Transaction cost theory might not be everybody’s oyster. It’s not mine either (no offence, my dear economists!), but studying it underlined one important issue and armoured me with strong arguments to prove that freelance translators shouldn’t price less.
As a translator, you can be in one of three market positions: you can be either an in-house translator, a freelancer working for an agency or a freelancer working directly with clients. Let’s have a closer look at levers working in each of the cases. You can now also read this post in Spanish, as it has been translated by Jimena Licitra!
In-house translator
In-house translators work for agencies and are on their payroll. Agencies get to the clients and supply their translators with work. Simple:
Client -> Agency -> In-house translator
An agency does the payroll, provides insurance and covers, deals with bookkeeping, tax and National Insurance. They have to invest in new technology (say: Trados for everyone). In-house translators do their job for 8 hours and go home (physically or metaphorically). By the end of the month, they get their salary chopped by tax and NI contributions. No need to worry, no mess with invoices, accountants and earnings tax. In theory, in-house translators do nothing but translating and coffee-making.
How is that reflected in the price?
Client
- pays for the whole project
Agency
- pays for administration
- pays for business issues
- distributes salaries
- invests in technology
In-house translator
- translates
Agency covers most of the transaction costs
Freelance translator working with an agency
Client -> Agency -> Freelance translator
Things start to get a bit complicated here. If we think for a moment, what is the thing that agencies are actually being paid for? As a freelance translator working for an agency, you have to do your own invoicing, bookkeeping, taxes, marketing and who knows what else. Moreover, if you want to be competitive, you have to invest in Trados yourself. How rude is that! Agencies demand that you have one technological solution, but they do nothing to facilitate that.
Client
- pays for the whole project
Agency
- pays for running their own business
- pays for administration and project management
- pays for marketing
In-house translator
- translates
- does bookkeeping
- issues invoices
- pays tax
- pays the insurance
- invests in technology
- runs the office
Freelance translator covers most costs, but on the other hand doesn’t have to do that much marketing and client-hunting. However, still does much more than an in-house translator
Freelance translator working with a client
Client -> Freelance translator
On these rare occasions when freelance translators do get to work with direct clients, they seem to panic and chicken out. As a result, very often they come up with ridiculously low prices, compared to the agency peanuts. Why this is wrong?
Client
- still pays only for the whole project
Freelance translator
- translates
- does bookkeeping
- issues invoices
- pays tax
- pays the insurance
- invests in technology
- runs the office
- does the marketing
- spends time on looking for clients
- builds own image and brand
- is a business
As a translator working directly with your client, you provide the whole service. Don’t forget that you are a business, and your rate covers not only the time you spend translating, but also the time you spend invoicing, phoning, e-mailing, doing marketing. You are a business.
How to price?
I would advise every freelance translator to be firm about their pricing and stop moaning that in-house translators live better lives. As freelance translators, you can earn much more. You just have to realise that you are allowed to charge for all the time you spend working, not only the time you spend translating. Good luck with that!
Marta Stelmaszak
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1 Comment
I simply love this quote of yours:
“I would advise every freelance translator to be firm about their pricing”.
Absolutely!!!