American Translators Association (ATA): Assessing Pricing Pressures

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American Translators Association (ATA): Assessing Pricing Pressures

Assessing Pricing Pressures

In the current economic climate, corporate procurement departments all over the world are attempting to cut prices by reducing their purchase volumes and applying other price pressures. It is important for small business owners in the translation and interpreting industry to remember that they provide a highly specialized product that continues to be in great demand.

Dear Business Smarts:

A long-term client of mine was acquired by another company recently. As a consequence, the terms of the company have changed. Not only is the company’s management asking for a substantial reduction of my rates, but a recent communication from the company also stated that all contractors will be "required" to work with a specific computer-assisted translation tool. To my annoyance, I found out that the parent company of this agency actually owns this software, and is selling licenses for €250 as a prerequisite for getting translation work from the various divisions of the corporation. The expectation that I spend €250 for a mandatory software license while reducing my rates seems to add insult to injury. Am I the only person to feel angry about this?
— Not Buying It in New York

Dear Not Buying,

You are under no obligation to buy a software license that you do not want or need. To address this situation effectively, take a few moments to assess the actual qualities of this client. Are they reliable payers, do they send you large amounts of interesting work, and do they listen to your input? Will they truly appreciate the sacrifice you are being asked to make, and what would your acceptance of the new terms mean in the long run? What percentage of your translation income currently comes from this client?

This honest assessment of the situation will provide you with the answers you need. If the client is just one of many, the impact of dropping them will most likely be negligible, as other clients will be glad to fill the void in your work schedule with new projects. In that case, the agency loses an experienced and highly qualified supplier, and you may actually gain from working with clients you did not have time for in the past.

The situation is trickier, however, if you depend on this client for a sizeable portion of your income. You can grudgingly accept the new terms, buy the required license, and make up for the lost income by accepting more work and working longer hours; or you can make a conscious decision to phase the client out. While this could lead to a short-term drop in income and may be scary, especially in a bad economy, keep in mind that running a small business requires continuous evaluation and adjustment of your best strategies for getting ahead. In the long term, it is in your best interest to stick with the prices and policies you have established for your business, and to reject scare tactics that try to exploit a fear of not having enough work.

Needless to say, you will no longer be a "preferred supplier" of the company if you refuse to go along with the new requirements. By the same token, the new management’s actions suggest that it has little regard for the highly specialized work you do and has therefore disqualified itself as a "preferred customer." As the ongoing work volume of the translation industry suggests, there are still many clients who appreciate the value of professional translation who will gladly pay for your highly specialized skills.


Reprinted from The ATA Chronicle: April 2009, p 36