In a recent post on her blog, among many other interesting things, Corrinne McKay wrote, “If no one ever thinks that your rates are too high, that means that they’re too low. Or at least that you could be charging more.” I could not agree with her more. What Corrinne is saying in simple words is that, for lack of unbiased or objective industry studies on rates, your clients can help you measure the elasticity of demand that ultimately determines rates in your market. Allow me to explain, but first I need to make a little digression.
In her beautifully designed blog, Audra de Falco, wrote: “Setting lower rates means the whole market is forced to accept them. [I]f enough novice translators set severely low rates, it has an effect on everyone else who shares that language combination, and, in some sense, across the board for the entire industry.” Audra is correctly addressing the exact same notion as Corrinne, just from a different angle.
What both these women are intuitively showing is that, as I explained in a previous post, the “invisible hand of the market” determines rates. But though invisible and anonymous, this hand is ours to guide. Every time we make a transaction, we are guiding her in a certain direction. The more translators are willing to treat translation work as a commodity instead of a specialty service, and to reduce their rates to capture clients, the louder they are telling the market as a whole what translation work is worth, and they’re doing it incorrectly! This is basic math and market economics.
Our power to determine rates is limited by a simple economic principle: high supply and low demand decrease rates, while low supply and high demand increase them. What commodity-selling translators are doing is sending the wrong message and failing to preserve translation in the right realm, i.e. in that of specialty service. In specialty service markets prices are usually always high for a reason: highly specialized professionals are hard to come by. For those who haven’t pieced it together yet, the formula looks like this:
low supply + high demand = high price
few highly specialized translators + lots of clients = no need to compete on price
Cheap translators are bad translators because they have too much work, too little time, and no real area of specialization. They’re also bad businesspeople because they fail to sell translation as a specialty services, they’re like the McDonald’s of the translation world. Yes, they’ll make some money, but at what cost? What they don’t realize, on the one hand, is that they could make more money with far less effort if instead of lowering rates they increased their added value as linguists; and on the other hand, that they are detrimental to the industry as a whole, because their actions send orders to the invisible hand that determines rates for everyone else.
What Corinne and Audra are saying in layman’s terms can be explained by economics, which is why my point is twofold. For setting rates:
1) Don’t sell yourself cheap.
2) Learn basic economics!