US cents sounds more appealing to me.


You will probably find that many in the eurozone will prefer euro, and who is then to decide who is right and who is wrong? Why would all agencies in the eurozone suddenly start asking for quotes in dollars? Can you imagine US agencies accepting to ask for quotes in euro? I can't.

The thing is, there is no way of enforcing only a single currency for quotes. Freelance translators can set their rates as they want, and if an agency wants another currency, only the two can decide the result.


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Sheila Wilson  Identity Verified
Spain
Local time: 00:27
Member (2007)
English
+ ...
I don't think we have the same clout as OPEC, Anil :) Jan 26, 2015

Thomas Frost wrote:
can the translation 'industry' agree on quoting in just one currency, you ask. You probably also know the answer, no, because the 'industry' consists of thousands of independent translators who are unlikely to agree on this. Many would protest against seeing their income go up and down with exchange rates when their expenses remain the same.

Absolutely. I for one would not be prepared to run my business that way. I spend euros, and I need a certain number of them each month if I'm to pay all my bills.

I work with US-based clients sometimes, and clients in many other parts of the world apart from the EU (Russia, Ukraine and Switzerland this month). I quote in EUR to them all - that's the base currency of our relationship. However, I'm happy to receive the equivalent in USD or GBP. Rather than adjusting the rate for each invoice (which would take too much admin), I'm happy to quote an equivalent in another currency, but I reserve the right to amend that rate, in either direction, if there are major fluctuations in the exchange rate. If that makes me suddenly too expensive for them at some point in the future, so be it.

I can't accept a drop in my rate just because they can't pay. It doesn't matter that the reason is entirely outside their control. I'm running a business and it doesn't make sense to do anything other than insist on clients paying the normal rate for my services. I can't force them to pay what for them is a higher rate; neither can they force me to work for less. There are plenty of other clients out there. Let's keep the "free" in freelancer, please.


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Anil Gidwani  Identity Verified
India
Local time: 05:57
German to English
+ ...
TOPIC STARTER
Yes, but we are a truly global industry Jan 26, 2015

I agree, Sheila, we certainly don't have the same clout as OPEC. But the translation industry is unquestionably a global industry where it is easier to do cross-border business than in any other industry, with no tariff barriers standing in the way either!

I like your approach of sticking to your EUR rate and asking clients in other currencies to pay the equivalent USD or other currency. I have the same approach, as a matter of fact. But it does restrict the client base, since many USD clients find my rates too expensive, which European clients would not.

Some other posts suggest the USD-EUR rate will reach parity. I disagree, I think the EUR will continue to remain priced at 1.x for a dollar, just like the GBP. The Swiss franc has always been artificially pegged to the EUR since the latter's inception, and with that peg dismantled, it's now finding its market level which happens to be higher, hence the wild swing. That is unlikely to happen between the EUR and the USD.

If all international freelancers saw the wisdom of quoting in EUR, given the higher USD returns it currently fetches, the discrepancies in prices between the US and Europe would come down. While I'm sure US freelancers would continue to quote in USD, even they would benefit by quoting in EUR. Non-US freelancers would find quoting in EUR beneficial, for the most part.

As a matter of fact, one of my clients tried to get me to bill in USD a few years ago, when the EUR was touching 1.4 to the dollar. I'm sure they knew they would get a 40% discount right off the bat, but I insisted on billing in EUR, and they thankfully agreed.

It has to be voluntary. No one can force anyone to quote in a preferred currency. As freelancers, we should try to evolve a standard, be that EUR (my preference) or USD, or GBP or even the Swiss franc!


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Thomas T. Frost  Identity Verified
Member (2014)
French to Danish
+ ...
Currency Jan 26, 2015

Anil Gidwani wrote:

Some other posts suggest the USD-EUR rate will reach parity. I disagree, I think the EUR will continue to remain priced at 1.x for a dollar, just like the GBP. The Swiss franc has always been artificially pegged to the EUR since the latter's inception, and with that peg dismantled, it's now finding its market level which happens to be higher, hence the wild swing. That is unlikely to happen between the EUR and the USD.


The Swiss franc was only pegged to the euro in 2011 in an act of desperation over the euro crisis that drove the Swiss franc up as money went into that currency as a safe haven.

Maybe you are thinking about the Danish krone which has always been pegged to the euro, but even that peg could be abolished by Denmark if they wanted - or if market pressures became too powerful for defending the peg.

Nobody can predict future exchange rates. You think the euro will remain at 1.xx, but if you look at the early years of the euro, you will see that it has already been below parity for several years. There is a lot of uncertainty around the euro because the structural problems with the foundation of the euro as an artificial currency have never been solved. The euro is a gigantic monetary experiment never attempted before, because there is no single government responsible for the euro, and fiscal transfers are impossible. That has led to what wise people predicted as early as 1995, huge internal imbalances between the eurozone members, economic crisis and mass unemployment. The euro simply cannot work with its present structure, so the euro crisis will continue until we either get a full fiscal union or the euro breaks apart. The southern European eurozone members need a huge devaluation to regain their lost competitiveness. The drop in the euro value will help them, but it is too little too late, and Germany now risks revolting over QE because Germany's condition for entering into the euro was the Stability Pact and no fiscal transfers, conditions that are now breached. The German Supreme Court has already ruled against some of the German Bundesbank's participation in the ECB's activities because it would violate the German Constitution, and more legal action is underway.

If you are really interested in the problems, I can recommend the book "The Rotten Heart of Europe" by Bernard Connolly, former head of the unit responsible for the European Monetary System and monetary policies in the European Commission but fired after he told the truth about the euro in that book.

I would not keep savings of importance in euros. If a breakup comes, it will happen very quickly, and deposits could be redenominated in national currencies overnight, national currencies that would very quickly be devalued across large parts of the eurozone, perhaps except in Germany. I can obviously not predict that the euro will break up, but there is an unquantifiable risk that it will.

At least the crisis presently means increased competitiveness for those whose rates are in euro, but nothing is forever in the monetary world.


If all international freelancers saw the wisdom of quoting in EUR, given the higher USD returns it currently fetches, the discrepancies in prices between the US and Europe would come down. While I'm sure US freelancers would continue to quote in USD, even they would benefit by quoting in EUR. Non-US freelancers would find quoting in EUR beneficial, for the most part.


The wisdom is different from one translator to the next and depends on how exchange rates move.


It has to be voluntary. No one can force anyone to quote in a preferred currency. As freelancers, we should try to evolve a standard, be that EUR (my preference) or USD, or GBP or even the Swiss franc!


The de facto standard seems to be the major currencies, but I see no interest in accepting any 'standard' that would conflict with my own interests, which is rate stability in the currency my expenses are in. I will not abandon my freedom to be able to set my own rates and currency. Others can set 'standards' for themselves if they want.


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Andrea Halbritter  Identity Verified
France
Local time: 01:27
French to German
+ ...
I only accept € Jan 26, 2015

I only accept Euros and want to continue to do so. I do work with clients all over the world and this is not a problem for them.

Also for me 0,10 € per source word is a really low rate which I only accept for big projects I absolutely want to do.


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Samuel Murray  Identity Verified
Netherlands
Local time: 01:27
Member (2006)
English to Afrikaans
+ ...
Adjust your rate to the market Jan 26, 2015

Anil Gidwani wrote:
Short of setting two different rates for the two different markets, can the translation industry agree on one currency for rate-setting?


No, I think it's much simpler to just set different rates for different markets. I myself work in five different markets and I have five different "usual" rates, in four (not five) different currencies. In countries where clients are more used to dealing with non-local service providers, one can get away with quoting in one currency and then convert it to the client's currency. My feeling is that the USA is not such a market, however, and you'd be hard-pressed to convince a USA client to accept EUR.

If you can't get the equivalent of EUR 0.10 from a USA client, then the reduced rate is simply the cost of doing business with clients from the USA. You are free to choose not to work for USA clients.

==

Anil Gidwani wrote:
I like [the] approach of sticking to your EUR rate and asking clients in other currencies to pay the equivalent USD or other currency. ... But it does restrict the client base, since many USD clients find my rates too expensive, which European clients would not.


Yes, and your theory is that it has to do with the fact that "10" looks better on paper than '"13". But that is simply because your example is "10". My numbers for my five markets are 70, 12, 9, 7 and 6.

Some other posts suggest the USD-EUR rate will reach parity.


Even if it does, the market is not ruled by the exchange rates. The price of a service in a country tends to remain constant, regardless of whether the country's currency goes up or down. Even if the price does not remain constant, but fluctuates, it fluctuates due to influences other than the strength of the local currency.

In June 2010, the EUR:USD exchange rate was 1:1,20. Barely a year later, it was 1:1,45. A year later it was 1:1,20 again. Two years later it was back up at 1:1,39, and six months later it was down again, at 1:1,15. The price of translation in the USA, paid by USA clients for USA translators, did not fluctuate like this.

Between 2003 and 2007, my GBP rate and my EUR rate worked out to about the same. After 2007, the GBP weakened tremendously, but I still quote the same GBP rate as I did in 2007, which means that I earn less from UK clients (when converted to EUR) than I did five years ago. I don't raise my UK rate because that is what UK clients typically offer for my language combination, even today, and so I assume that that is what my language combination is worth in that market.


[Edited at 2015-01-26 14:18 GMT]


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Sheila Wilson  Identity Verified
Spain
Local time: 00:27
Member (2007)
English
+ ...
But that doesn't make sense Jan 26, 2015

Anil Gidwani wrote:
As a matter of fact, one of my clients tried to get me to bill in USD a few years ago, when the EUR was touching 1.4 to the dollar. I'm sure they knew they would get a 40% discount right off the bat, but I insisted on billing in EUR, and they thankfully agreed.

As said, I'm happy to invoice a US client in dollars. But if I quote for a job in euros, the only time I would then send an invoice in dollars of the same numerical amount (e.g. EUR 100 becomes USD 100) is if there's parity between the two currencies. You don't just switch the currency symbol, whatever the exchange rate - that makes no sense at all!


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Anil Gidwani  Identity Verified
India
Local time: 05:57
German to English
+ ...
TOPIC STARTER
It was a fixed price contract Jan 26, 2015

Sheila Wilson wrote:

Anil Gidwani wrote:
As a matter of fact, one of my clients tried to get me to bill in USD a few years ago, when the EUR was touching 1.4 to the dollar. I'm sure they knew they would get a 40% discount right off the bat, but I insisted on billing in EUR, and they thankfully agreed.

As said, I'm happy to invoice a US client in dollars. But if I quote for a job in euros, the only time I would then send an invoice in dollars of the same numerical amount (e.g. EUR 100 becomes USD 100) is if there's parity between the two currencies. You don't just switch the currency symbol, whatever the exchange rate - that makes no sense at all!


Well, they did try to switch the currency for a fixed price contract!


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Balasubramaniam L.  Identity Verified
India
Local time: 05:57
Member (2006)
English to Hindi
+ ...
I always keep the dollar in my mind Jan 27, 2015

I always have a dollar rate in mind which I try to achieve with all my clients, even when quoting my rates in other currencies such as the euro, CAD, AUD, pound, etc. I convert my dollar rate to these currencies and quote.

I have also found the dollar to be the most stable currency in the last several years. The euro has had the most ups and downs, and currently it is doing quite badly - it is almost achieving parity with the dollar, which is a tremendous downward trend for it. At one time, it used to be 1.5 dollars to a euro. Given the economic stagnation in Europe, I expect this situation to worsen in the coming years.

Sticking to one currency also allows you to escape being manipulated by your client who would want to pay you in the cheapest currency going at the time. So when the euro does badly, the client would request you to bill in euros, and when the dollar is in trouble, he would want you to accept the dollar.

But I think, these are mostly issues with the penny-pinching type of agencies. The really professional and quality-conscious clients usually don't bother much about your rate moving cent or two this side or that side of some accepted norm due to currency fluctuations.

Also, I disagree that 10 US cents per word is a fair rate. I would put it more near 12 or 15 cents. 10 cents is definitely on the lower end of the rate spectrum, and applies only to the middle translation geographies like eastern Europe, Latin America, China, etc. The top regions like the US, Canada, UK, Germany, France, etc., can take much higher rates.


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564354352  Identity Verified
Denmark
Local time: 01:27
Danish to English
+ ...
All for one, one for all? Jan 27, 2015

Nahhh.... that would never work. And you will never get an entire industry of independent professionals to agree on this... or on anything else for that matter.

Personally, I would scream and shout and kick about if anyone tried to tell me how to run my business, whether that be regarding pricing or anything else.

In terms of invoicing, all my prices are based on what I want to earn for my work, and that has nothing to do with 'industry averages' or 'agency expectations'. I have decided on my price in Danish kroner, and when I invoice Danish clients, obviously, I invoice them in DKK. If I invoice a British client, I will invoice them in GBP. If I invoice a client in any other European country, I will invoice them in €, unless they prefer their own currency. It makes no difference to me whatsoever. The price will be based on my DKK price, converted into whatever currency is convenient for my clients.

Oh, and I generally don't work with American clients, so USD is completely irrelevant to me...


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Peter Linton  Identity Verified
Local time: 00:27
Member (2002)
Swedish to English
+ ...
World currency - Bitcoin ? Jan 27, 2015

Anil Gidwani wrote:
...can the translation industry agree on one currency for rate-setting? Just as oil prices are pegged to the dollar, could translation rates be pegged to the . . .

Bitcoin? Nobody has mentioned it yet, though surely it is the closest thing there is to a world l currency? Though I admit I do not want to be a pioneer just yet.


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