A few thoughts on the "It's the New Year, rate increase" debate

As I browse through various translation industry fora and blogs, I notice many posts that recommend increasing one’s rates with ringing in the New Year to adjust for inflation.

Don’t get me wrong, I am strongly in favor of independent professionals charging professional rates commensurate with the level and quality of service rendered to clients.

The New Year “cost of living adjustment” rate increase reflex is perplexing for several reasons:

1. It’s predictable and, as Simon Turner underscored in his presentation at the SFT’s Journée mondiale de la traduction in December 2009, it is counter-intuitive from a marketing standpoint. Building client loyalty is even more important than getting a rate increase from January 1. It’s a smarter move to announce a rate increase, but tell your clients that ,*for them*, it will only be applicable say from June 1. He has a few other tactics up his sleeve that make this (small) discount pay off even more.

2.  2009 inflation rates in the US, Euro zone and Japan, for example, were modest or negative: 0.5 % in the Euro area, 1.8% in the US,  and – 1.9% in Japan.  A cost of living rate increase per word three digits after the decimal point hardly seems worth bothering clients about.  Say you charge 0,20 cents per word and increase your rate by 1.8%, your rate adjustment is 0,0036 cent.

3. Also, if you use inflation to legitimize rate increases to clients, then clients should also expect rate cuts in line with negative inflation.

Two suggestions:

As a buyer of professional services, I’d be annoyed if my suppliers took up my time to announce absurdly small rate increases. Also, this would tell me these professionals:

a) Take a unit cost approach, rather than an added value approach, and

b) Are not making the best use of *their* time.

Rate increases are worth discussing with clients when they represent a measurable shift. Moving from 0,20 to 0, 2036 is not worth the stamp, phone call, e-mail, time. Moving from 0,20 to 0, 22 or more is.

Explaining that increase changes the conversation with clients and the professional’s positioning. Your years of experience, continuous professional development, investment in resources and expanded scope of services, to name a few and all of which provide noticeable added value to clients, are worth much more than just a cost of living increase.

Taking a consultant’s approach is another way to focus on service rather than price.  Incremental cost of living rate increases suggest that translators work on a fixed-rate basis, regardless of the unit count used (source words, target words, hours) – whether that fixed-rate is of a “one-sized fits all” variety or further refined to consider specialization, format, urgency, night or weekend surcharges and so on.

In my mind, this prevents the professional translator from being able to link the value of the service he/she provides with the effort (read time, expertise, tools) needed to provide that service *at a given time*, and to call on extra resources as may be required for the project’s complete success.

I can hear some of the objections as I write: “But we have set rates for various scenarios, which cover various types of projects, formats and deadlines.”

Maybe. But at some point:

• You’ll undersell yourself (not fair)
• You’ll overcharge your client (not fair either)
• Or you’ll have a set of announced rates (to increase them, they have to be announced, right?) that could lead you to fall into a full dancer’s split hard to explain to some clients.

Not having a set rate is one reason I rarely work with agencies: many (if not most large ones) expect translators to commit to a set rate for at least a year (often more) regardless of the project commissioned and regardless of foreign exchange rates. Yet each project is different, each client’s needs and goals are distinct, each project’s impact is specific – which is part of what makes this profession so interesting.

Does this mean I charge whatever my mood feels like on a given day? Of course not. I have a “drop-dead” rate under which I will not accept a project, regardless (or I take it on pro bono or in exchange of services).  But I have found over the years that it is preferable to estimate a project – once I have all the needed information – on a fee basis (even if I then convert it into the client’s desired unit, as the case may be, such as source work, target word, hour, “feuillet”…) because that proves to be most sensible and fair to all parties involved.

Tags: Business development, client relations, freelance marketing, linkedin, rate increases, translation rates