Why Can’t I Raise My Rates? Differentiation

My posts up to this point have mostly been descriptive. In other words, they have sought to describe the market as it is (or appears to be). With this post, we turn to a more prescriptive discussion, focusing on what, if anything, can be done in light of this reality.

In a fairly competitive market, like translation services, there are lots of translators competing with one another to meet the demand of lots of consumers looking to have their documents translated.

Given this situation, how and why would a consumer choose one translator over another?

The answer is differentiation.

A good starting point for understanding the power of differentiation is to examine a market in which it doesn’t exist. Economists call them “commodity” markets. The word commodity has moved into common parlance and often gets used in a generic way to refer to just about any fungible good or service. But in economics, a commodity is specifically a highly traded good or service with undifferentiated quality. Examples of economic commodities include sugar, wheat, silver and electricity.

CommoditiesActual commodities

In these cases, suppliers of these goods are providing the exact same product. In fact, in order to trade on commodity markets, they have to be identical, because the buyers are paying for a specific set of characteristics, features, size, weight, etc. The only thing that varies from supplier to supplier is the quantity.

With commodity markets, the price of the commodity is exogenous. In other words, the people selling corn or copper don’t have control over the price. The market determines it through contracts, and the sellers either accept it or hold on to their inventory in the hope of prices improving in the future.

I want to avoid going too far down the commodity rabbit-hole in this post, so I’ll stop short now. But the point I want to make is that commodities are at one extreme of the market, where there is no differentiation. And because there is no differentiation, suppliers have no ability to affect prices.

Thus, for every type of good or service that is not a commodity, the possibility exists for differentiation.

The translation market has suffered to some extent from “commoditization[1]”, in which consumers tend to think of one translation being just as good as another. This perception stems in part from a lack of knowledge of other languages, and also from the incentive that consumers have to believe that a service is a commodity, because if it is, then the only thing that needs to be negotiated is the price.

Translation agencies often unwittingly put commoditization pressure on the market, by claiming to have a uniform product that oftentimes is the result of work done by multiple translators with differing skill levels, experience and knowledge. I say unwittingly, because, in the end, commoditization hurts translation agencies as well, in that they too are viewed as competing solely on price, thereby limiting their options for differentiation.

So how does one translator differentiate herself from another?

Let’s start with something obvious: language skills.

The basic requirement to become a translator is the ability to read and write in two or more languages. The way in which languages were learned is a differentiating factor. Some people are raised bilingual. Others study languages in school. Some translators have earned advanced degrees in their languages. Others have taken translation, linguistics, or other specialization courses. Some translators have furthered their knowledge by living, studying or working in another country, or countries. Where they lived, what they did while they were there, and how much time they spent immersed in a country where another language is spoken all make a difference in the translator’s language skills.

These factors together start to build a picture of how one translator differs from another. But they are just the foundation of a larger “differentiation pyramid”.

Differentiation pyramidDifferentiation Pyramid

Moving up a level, once a translator has established his or her skill level in a given pair of languages, the next step is demonstrating other professionally desirable knowledge. For instance, many translators have advanced degrees in other fields. They may have studied business or law or medicine or information technology.

Given their specialized knowledge, they can offer more than just bilingualism. They can add value through field-specific familiarity. For instance, if a company needs to translate an engineering report, it will typically prefer a translator who has an engineering background to one who doesn’t.

Thus, you can begin to see how an individual can stand out in a crowd.

Language skills and advanced degrees are the building blocks, but the differentiation pyramid can grow higher and even more distinct. Translators get better over time, like nearly every other profession. The more that you translate, the more you learn, and the larger your vocabulary becomes. Your writing skills improve. You become more confident in your work. In short, experience differentiates you.

In addition, translation has become an increasingly high-tech field. Translators are expected to be able to work across a range of platforms, producing work in multiple formats. Computer assisted translation (CAT) and translation environment (TEnT) tools are now the norm for anyone who works with a translation agency. Even translators who work solely with the final client can benefit from efficiency gains. In short, translators who are tech savvy are different from those who aren’t.

Finally, in the same way that singers and writers have to find their own voice, translators, too, have to find the one element at the top of the pyramid that sets them apart from their peers. By definition, this distinguishing feature will be different for everyone. And once translators know what differentiates them from others, they can begin to charge differing rates on that basis.


[1] Not to be confused with “commodification”, which is the Marxist idea of commercializing something that previously was noncommercial.