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September 19, 2022

What Does Shrinkflation Have to Do with T&I?

Business Strategies
Source: The ATA Chronicle

Have you heard of an economics term called shrinkflation? I hadn’t until earlier this year. Unfortunately, I encountered it in Spanish during an interpreting assignment. (Luckily, it was a practice assignment!) I did recognize the term and was able to render it correctly in English, but didn’t know exactly what it was all about, so I looked it up.

Turns out you don’t need to be an economist to understand the concept. Shrinkflation is what happens when manufacturers sell you seemingly the same quantity of product, but it’s actually less—and they sell it at the same price or higher. This means, of course, that customers are both receiving less and paying more, which is hardly a way for sellers of products to make themselves popular. Therefore, sellers of myriad products—from cookies to laundry detergent—have found clever ways to trick customers into believing they’re receiving the same quantity of product as before: think clever packaging and some misleading labeling. Some clueless customers, like yours truly, hadn’t even noticed they were getting fewer cookies than before, which is exactly what the seller intended.

While this goes without saying, I do want to state for the record that I’m in no way, shape, or form advocating for applying the principles of shrinkflation to our services businesses, which would be difficult to do anyway. (It’s not like it would be easy to offer 50 minutes of interpreting instead of the usual hour and bill the same fee schedule.) What I’m advocating for is that we need to adjust for inflation. Let’s have a closer look.

Readers of this column, which, believe it or not, dates back to 2009, might recognize an argument that I’ve been making for years: that as self-employed small business owners, we must adjust our fee schedule for inflation, if only to preserve our purchasing power. If you work in-house for a company, this adjustment—which is far from a raise—is usually called a cost-of-living adjustment. In fact, when I was an in-house translation team manager many moons ago, my boss and I had good-natured banter every January about the raise versus cost-of-living adjustment question, and every year I would get both. It turns out that we’re not as good about giving ourselves what companies—at least good companies—naturally give their employees. Many colleagues don’t adjust for inflation at all. If you don’t adjust in 10 years and inflation is, say, 3% every year, you have essentially decreased your purchasing power by more than 30%, but probably significantly more due to something called compound interest (the interest you earn on interest).

Adjusting for inflation is now, for the first time in decades, something that’s gone from nice-to-have to critical. With inflation rates at unprecedented levels in the U.S., which, frankly, we’re just not used to, small businesses must adjust their fee schedules to make it through this difficult time. Everything has gotten more expensive, and so will services, including ours. I’ve taken the first steps and informed some of my largest customers of an increase in my hourly fee schedule (and daily fee schedule for conference interpreting) and have yet to hear any complaints. I highly encourage you to do the same. To sum up: shrinkflation is about deceiving customers, but adjusting for inflation is about making sure you can stay in business to take care of your customers in both the short and the long run.

Useful Links

Abdelnour, Alex, et al. “Five Ways to ADAPT Pricing to Inflation” (McKinsey Insights, February 25, 2022).

U.S. Bureau of Labor Statistics Consumer Price Index Inflation Calculator.

“What is Compound Interest?” (U.S. Securities and Exchange Commission).


Judy Jenner is a Spanish and German business and legal translator and a federally certified Spanish court interpreter. She has an MBA in marketing and a master’s in conference interpreting. She runs her boutique translation and interpreting business, Twin Translations, with her twin sister Dagmar. She was born in Austria and grew up in Mexico City. She is a former in-house translation department manager. She writes the blog Translation Times and the “Entrepreneurial Linguist” column for The ATA Chronicle, serves as one of ATA’s spokespersons, and is a frequent conference speaker. She is the co-author of The Entrepreneurial Linguist: The Business-School Approach to Freelance Translation. judy.jenner@twintranslations.com

This column is not intended to constitute legal, financial, or other business advice. Each individual or company should make its own independent business decisions and consult its own legal, financial, or other advisors as appropriate. The views expressed here are not necessarily those of ATA or its Board of Directors. Ideas and questions should be directed to judy.jenner@twintranslations.com.

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