Freelancers, price negotiations and opportunity cost – a resulting tale

 

Freelancers set their own prices and must, therefore, negotiate them. Many customers, especially from the Middle and Far East, relish price haggling and practice it at every opportunity. This face-off presents the entrepreneur with a set of choices, namely if and how much to bend. Yet, in deciding how much to handle these negotiations, many solo businesspeople forget the impact of opportunity cost, a factor that cannot be ignored. I will share my experience dealing with this situation, a positive one I am happy to say, and my analysis of the potential outcomes.

To begin, it is important to define the term opportunity cost. The basis is the assumption, generally true of freelance work, that a person working on Project 1 at a specific moment cannot take on Project 2 at the exact same time, i.e., the cost of taking on Project 1 is the inability to accept Project 2. This cost is most noticeable on larger projects that require many hours or several days to complete. Its verbal expression is the outcry “Why did I agree to this job? Now, I can’t take on that project!” Of course, in some cases, it is possible to work almost simultaneously on two different projects or outsource one of them. Even more importantly, the cost is only potential as it is generally impossible to know if and when a better project will arrive in your email. Thus, opportunity cost can be high, but it is uncertain.

This week, an established customer contacted me about certified translation of some 7 personal documents from Hebrew to English. I provided a quote, which was immediately followed by a significantly lower counteroffer. I made a small concession to no avail. The next day, the customer sent me an amended package, 4 of the 7 documents. The result was the same, but without any concession to price on my part. The following day, the customer informed me that it had found another service provider. All this correspondence took almost an hour. Most curiously, several hours later, a new customer contacted me with an interesting new project, a certified translation of a Russian-English asylum request, and immediately agreed to the quoted price and deadline. The invoiced amount was much higher with very few additional hours. On this occasion, I came out ahead in all respects.

In terms of odds,  a positive result is highly probable in this situation. If the customer refuses to compromise and I lose the order, my maximum potential loss is a small amount of income and future business. Neither the insistence nor the loss of the customer is certain. It is quite possible that this buyer will return to me. Meanwhile, I may and did gain a new customer and quality project, which is far more valuable separately and together than the original project. If no new project appears in the immediate timeframe, I lose a small amount of business but I can use that time for alternative activities, e.g., marketing, physical exercise, viewing webinars or watching Wimbledon, each valuable in its own way. Thus, standing firm on prices requires faith but is often the correct strategy.

Therefore, if faced with the demand for compromise beyond their point of comfort, freelancers should remember that every choice carries an opportunity cost. It may help them make the decision that provides the greatest probability of a successful result, however one defines success. As they say in Hebrew, if you are not for yourself, who will be?

Long briefs and AI wisdom

 

A word to the wise is sufficient, but only sometimes; a kick in the ass makes a far greater impression. As a case in point, this week I made an apparently unsuccessful proposal on a translation project. In retrospect, I could have and should have handled it differently and will do so in the future.

The project in question was the translation from French into English of a 45-page real estate purchase contract containing nearly 25,000 words. The document posed several challenges, including PDF formatting and quite precise legal vocabulary. Furthermore, the customer required a signed statement of accuracy, which would entail even more QA time to ensure that demand. Due to the extensive time required because of the document’s length and complexity, the quote involved four figures (in euros) and a long deadline. I received a polite but understandable “I will let you know when relevant”. It was clear from the start that the customer was neither expecting or willing to pay such an amount. To be fair, I was not surprised but stood by my quote as I knew how much time and effort such a translation involves.

Looking back, I see that I had another option, one that I know about and had forgotten. Specifically, I had heard Naomi Shenkar, a respected Israeli attorney and translator, say that, for long documents,  she provides two quotes: one for human translation and one for AI + editing. The first is based on standard human translation elements while the second quote is contingent on the quality of the AI output. She also noted that most customers ultimately prefer the human translation. In this matter, she provides the potential buyer with a choice, an unequal one in many respects, but at least an option.

I now recognize that I should have done the same. If I had offered to edit an AI version, the customer may have considered and understood the human translation proposal. While I am not particularly fond of AI or any machine translation, for longer documents for which the time and financial investment may be beyond the customer’s situation, it can provide a reasonable alternative. Furthermore, I would have created a win/win solution. Shorter projects create income and allow the translator to help other customers.

When I began translating some 22 years ago, I promised myself that I would limit myself to one time per mistake. I have been fairly loyal to that vow. The next time I have the opportunity to make a proposal on a long legal document, I will provide an AI option. Better late than never.

In praise of project-based pricing in translation

 

[Fiddler on the roof*]

Tradition is the last justification for continuing long-established business practices long after they are no longer relevant. As an example, translation prices are generally quoted in price per word, just as Dickens and Melville were paid for publishing chapters of their books in newspapers two centuries ago. Yet, although writing by pen and typewriters have essentially become curiosities, every request for translator still involves those classic words: “What is your rate per word” as if this measure is still relevant and fair.

To be clear, uniform unit measures can be relevant if all goods are equal and randomly variable. For examples, today in most industrialized countries at least, all supermarket potatoes of the same kind are more or less equally tasteless. The difference between them is natural and unpredictable. It is impossible to make any connection between the farm and potato. Thus, comparing the cost of a pound or kilo of potatoes is legitimate and reflects the sole actual value difference, cost.

By contrast, the per-word price comparison in translation is illogical, as Spock would say. Even if the field of the translation is identical, e.g., medical or legal, all words, or texts to be more precise, are not created equal. Aside from the quantity of words, format potentially adds hours to a project. If the document is in PDF, it requires preparation before it is useful for CAT (Computer Assisted Translation) tools, which almost all translators use. Charts and special formatting add time after translation as they often only can be arranged after translation especially if one language is significantly wordier than another. In additional documents, more technical document require research as a professional translator must be 100% sure that the term is correct, a time-consuming process even for those who are expert at searches. For larger projects, QA can take no less time than the translation as it is impossible to properly reread 10,000 words without frequent breaks. Finally, every translation, including the most technical ones, reflects the language and expertise of the translator, i.e., no translations are identical. As such, a higher price may result in greater value if the result is more effective. So, unlike potatoes, the price comparison by itself is meaningless.

Project-based bids are fundamentally good for translators. Obviously, the quoted price better reflects the total effort of the translators as it includes all the factors specific to that project. The psychological effect of translators setting rates according to their reality is greater productivity as they “own” the project. Furthermore, overall quotes allow for invisible and seamless rate increases over the years, solving the issue of how to raise rates with long-term customers that act as if inflation does not exist. An additional benefit is the ability to create win-win situations for unpleasant work. All freelancers have certain type of works that they find very tedious and/or unpleasant. By factoring this element into the price, as plumbers do with sewer work, the service provider either avoids the project or is highly paid, both positive outcomes. Finally, it is not necessary to explain source-word and target word to customers, saving countless emails and avoiding unpleasant misunderstandings. Thus, translators gain in terms of effectiveness, efficiency, flexibility and clarity.

LSPs (Language Service Providers) all benefit in terms of price clarity and reliability.  In per-word cost quotes, it is necessary to assess the word count to calculate the price for the end customer. In relations with the translator, the parties must factor in repetition rates, the percentage of the full rate paid for partial or total repetitions of the same sentence. By contrast, in a project-based quote, after review of the document, the translator provides a single quote, which provide a basis for the agency quote, a much simpler process. Furthermore, translators meet deadline more often as they have carefully reviewed the document in order to prepare the quote. While it may delay the LSP quoting process, that period of time is minimal. LSPs also gain from this pricing method.

In all cases, the end customer finds project-based quotes much simpler. Most end-customers do not understand industry jargin. They do not know that a page is 250 words, not all the words on a A4 piece of paper nor can they grasp why there may be a difference, sometimes up to 50%, between the number of words in the source and target. They simply want to know how much the job will cost. One sentence with a cost and deadline answers their main question in short work. That is the art of keeping it simple.

There are at least two ways to calculate the total amount of a translation project. It is possible to multiply the total number of words by the base rate and then add or subtract elements that affect the total time. For example, on a project of 1000 words at rate of .10 USD per word, the base rate is 100 USD but the quote will be higher if the document is in PDF form and requires another hour of work. Another method, especially relevant for a multitask project, is estimating the total time for each section or task, totalling the amount,  multiplying it by the hourly rate and adding a “fudge” factor to reflect unpleasant surprises. Of course, the amounts are adjusted for local factors, i.e., how much the paying party is willing and able to pay and to what degree the project is desirable. In either case, the final offer should reflect the total time that will be invested and cost of living of the translator.

I have been using project-based pricing for four years now with both end-customers and translations agencies. The former finds it much simpler while the latter accepted it rather quickly. I am never automatically out of the consideration for a project due to my price since they first need to query me nor do I turn myself into a “potato”. I admit to have miscalculated a few quotes but the overquotes have easily compensated for the underquotes. Using project-based quotes, I “own” my prices while simplifying life for others. Tradition makes for a good song but poor business practice.

*Picture captions allow the blind to enjoy your posts.