Many language-service providers work on a freelance basis. They do not have a steady job with steady pay and benefits. Instead, they are constantly hustling, looking for the next client, the next project, the next paycheck.
There is a whole host of reasons to explain how the industry got this way, but I’ll leave that for another post. For now, we’ll take it at face value that professional translators, interpreters, editors, proofreaders, and others are mostly working as freelancers.
It’s not all bad, of course.
In fact, many in the industry would likely say that freelance work is part of what attracts them to the profession; that freedom to control their time and income, to the extent possible.
But when you work in a freelance job, you face certain limitations. There are no promotions, no raises, no bonuses. There is just you and the market, and no one is going to give you more money. In fact, because of market pressures – like competition from other language-service professionals and new technologies – freelancers are constantly battling the downward spiral of potential earnings.
So what can you do? How can you thrive as a freelance language-service professional?
Those of us who have chosen this career ask these questions all the time. And one of the first things that comes to mind is: I’ll just raise my rates. It seems simple enough. If you charge 10 cents a word for your services today, and you start charging 11 cents a word for your services tomorrow, then you’ll make more money, right?
Not always. And there are many reasons why.
For starters, in the field of economics, there’s a concept known as elasticity.
This type of elasticity doesn’t refer to how big you can blow up a balloon or stretch the skin on your cheeks and have it return to normal. Instead, it is a way of determining how one variable affects another; a measure of economic sensitivity. More specifically, for the case at hand, it is a measure of how much work you might gain or lose if you raise or lower your rates. It shows how sensitive your clients are to changes in your rates.
Instead of getting into the theoretical underpinnings of elasticity, I’m going to keep this post sector-specific and provide some real-world examples to help get this point across.
Let’s look at some nice round numbers to illustrate this point. Let’s say that you are a translator[1] and you charge 10 cents a word for your work. At this price, let’s say that you get 10,000 words from your clients to translate each month. So, you’re grossing[2] $1,000 a month.
You’d like to make more money. So you figure, hey, let’s just bump up that rate to 11 cents a word. At 10,000 words, you’ll now be making $1,100 a month, right? Boy, that was easy. But there’s a problem.
You are not a monopoly. You are not an oligopoly. Heck, you are probably not much more than a drop in the ocean of language services. And that matters, because of elasticity.
Let’s take a look at one extreme, and then another.
On one end, you’ve got the monopoly. One translator, the only person qualified to do the job in that specific language pair. If that were true, then that monopolistic translator would have what economists call an “inelastic” supply. In other words, there would not be much sensitivity between the price that the translator charges, and the amount of work that the translator does as a result. This is a dream situation…for that one single translator.
Now, let’s look at the other extreme: a highly competitive market. In this case, the translator is just one of perhaps thousands of translators doing the exact same job in the same language pair. Given this reality, this individual translator would face a highly “elastic” supply curve. Translation: it is very sensitive to changes.
In a highly competitive market, price and quantity are so sensitive to one another that there is no practical way to affect price. This is the reality of commodities like corn or coffee or crude oil. In this situation, if you raise your rate, you get no more work; you might even lose the work that you already have.
By now, you’ve probably guessed that the language-service market falls somewhere in between, and you would be right. So, given this economic reality, what can you do?
We’ll explore some answers to that in the next few posts.
*This series is based on a lecture first given at the 2010 CATI Conference at UNC-Charlotte.
[1] For interpreters, proofreaders, editors, and others, the same does apply, but would require slightly different figures to take into account hourly rates, which I’ll address in a future post. The concept, however, is the same.
[2] It’s important to keep in mind that gross earnings are different from income, which is what you earn after paying expenses and taxes.