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Who sets translation prices?

(This article is now linked to (but not replicated, given its length) from this blog post where you can make comments.)

Mooching around translator forums, in particular those that offer some matching service between translators and those wishing to avail themselves of the services of same, two recurring and connected themes can be spotted. To wit, why are the prices stated by job posters so low, and why is it that job posters/agencies in general are dictating the price to translators anyway?

It should of course be noted that we all know that not all translation work comes through agencies, and not all agencies behave like this (or even use such websites to find translators), but at least for the initial purposes of this piece, for "agencies" read "agencies that behave like this", and "the market" is similarly more accurately that segment of the market in which agencies that behave like this operate.

False Comparisons

In particular as regards the second question (why do these agencies attempt to impose prices), comparisons are often drawn between translation and a number of other commercial or professional activities, some familiar to the translator as a consumer, others perhaps somewhat less so, but with which certain translators nonetheless feel a need to bracket themselves. So we can find translators compared to restaurant owners, car repair workshops, plumbers and grocers on the one hand, and doctors, architects and lawyers on the other hand (presumably owing to the years of study and somewhat intellectual nature of the work).

The purpose of these comparisons is always the same – to demonstrate that it is a universal rule of business that sellers determine their price and that customers can take it or leave it (or perhaps attempt to negotiate, particularly in some cultures and situations).

Often this demonstration takes the form of imagined conversations, whereby the indignant translator, in the role of Joe Public, consumer, tells the grocer that he wishes to now pay 20% less for tomatoes than he paid last week, or announces to the restaurateur that he intends to eat steak and chips and black forest gateau to follow, and perhaps the cheese platter, and that he will be blowed if he will pay more than ten quid for it. Quite rightly, it is posited, the grocer/restaurateur will waste little time telling Mr J. Public (the off-duty translator) to sling his hook. It is not, I have read more than once, the shopper who puts the price tag on the goods in the shop, it is the shop-keeper. All of this is true.

But the problem with such comparisons* is that they do not apply to the broad economic context of translation. Furthermore, it seems to me that the problem or issue as framed in the question in the introduction to this piece is essentially focussing on an individual symptom of a wider economic structure.

(*Any regulars round these parts will know I am no fan of inappropriate comparisons. See for instance here or here.)

1. The market structure

The comparison examples above, and all the other examples that I have ever seen given under the why-oh-why-is-it-the-agency-that-sets-the-rate threads in forums, are cases where the number of (potential) customers exceeds the number of suppliers. This tends, of course, to be the case with the majority of transactions that translators, as consumers, are involved in, whether with lawyers, doctors, plumbers, grocers, utility service providers or any other consumer transaction which is to be found as a comparison to our own august profession every week on every translators’ forum in the known universe.

Yet casting our attentive eye around the economic landscape, we notice that there are indeed markets where the customer/buyer sets the price (or if not the actual price, some other aspect of the arrangement). The milk market in the UK is one such example. Indeed, with the dominance of supermarkets in the UK grocery/food retail market, many agricultural producers are feeling the same impact. Accept what the supermarkets offer, or have your produce rot on your farm.

This phenomenon is not restricted to supermarkets and agricultural produce, either, other companies (in the UK, at least) have announced unilateral discounts or extended payment terms. And these suppliers are professionally-run companies, producing actual physical stuff that people want to buy. So, it is not just small-fry translators suffering from this phenomenon (this being another claim often heard).

At this point, we pause for contemplation. What exactly is it about translation that makes it appear, as a market (particularly the segment in question), to be more akin to the milk market than to, say, legal practice?

There are two factors at work, in my view:
a) They are markets where there are more suppliers than customers.
b) Translations are viewed (in this market segment in particular) as a lumpen homogenised mass, like so many million gallons of homogenised milk, or indeed, a commodity like any other (not originally my own observation, but one that definitely fits).
(As an aside, one could point out that pricing by word does much to reinforce the perception that a translation is ultimately just a bunch of words, a commodity or good, rather than a service.)

In essence, then, this market segment operates the way it does because by the rules of economics, it can. IF we take translators as an undifferentiated mass, then there are more sellers (translators) than there are buyers/customers (agencies of the kind described in the intro). Translators are in no way organised (not that the NFU seems to help dairy farmers much), there is no price regulation under the free market and some (many?) translators feel, with some justification, that if they don’t work for thruppence a fortnight, someone else probably will (especially in these globalised times). And, with rent and bills to pay, there are those who believe it is better to work for half a loaf than have no bread at all. The way that "IF..." statement is phrased may give a clue to a possible solution, but there is no doubt that many agencies see translators as interchangeable, and believe that most translators can tackle most types of work. (Perhaps if fewer translators tackled just about everything they are offered...? - but I am getting ahead of myself.)

Therefore, put bluntly, the buyer in this segment calls the economic shots. The buyer – the agency – knows that if you, Joe Translator, do not accept their terms, they will have absolutely no trouble finding someone who will. (Again, perhaps that is a sub-optimal situation for translators as a body?)

(Note that 'customers' here, does not mean end-customers (most consumers buy milk and vast numbers of companies need translations), but customers in the sense of those who actually buy direct from the supplier. There are very few companies buying milk (mainly supermarket chains) compared to the number of dairy farmers. There are relatively few agencies compared to the vast numbers of translators.)

(It has also struck me that the supermarkets' role for milk producers is that of a middleman before the consumers get their hands on the milk. Much as agencies are middlemen between us and our end-clients. I wonder if the same holds true for all industries with middlemen dealing in products with little perceived differentiation...).

It is, then, a classic buyers’ market where any individual seller genuinely feels that they need the custom of the buyer(s) they have. It is not just a simple question of who is the “buyer” and who is the “seller", as under the false comparisons above, it is about who needs (or perceives that they need) whom the most, and which side is most easily replaced (or perceived as such). While translators allow themselves to be perceived as interchangeable (even if they feel or even know that they are not), the situation will persist.

This is why many of the comparisons seen in discussion forums just do not work. They are not comparable because the market balance is different. The comparisons made are invariably to markets where there are fewer sellers than buyers. The structural economic basis for the comparison is all wrong.

And, if no mention has been made of quality or ability thus far, ‘tis with good reason, for these are not factors in this discussion up to this point. The whole reason that the situation we are discussing arises is because “translation” is treated under this scenario, both by the buyer and seller, as a homogenised (and, dare I say, often somewhat mediocre quality) mass.

2. Solutions and responses

As i said at the start, the problem as posed combines two aspects, the individual relationship of one translator with a given agency, and the wider economic structure of the "translation industry". The complaint is a symptom of a structural economic feature. When we see that plaintive cry ("why do agencies impose (low) prices?"), it is the market structure as perceived, or even manipulated and directed, by agencies that translators are really complaining about, in my view. Nonetheless, we can attempt to provide two answers, to fix both the symptom and perhaps, just perhaps, the underlying ailment, so to speak.

2.1. Individual business relationships

One response to the original complaint is, evidently, that you are in charge of your own business, and if you don't like it, don't agree to it. Which applies to pretty much any aspect of any business relationship. This is, perhaps, not exactly an economic argument in the sense of this article, but is certainly a valid response. All the more so when other factors are considered. After all, it is not the imposition of rates per se that is an issue - if an agency insisted on paying a euro per word, I doubt many would complain. It is, however, a fact that these rates tend to be low, and there is an anecdotal correlation with slow payment, the use of dubious grounds to apply deductions to invoices and other suchlike unpleasantness. Economics aside, there are very good reasons for simply walking slowly but surely (and metaphorically) in the opposite direction.

Not only that, but it is also an observation that agencies that unilaterally impose low rates also tend to be those that compete purely on price and nothing else. They tend to offer their clients (our end-clients) little else, often not even a cursory proof-read. When a large-ish group of providers competes solely on price, prices only head in one direction. And in the case of translation, it cannot have escaped anyone's attention that the seriously cheap no-frills agencies are (or soon will be) facing competition from the absolutely free translation tools available. In short, even if you accepted work from them out of immediate economic necessity, it is doubtful whether it is a business relationship destined to last over the long-term.

That is one straightforward and valid response, but does not address the underlying broader economic reasons enabling agencies to behave like this, nor does it offer much in the way of constructive action for the individual freelancer.

2.2. Some economic analysis

So moving on from "if you don't like it, don't do it", if we accept that the underlying cause is structural, that the cause is a cost-sensitive buyers’ market (fewer buyers than suppliers; an excess of supply over demand) then surely one solution in purely logical terms is to reverse the numerical balance – to put ourselves into a sellers’ market, if you will, that is, one where there are fewer suppliers than buyers, more demand than supply, and one where cost is not the sole discriminatory factor.

This may sound facile, but it is not merely playing with logic or maths. It does actually provide a response that works i) for individuals on a micro-economic level, and ii) secondarily (possibly somewhat idealistically or unrealistically) on a broader economic level, if we accept the simplistic view that (macro-)economics is the sum total of thousands of individual (micro-)economic decisions. The individual level - the supply/translator side

In terms of "playing with maths" here, to reverse the numerical balance as suggested, there is little the freelancer can do other than simply not form part of the supply in the segment where those rules apply. It seems unlikely many of us will be able to generate markets (or more accurately, market segments) out of thin air in which we are the only supplier.

However, there are definitely steps we can individually take to shift the balance back in our individual favour, so that we are not merely interchangeable with anyone else. We need to not be just generic “translation” suppliers, but move to operate in a niche, a market segment in which the number of suppliers does NOT exceed the number of customers, but vice versa, and where agencies (and other clients) are battering down our specific doors to have us specifically do the work, and where therefore the more usual economic circumstances, that we as consumers are used to, apply.

(If you work in a minority language pair, you may not even have read this far, because your segment may already be small enough for you to have the “balance of power” – there are fewer of you than the agencies that need your services… perhaps you are not easily replaced - although no-one is irreplaceable).

The answer for individual translators in commoner language pairs is surely then to make themselves the ones who cannot easily be replaced, to shift the balance of power, and I think this is best achieved by specialising and being excellent, both in terms of the actual text delivered, and the peripherals – delivery on time, raising queries in such a way that responses can be incorporated without jeopardising deadlines, answering questions, accurate invoicing, and so on. Provide a quality service, and not a generic commodity, competing purely on price and nothing else. When the buyer needs YOU, and is going to struggle to run his/her business without YOU, then YOU get to set the terms, within reason. Whereas if the client believes there are 5,000 other people who can do exactly what you do, and who can be contacted within 2 minutes via certain websites...

(That paragraph could easily stretch to pages in itself. By happy coincidence, I came across this advice while drafting this, which all seems very sound, although I fear the intro is dangerously close to the kind of comparison objected to at the start of this piece, and I'm sure there are plenty of websites offering similar pearls of wisdom.)

There are far fewer excellent specialists than “general” translators, and they are much in demand and, within reason, set their prices. Or, at the very least, do not have prices unilaterally imposed on them. These specialists are the people who, when seeing a thread the tenor of which I alluded to much earlier, will reply "I don't see the problem" - and for them, there isn't, because for them, as I have said, the sellers are less numerous than the potential buyers and the balance switches to the more usual plumber/doctor/grocer type of buyer/seller numerical (and power, and economic) relationship. The individual level - the demand/client side

For us as individual freelancers, at first sight there may appear to be little we can do (except, perhaps, when we outsource work, not to perpetuate the situation by playing a role in this segment).

However, it may be possible for us to attempt to reduce the demand in this segment by education, for want of a better term, particularly with any direct clients who may appear to be purely focussed on low-cost translations (although the same arguments apply indirectly with agencies). Translators can point out the negative impact on the buyer's corporate image of disseminating sub-standard translations. For instance, if the user guide for a product is utter gibberish, what does that say about the product? Are consumers likely to make repeat purchases if they can't use it? Worse, are they at risk if they can't understand safety guidelines? Will internet users spend much time on unintelligible websites?

Here too, then, in essence, the idea is not one of having some kind of global effect within this segment. It is the corollary of the individual level on the supply side, and is simply to educate or persuade clients, piecemeal, to remove their demand from this segment entirely. Individual summary - everybody out. Freelancers should not and do not, if they can find a niche or other segment and exploit it, need to get involved. Meanwhile, they should attempt to drive home to customers the old adage that "you get what you pay for", or indeed if they prefer, proffer the oft-repeated and frankly somewhat tired old saw that, as the fellow on my homepage might put it, in the event that remuneration takes the form of Arachis hypogaea, the labour force is likely to consist predominantly of the smaller simians.

2.2.2. Market (segment) level, or the cumulative impact

Going back to "playing with maths", the mathematical solution to the market issue is also to reverse the numerical balance, cumulatively. To reiterate, the position to be reversed is that of too many suppliers (translators) with too few buyers (agencies). Taking each side in turn (in the interests of thoroughness and logic): The demand (buyers) side. Tens of thousands of agencies cannot be generated out of thin air in order to get the balance in our favour. In fact, more experienced and wiser heads than mine have said that they believe the current situation is in part the result of too many agencies overcrowding the market, constantly trying to poach end-clients from each other and competing purely on price to do so. I confess I had hitherto assumed that the agencies that are the subject of this piece had been acting under price pressure from their end-clients. But the issue cannot be looked at purely in numeric terms. It is more complicated than that, of course, since increasing the number of middlemen dramatically would have other supply/demand price impacts, as indeed hinted at earlier.

(It should be noted, of course, that this is not the same as a sudden upsurge in the volume of demand for "cheap" translations to the extent that there is no longer an excess of supply volume over demand volume. Under such circs, the price of "cheap" translations would, in fact, have to rise.) The market structure here is essentially that of the numbers of individual economic players on each side, not volumes of work.) The supply (translators) side. So if more agencies is not the answer, it must be fewer translators. My legal team advises me not to recommend the systematic slaughter of other translators (appealing though the idea so often is...). But there is one 'macro-economic' solution so simple it is, inevitably, flawed. Surely, in theory, if every single translator individually:
a) simply refused to respond to the sort of job offers that give rise to the complaint mentioned (see sample threads on this related page), and
b) specialised, provided a service, refused to compete on price alone, and was not interchangeable with thousands of others,
in other words, simply did not supply the price-led market segment under discussion), then would the problem not vanish? (And logically, in this theoretical paradise, a) alone would suffice.)

Unfortunately for this solution, however, freelance translators are, almost by definition, independent-minded, and tend not to pull together with any degree of success. Even if every last one of us agreed in principle not to respond to such offers, there is no way, for example, we could ever all agree worldwide on the rate level at which this would take effect. People need to eat and keep a roof over their heads, regardless of any notion of solidarity, and the mewling of their half-starved offspring would inevitably lead some to break ranks. And quite frankly, there is an anecdotal consensus that about half of all translators are probably simply not very good, and as such their translations are interchangeable, albeit interchangeable with other substandard rubbish. The price-led segment is getting what it deserves, in this regard.

3. Conclusion

Therefore, one is relunctantly forced to conclude that any individual translator faced with job offers featuring unilaterally imposed rates is probably best advised not to rant on, drawing inappropriate comparisons on forums, accept that there is a market segment that operates in that fashion quite legitimately, and instead merely strive to play no part in it. And if, despite their best efforts, they fail to escape the vortex, and are unable to stop supplying that particular segment, perhaps they then need to accept that their competitive advantage, whether through an weakness in marketing skills, lack of knowledge, or a simple inability to translate to an acceptable standard, may lie elsewhere. Or they could get some training and devote some time to marketing and finding better-paying clients. Ultimately, the outcome is the same - they leave this segment behind.

Are rest of us to perhaps do no more than shrug and walk on by...? This is the way this market segment works, and the only workable solution is to understand how it works, and then not get involved. Yet perhaps we can at least help to shrink the segment, by persuading translation buyers of all stripes that ordering translations from the cheap underbelly of the market may not best serve their long-term interests.

4. Addendum. Just to complicate matters

I have realised, in fact, that it's not simply a matter of the specialist service-provision segment the translator feels he/she is working in generally, because that can vary with individual projects and clients.

This applies to my own situation. I do some run-of-the-mill, non-specialised (in the sense of requiring no particular expertise other than a general awareness of the world around me) translation, for agencies, who tell me what the rate is and I can take it or leave it. Some I take, some I leave. It's cool. There is an argument that there are some jobs where most translators could produce acceptable output. (And to be fair to my regular agency clients – genuinely, not just in case they read this – in all cases, these are agencies who asked ME what my rate was and then decided to add me to their books.) With other jobs, mainly for direct clients, but not exclusively, I get asked "how much", and I say how much, and they can take it or leave it. They usually take it. That's cool too.

My situation in this regard is hardly unique.

And so, the micro-economic solution may need to be refined, or considered not to be a universal solution 100% of the time, because there are some translators for whom part of the time, the situation will be one where they are just one out of a thousand others who could have been asked to do a particular job, and part of the time, they will be the one in a thousand who is able to do the job required. That said, other factors (such as variety of work) notwithstanding, the general idea should probably be to minimise the former and maximise the latter, since this is likely to maximise revenue.

Equally, the same may apply to customers. Sometimes rough-and-ready and dirt cheap will be adequate for their needs. Although in that case, they could probably use Google Translate or Babelfish and get it absolutely free (apart from the time it takes, and time is money).

4a. Additional addendum - the thing we haven't mentioned

While we are doing complications, note that at no point here, while remaining a healthy distance from the unilaterally-imposed low prices segment, has there been any attempt to determine what price the freelance translator should charge. It might be worth noting that there are probably two basic approaches. The first is to charge what is needed to keep one in one's chosen lifestyle, and is probably the conventional approach. The second is to charge what you think the client is prepared to pay, based on the value of the translation (and related services, natch) to them.

A whole new topic for another day...The Unified Theory of Translation Pricing still needs work.

4b. One more addendum for the road

The above analysis, such as it is, is based on a snapshot of the situation, and indeed assumes that the situation described actually represents economic equilibrium. I'm not sure we are in equilibrium. If anything, it seems that end-client demand for translation in general is rising despite the recession (no surprise, when gazillions of terabytes of information are being generated every nanosecond) although arguably not all of it needs to be publication-standard. But if prices overall are falling, as claimed by some, then this is can only be happening, ultimately, for one reason - the excess of supply over demand. When push comes to shove, that is all there is to it. Under these circumstances, rational suppliers will leave the market (note that this itself assumes perfect market knowledge, and has a further flaw in that not all suppliers are economically rational. Those who "just love words and translating", for example, will offer supply beyond the point that economic rationality would dictate they should stack supermarket shelves or be a librarian). The supply of translation man-hours will fall, as people leave the profession to earn a more lucrative crust elsewhere. Hence prices logically should never fall beyond the point at which someone, somewhere (in this globalised, internet-enhanced profession), can make a living. If that does not include you, or indeed me, then we too must either make greater efforts or seek to earn a crust elsewhere.

Info on the inspiration for the above can be found here

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