Translation Pricing: Should We Charge Hourly Rates?

The inside of Judy's wallet.
For today's quick post, we wanted to touch on something that we've been thinking about a lot: the way translators charge for their services. Traditionally, translation services in the U.S. have always been billed by the source word, meaning the translator will know exactly how much she or he will charge the client before the process starts. And the client has an exact figure, which is helpful for them. In Germany and Austria, translation is usually billed by the source line (a line being 55 characters).

Changing existing pricing structures can be difficult, and most translation agencies have established processes based on per-word rates, so we speculate that there won't be too much change there in the short term. So that's why we will focus on direct clients here. We work only with direct clients, and not surprisingly, most have no idea how many words are on the documents/websites they need to have translated  because as opposed to translators, they've never thought on a per-word basis. On most documents, it's easy to count the words, but things get trickier with PDFs and with web-based content. For the past few years, we have started quoting many projects by the hour, because we feel that an hourly rate is something most clients understand quite well, as they are used to paying that for other professional services, such as lawyers, CPAs, therapists, etc. 

We also like this approach  because it elevates our profession in a way and puts it more on par with other professional services and moves away from this "piecemeal" approach that sometimes comes with per-word pricing. And ultimately, it's all about making clients happy, and in our (not necessarily representative) experience we feel that clients have been pleased with the hourly approach. We also like this pricing structure because it makes sense to most clients. For instance: say a client brings you a five-page last will and testament. If you submit a quote for five hours' work (for instance) at your hourly rate of, say $100/hour, that's transparent and easy to quantify and understand. 

Finally, we like per-hour pricing because it gives the client the chance to clearly understand some surcharges that we usually added on manually in percentages. For instance: a scanned images converted into a PDF document will take infinitely longer to translate than a Word document with no tables (well, not infinitely, but it feels like it). We've always had a surcharge for PDF processing (which sometimes results in the client finding the Word document), and we think it's a very straightforward explanation that a PDF takes more time to process and is thus more expensive. We think it all comes down to an hourly charge being something that's transparent and easy to calculate and understand. Of course, your clients must trust you not to overcharge them. 

Now, what are the potential downsides to this pricing approach? The main one that we see is that the translator has to do an excellent job at estimating how long the translation will take before the project starts. This is relatively easy to do if you have many years' experience, but it's hard in the beginning. That's why we advise to estimate on the high end to give yourself some wiggle room and you will have a pleasantly surprised customer if you invoice them for less. On the other hand, we never invoice more than what we estimated, as we think that's not fair for the client. You may choose to do this differently, but on the few occasions where we've been way off on our estimates, we just had to absorb the difference. Another downside is that some clients might potentially perceive your rate, regardless of what it is, as high. Then you can either explain to them that translation is professional service or you can simply thank them for their interest. Unfortunately, a change in pricing structure doesn't mean that there won't be some clients who will think your work is too expensive regardless of how you charge for it. 

What do you think, dear colleagues? This brief post is of course in no way exhaustive, and we'd very much enjoy knowing what you think. Please join the conversation below!


12 comments:

Marsha Ortega on May 20, 2015 at 8:45 AM said...

I am a beginner translator(your former student), and I charge by the hour. The company wants it that way. The nice thing is that they don't ask me how long it will take; however, because I'm slower than an experienced translator, I make sure to charge for the time it would take an experienced translator.
By the way, I miss your class.

MChavez on May 20, 2015 at 9:07 AM said...

Thanks, ladies, for bringing attention to a much-needed discussion. I've attempted, at times successfully, to charge by the hour to some of my direct clients.

Obviously, the per-hour approach is a no-go with established translation agencies for the reasons you stated. However, I have introduced hourly charges for other services, such as desktop publishing and formatting. Nobody objected.

Perhaps you could branch out this discussion on formatting charges for some files, like PowerPoint files, that most translation agencies think are just as simple to handle as MS Word or Excel files.

I could say “Lucky you!” for working only with direct clients, but I intuit that it took you years of effort. That's admirable.

On another note, could you perhaps invite one of your marketing contacts who is an introvert to discuss best ways to market services for introvert translators by introvert translators? I'm one, and it's been kind of an uphill challenge. Thanks!

Judy Jenner and Dagmar Jenner on May 21, 2015 at 5:08 AM said...

@Marsha: Many thanks for your lovely comment and great to see you here! That's wonderful that your client wants you to bill hourly. This is a direct client, correct? Are you enjoying the work? It was great having you in class, and keep in touch--this blog is a great way to do it.

Judy Jenner and Dagmar Jenner on May 21, 2015 at 5:12 AM said...

@MChavez: Thanks for reading and for commenting. Yes, growing the base of direct clients took many years, and it was worth it. The hourly charge is indeed perfect for PPT files as well, but as you point out, it might be difficult to convince some of that new approach. Excellent to hear that you have started charging other services by the hour--well done.

We are afraid we don't know of a person who could discuss marketing services for introverts (great idea, though) and we are usually the only two people who write for this blog, but we will put on our thinking caps and see if we can come up with something. Thanks for the suggestion! We hear you that marketing for introverts can be quite a challenge....You can do it!

Helena G. D. on May 21, 2015 at 6:15 AM said...

Hello Judy and Dagmar,

I suppose this is a question that many translators have asked themselves. In my case, some time ago, after listening to the wise advice from some experienced and successful translators, I decided to adopt the "hourly approach" for direct clients. Until now, it has always worked well for me. I think that, as you say, direct clients understand this approach and they see it as a normal practice for a freelance professional. Logically, for someone who is not in the translation sector, an hourly rate is much easier to understand than a per-word rate. On the other hand, it is true that we must be able to estimate how long the job will take, but that is not so hard when you have some experience.

Apart from that, I believe that per-hour rates put translators (and translations) in a slightly different position. Instead of being “translation sellers” who sell a product (a translation) which is valued according to its "weight" (the number of words), we become service providers who charge for their time. The price is proportional to the time that the translation has taken because time is what really indicates how difficult (or easy) the job was (and because time is what really matters to us). In my opinion, one of the most interesting virtues of per-hour rates is that they contribute to portray translation as a non-commodity, and this is crucial for any translation professional.

Regards,

Helena G. D.

Robin Bonthrone on May 24, 2015 at 4:39 AM said...

Just a minor correction: Translations in Germany are usually billed on a target line basis. Although 55 characters is a common definition of a "standard line", it's basically up to the translator and client to agree on what that standard line constitutes, and many variations are found in practice. Up-front transparency is the key here.

Overall, I'm a great fan of billing by the hour, though it can be very difficult to sell this concept to clients, except for e.g. Excel and Powerpoint files, changes to existing texts, etc. A lot will also depend on how plain vanilla your text is (or not).

Dorin on May 26, 2015 at 5:51 AM said...

This is a great idea. I remember a situation where the agency I work for had to outsource some file engineers to get an accurate word count. Not only did it take a while to get that done, but it also cost us and the word count was not accurate. An hourly rate is perfect for such situations. Saves time and keeps the client well-informed.

Anonymous said...

Great post. I agree that billing hours is much better than counting words, but how about charging per project?

Angela Benoit on May 29, 2015 at 11:11 AM said...

Hi Judy and Dagmar!

Great post, thank you! I've started to work with a few direct clients over the past few months (yay!) and this topic has surfaced more than once. I have a question about the cases where finding out the exact word count or volume is challenging (complicated websites, for example). How do you go about putting your finger on the right number of hours? When dealing with numbers of words, it's easy to say to the client "let's find out how many words you have and build an estimate based on that". But if we're leaving word-counts out of the equation, what would be a good approach?

In other words, asking for wordcounts may have the downfall of leading towards a wordcount-based quote, but it does allow us to enlist the client's help in order to figure out together what types of volumes we're dealing with. I've been stuck with this a couple of times over the past 6 months and haven't really come up with a satisfying solution.

Thanks!
Angela Benoit

Anonymous said...

I disagree. I think that charging by the word is efficient and clear. In the beginning of the negotiation, everyone knows what the document will cost. If the client sends a PDF, they get an estimate, but it is clear that this might change, is fine. I have had clients agree to pay per target word rates on scanned handwritten documents, where a word count was impossible.
It is also OK to tell the client, if there are tables and graphics that there will be XYZ charged for those, and if there is technical language, that will be extra...

If the system is not broken, why fix it?

Judy Jenner and Dagmar Jenner on June 10, 2015 at 2:29 AM said...

@Robin: Point well taken, thanks for letting us know. Most of the translators we have worked with in Germany have billed us by the source line, but of course you know your home market better than we do. Thanks for reading and for commenting! We also do like the hourly approach, but as you mention, it can be a tough sell. What we have noticed is that many direct client get confused by per-word charging because it's something they have never deal with before and as a billing unit it can seem obscure to them, although of course it is very fair.

Judy Jenner and Dagmar Jenner on June 10, 2015 at 2:33 AM said...

@Angela: Many thanks for your lovely comment and sorry it has taken so long to respond. You bring up an excellent point, and having to estimate hours accurately ahead of time is one of the downsides of charging by the hour. There's no easy solution to this, but our best advice would be to estimate on the high end and put a note in the price quote saying that it's an estimate and that client will be charged fewer hours if takes fewer, but not more than XYZ.

@Anonymous: We'd love to know your name, and of course your opinion is very valid. Charging by the word is a good idea, but many direct clients have told us that it's confusing to them because they never know how many words they have/will have and some have actually said that they prefer to be billed by the hour because it's a unit of billing that they understand very well. It's all about making the customer happy, and we think hourly is a very known quantity. That said, charging by the word also has many advantages. Ultimately, it's completely up to you, of course! Thanks for reading and for commenting.

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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