Have You Updated Your Rates?

We have written about the need to adjust your rates on January 1 very frequently. So, have you done it? January 1 is the best day to do this, unless you spend the entire day at the gym working on your other New Year's resolutions. The reason you need to adjust your rates is simple: inflation. With your very small rate increase, you are simply ensuring that you have the same purchasing power this year as you had in the previous year. If you don't increase your rates, you are effectively giving yourself a pay decrease. That doesn't sound like a good way to start the year, does it? To read more about inflation, visit the US Bureau of Labor Statistics and learn about the Consumer Price Index. And be grateful you don't live in Zimbabwe, where inflation has been 79,600,000,000%.

And yes, we know, you will say: the girls at Translation Times should lead the way, yet they haven't adjusted their rates. And you are right, but we have a good reason. Our wonderful IT guru is in the middle of a rather complex server migration this week, and we don't want to add another element to it. Once the migration is complete, we will update our rates as well. We'll be precisely one week late.


Kevin Lossner on January 8, 2010 at 3:17 PM said...

As fond as I am of raising rates, no I have not. Nor do I agree that January 1st is in any way an ideal time for a rate hike. The idea time is when you understand how much of an increase you should make to keep your business sustainable or to improve it. I fully intend to make significant upward adjustments in the next weeks and months, but first I am re-writing my business plan to get a clearer picture of how I plan to change the business over the next year and justify some "extreme" increases. Not so extreme, really, when presented in context, and a clearly developed plan will lead to better negotiations and more success in getting better projects at better rates. At least this is how it has always worked in the past.

mjenney on January 9, 2010 at 8:56 AM said...

I’ve been in the translation and localization industry for over 20 years, ranging from translator and director of sales and marketing to agency owner and business operator.

You’re encouraging translators to raise their rates is overlooking a very important component. How much value are they providing? If we based the translation profession purely on our rates, we are competing merely on price and making this beautiful industry into a commodity. Since it is a service, translation is an intangible, so what are we doing to make it “tangible”?

We have to stop that habit in the translation industry of competing simply on price. Price is not the key factor when our clients consider buying translation services. It is just one variable they take into account when they assess the overall value of buying translation.

Kevin couldn’t have said it better. He sees the need to make important adjustments to his business before a rate increase can be justified. I invite all translators to review their current business and marketing plans and carefully examine how much value they are delivering, that is, the perceived benefits their clients are getting for their money. What do your clients receive when they work with you? What are you actually offering? Do you have a clear, compelling strategy to reach your ideal clients? What qualifies you to do what you do? Are there any skills on which you need to improve to increase your value? What sets you apart from other translators and makes you unique? At the end of the day what are you really doing for your clients? What are they walking away with?

When IS the right time to increase your rates? When you know you’re delivering so much value to your clients that the price does not really matter to them.

Judy Jenner and Dagmar Jenner on January 9, 2010 at 10:50 AM said...

@Kevin: Interesting input. It also makes sense to review your business plan, but for us, it's unrelated. We are simply ensuring our continued purchasing power. Just as companies give their employees an adjustment at the beginning of the year, so we are we. Of course, we have to pass it on to our customers. No complaints thus far. We think about it as just keeping up with inflation, which we are.

@mjenney: Thanks for the comment. Of course we are not solely competing on price. Competing on price makes you a commodity. Providing a value is a given. The issue is simply that prices go up in the economy (=inflation) and that as small business owners, we must preserve our purchasing power. We think you might have misunderstood this post. We are addressing the adjustment for inflation, not price increase. You can't charge the same as you charged five years ago. No one in the economy does that. Our customers obviously adjust for inflation, too. That's why your products cost more this year than they did a few years ago.

Sara on January 10, 2010 at 11:22 PM said...

Interesting discussion! Some say you should raise your rates *every time you are contacted by a new customer*. I currently do several different kinds of work (from straight business translation to creative adaptation to copywriting) and have a variety of rates. My rates also vary depending on the "age" of the customer (a few "old" customers continue to benefit from "old" rates -- probably not good business, I know!). I do not do an annual inflation adjustment, nor do I increase my rates with every new prospect. But I do gradually and continuously try to align all of my rates with the highest. Sometimes this means letting a customer go, sometimes it means refusing certain low value-added projects, and sometimes it means changing the way a project is invoiced (per hour or per deliverable instead of per word). If my earnings continue to increase each year, I consider myself "OK" even though there could certainly be a little more method to my madness.

Join the conversation! Commenting is a great way to become part of the translation and interpretation community. Your comments don’t have to be overly academic to get published. We usually publish all comments that aren't spam, self-promotional or offensive to others. Agreeing or not agreeing with the issue at hand and stating why is a good way to start. Social media is all about interaction, so don’t limit yourself to reading and start commenting! We very much look forward to your comments and insight. Let's learn from each other and continue these important conversations.

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The entrepreneurial linguists and translating twins blog about the business of translation from Las Vegas and Vienna.

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