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What is reasonable to agree about when it comes to volume discounts?
Thread poster: Fredrik Pettersson

Fredrik Pettersson  Identity Verified
Hong Kong
Member (2009)
English to Swedish
+ ...
Feb 23, 2016

What is reasonable to agree about when it comes to volume discounts (if they at all should be given)?



[Edited at 2016-02-23 03:30 GMT]


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Yael Ramon  Identity Verified
Israel
Local time: 23:32
German to Hebrew
+ ...
why volume discount? do you work less when you have more work? Feb 23, 2016

you are not producing goods in a 24/7 chain factory ran by robots.
your product is time/effort/health consuming.
There is no reason to underestimate yourself.

i can understand discount on repeated words/phrases in an existing TM. but i cannot accept the approach of working more for less.


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Jack Doughty  Identity Verified
United Kingdom
Local time: 22:32
Member (2000)
Russian to English
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Do you mean volume surcharge? Feb 23, 2016

By undertaking a big job, you will have to turn down offers of other, possibly more lucrative, work. You risk upsetting your other customers because you are never available, and losing them.

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Yasutomo Kanazawa  Identity Verified
Local time: 06:32
Member (2005)
English to Japanese
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Seconded, except Feb 23, 2016

Yael Ramon wrote:

you are not producing goods in a 24/7 chain factory ran by robots.
your product is time/effort/health consuming.
There is no reason to underestimate yourself.

i can understand discount on repeated words/phrases in an existing TM. but i cannot accept the approach of working more for less.


I give discounts on repeated words/phrases in an existing TM, but not the ONES I created from scratch.


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Laura Kingdon  Identity Verified
Canada
Local time: 17:32
Member (2015)
French to English
+ ...
I don't give them. Feb 23, 2016

I've never understood how it benefits me to agree to do more work at a lower rate. As Jack said, it means I'll likely be turning down other work which would be paid at my regular rate, so I'd be losing money.

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Matthias Brombach  Identity Verified
Germany
Local time: 23:32
Member (2007)
English to German
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Fully reasonable... Feb 23, 2016

...when you want to make a vendor believe, that you are just sitting all the day over in your office waiting desperately for work.

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Dan Lucas  Identity Verified
United Kingdom
Local time: 22:32
Member (2014)
Japanese to English
Zero discounts for volume Feb 23, 2016

Fredrik Pettersson wrote:
What is reasonable to agree about when it comes to volume discounts (if they at all should be given)?

None.

If you're a manufacturing company and fixed costs (e.g. factory and other rent, salaries, depreciation etc.) make up 30% of your total costs, those costs don't change when sales rise. That means that profits increase more rapidly than revenue when production volumes go up. That's why manufacturers typically discount their prices for larger orders - their profits really do rise with volumes.

For a translator like yourself, your main "cost" is your time, because you could use the time to make money in other ways. Basically it's a kind of opportunity cost.

The point is that if you translate for ten hours instead of five hours, your revenue doubles but so do your costs - your profit per hour is the same. There is no "volume effect". It is, at best, disingenuous of the agency to imply such a thing.

Moreover, the more volume you take on from a specific client, the less time you will have for other clients. This makes you more dependent on that first client. It is not a good situation to be in and you should avoid it, not encourage it by offering discounts.

If you give the client a discount for a large job you are (a) discouraging other clients from working with you because you make yourself non-available for long periods of time and (b) locking yourself in at a lower than normal rate. Why would you do that?

Regards
Dan


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Chris S  Identity Verified
United Kingdom
Member (2011)
Swedish to English
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Actually Feb 23, 2016

Dan Lucas wrote:

If you give the client a discount for a large job you are (a) discouraging other clients from working with you because you make yourself non-available for long periods of time and (b) locking yourself in at a lower than normal rate. Why would you do that?


Because you cut out all that unpaid dead time between jobs, have less admin, need to do less research, translate more words per hour, etc, etc.

If the deadline is generous you can still keep other clients happy.

And above all it means they don't give all that lovely work (and money) to someone else...

But I don't give discounts, though. Point of principle. Ask for a discount and I'll charge a premium.


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Jan Truper
Germany
Local time: 23:32
Member (2016)
English to German
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... Feb 23, 2016

I occasionally give a tiny discount for very large jobs that I find really interesting.
I don't do this across the board, just for specific projects.

do you work less when you have more work?


Actually, you do: there's less overhead (time spent on e-mails, invoices, familiarization with terminology, formatting, etc.).

By undertaking a big job, you will have to turn down offers of other, possibly more lucrative, work. You risk upsetting your other customers because you are never available, and losing them.


That's a valid point, but it can be offset by negotiating a very gentle deadline.

Cheers,
Jan


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Michael Wetzel  Identity Verified
Germany
Local time: 23:32
German to English
not in general Feb 23, 2016

But if you consistently do not have enough work and you can't find a better solution than reducing your rates, I suppose calling that reduction a "volume discount" might be good for marketing and negotiating purposes.

I don't give reductions of this kind and I wouldn't want to hire a translator who does (because, like low prices in general, I usually interpret them to mean that a translator is either new or unsuccessful).

Discounts for very generous deadlines (requiring maybe 5% of your typical daily output over the course of a project, enabling you to use the project to fill the gaps that inevitably pop up in a freelancer's schedule) have been discussed here before and may or may not make more sense. I've tried this before and it was OK, but I wouldn't do it again, because you have to be very disciplined to turn this potential advantage into a real advantage.


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Samuel Murray  Identity Verified
Netherlands
Local time: 23:32
Member (2006)
English to Afrikaans
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Sole practitioners should not give volume discounts Feb 23, 2016

Fredrik Pettersson wrote:
What is reasonable to agree about when it comes to volume discounts?


Volume discounts make sense if you can make more money by charging less per unit. There are industries in which that actually works, and suppliers are happy to give volume discounts because it means they get more money for less effort.

However, a sole practitioner who already works at maximum speed will not make more money for less effort if he gives a volume discount. Unless the volume actually allows him to work faster... but that really depends on the type of text, and it can really only be measured after the job is completed.


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Philippe Etienne  Identity Verified
Spain
Local time: 23:32
Member
English to French
Boredom factor Feb 23, 2016

Indeed, high volumes may lead to less admin and less non-earning time.
But all these potential benefits are offset by missing other opportunities and how bored you get after translating the same subject for weeks, while maintaining consistency with ever greater volumes of text.

Although many agencies tell you that volume discounts will allow you to receive more work from them, I have never been interested in getting more work at lower rates.

All things considered, I think the time saved per earning unit and economies of scale are very marginal, if not wishful thinking from some agencies.

Philippe

EDIT:
Besides volume discounts requested for one-offs, there are also more imaginative volume discounts devised for "long-term collaborators":
I have unearthed an "offer" from an agency to let you know what they expected from incumbent translators. It was in 2008, so before the credit-crunch excuse to "offer" all sorts of other price cuts.
The approach was based on yearly billing: 2% discount for the €5k-10k bracket (gift of up to €200/year), 4% for the €10k-15k bracket (+gift of up to €200/year), etc.

[Edited at 2016-02-23 10:16 GMT]


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Georgie Scott  Identity Verified
France
Local time: 23:32
Member (2009)
French to English
+ ...
This Feb 23, 2016

Jack Doughty wrote:

By undertaking a big job, you will have to turn down offers of other, possibly more lucrative, work. You risk upsetting your other customers because you are never available, and losing them.


The fact that volume discounts exist shows a sizeable percentage of clients still don't understand how translation works.


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Sheila Wilson  Identity Verified
Spain
Local time: 22:32
Member (2007)
English
+ ...
Economies of scale Feb 23, 2016

Economies of scale don't apply to intellectual services like ours. We only have one brain each, and it needs to rest. By going the "higher volume for a lower unit rate" route you will likely think you're doing very nicely for a while. The money will roll in, even though you may not have much free time to enjoy it.

But consider the potential downsides:
- Burnout
- Loss of motivation due to getting stale (that kicks in before burnout)
- Poor self-esteem as it dawns on you that you're just becoming a machine: A-type words in; B-type words out, all day long
- Loss of marketing and negotiating skills
- Loss of client base as you say "No" too often
- New clients who might have really interesting work at higher rates have to be turned away
- Risk inherent with having all your eggs in one basket (as a freelancer, your contract applies only to the words received so far; and the client just may stop sending anything at all, with no comeback possible)
- Poor negotiating position with client as you depend so much on them that you can't risk refusing anything.

I could add a lot more points to that list. All that potential risk and negative impact for the future, just to have an easy ride this month and hopefully next month? Translators who only think of the pay-check at the end of the month really ought to get a nice 'safe' salaried job.


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Inga Petkelyte  Identity Verified
Portugal
Local time: 22:32
Lithuanian to Portuguese
+ ...
As old as the universe (of translators) Feb 23, 2016

This topic seems to me as old as the universe of translators.
It has been discusses and rediscussed numerous times. Consensus has never been and will never be reached.
If a particular job keeps me busy for several weeks, I would be willing to offer a discount. No, I don't work less but it gives me a peace of mind from "what's next" and my peace is worth something.


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