Freelance Finance: Setting Rates

Here at The Savvy Newcomer we understand that it can be intimidating to talk about money. It’s often a sticky subject, but we feel it couldn’t be more important to address as small business owners. One major component of succeeding as a freelance translator or interpreter is managing your finances well. If you don’t master your money, your translation career won’t be profitable or sustainable. This series on money matters is intended to get right to the heart of some of our biggest questions about freelance finances; we won’t shy away from the tough questions and we invite you to dive into these topics along with us.

Rates. There, we said it! Any conversation about freelance finances would be remiss not to mention the R-word; one of the biggest questions burning in the mind of every aspiring translator or interpreter is “What should I charge for my services?” Let us start with a little secret: there’s no right or wrong answer to this question.

A variety of factors, from your living situation, to your geographic location, to your level of experience, to your specialization, should all play a role in determining your rates. A one-size-fits-all response to this question wouldn‘t be fair; that’s part of why it’s tough to get a straight answer from practicing translators and interpreters to this type of inquiry! Another reason practitioners are hesitant to share their rates is because when a group of competing service providers agrees to charge a certain rate for their services it’s considered price fixing, which results in an unfair profit to sellers and increased cost to buyers.

So how does a newcomer to this profession go about deciding what to charge?

  1. Look at your own data.

A one-size-fits-all approach to translation and interpreting pricing just doesn’t work. Here’s why: everyone is different! Some key personal metrics to consider as you seek to set prices for your work include:

– How fast you translate

– How fast you type

– What business expenses you need to cover (don’t forget taxes!)

– What languages you work in

– Where you live

– What type of services you offer

– What specializations/settings you work in

– How much experience you have as a translator or interpreter

– How many hours a week you’d like to work

– How much vacation time you want to take each year

– How much money you need to live on

This may seem like a lot of factors to take into account; consider taking some time to determine actual figures for the items above that apply to your situation. Anytime you can have a concrete number in mind instead of a range or a guess, you’ll not only be more likely to stay firm on those numbers, but you’ll also feel better about your prospects since you know exactly where your goals are set.

Besides, I have some great news: once you’ve established the numbers above, there’s an incredible tool that a team of volunteers from the Spanish Translators, Copyeditors, and Interpreters Association (ASETRAD) developed to help calculate what you actually need to charge in order to make your business profitable! Calpro is a spreadsheet designed to be adapted to the individual situation of each translator or interpreter. The U.S. version of the spreadsheet includes suggested numbers that may be adjusted for your needs and can be downloaded by clicking here.

  1. Look online.

Another place to look in your pursuit for answers is the resource of all resources: the internet. By visiting the websites of both freelancers and language services agencies you can see how translators and interpreters discuss rates publicly, and this will give you a better idea of what your conversations about rates should look like. Many industry stakeholders choose not to publish their rates, but some do list pricing online—especially if they feel this will offer a competitive advantage. Some agencies’ rates are public due to their involvement with government agencies or GSA schedule listing. When a translation agency makes their pricing public, remember that the rate they are charging their customer will not necessarily represent what the subcontractor or translator will be paid; the agency needs to pay an editor and possibly other subcontractors, may include a project management fee, and will of course keep a margin of the funds to pay their employees and cover overhead.

As you peruse information about translation and interpretation pricing online, you’ll notice that not everyone uses the same units of measurement to charge their clients. Some translators charge per hour, while others charge per word, character, page, or line, and yet others prefer a flat fee per project. Interpreters may charge by the day, half-day, hour, or even minute depending on the type of work. There’s no right way to charge your clients, but you’ll start to see patterns and will want to consider the pros and cons based on the types of clients you work for and your language pair.

When you start to find information on what some of your colleagues are charging, it’s important to remember that pricing can differ across language pairs and specializations. Data from the ATA Translation and Interpreting Services Survey[1] (based on information from 2014) and the ProZ.com average rate survey, for instance, suggests that certain language pairs command a higher rate than others, and specializing in certain areas may bring in better pricing. However, keep in mind that even if two translators use the same unit of measure, such as a per-word rate, their translation speed may differ greatly based on their specialization and level of experience, so they may wind up making the same amount of money per hour or per day. Also note the dates of any pricing you may see online, since rates can increase or decrease over time based on inflation, demand, and implementation of technology in the market.

  1. Look to clients.

If you’ve pursued the two sources of rate information above and are at a standstill on what to charge a translation or interpreting client, there’s always the option of asking the client what their budget is for your services. Some negotiators suggest that this may even result in higher rates than you would set for yourself, since many people tend to underestimate their value or aim low in setting prices. If you can get to the client’s bottom line right away, it could help to ensure that both you and the client are comfortable with the rate that’s agreed on. Be aware that clients may offer a rate lower than what you were expecting, however, and be prepared to negotiate or stay firm on your minimum rate. Since rates with language services agencies can be difficult to adjust, make sure you aren’t locking yourself into a rate you’re not happy with. It can be hard for agencies to increase your rates over time since they aim to make a certain margin off their own pricing and can’t always raise rates with their clients when you need to raise them with yours. Make sure that whatever price you agree on will comfortably allow you to work with the client at a rate that’s agreeable to both parties.

A word to the wise: be cautious about raising or lowering rates in unique circumstances (for example, during a pandemic). Lowering rates without giving a specific and justifiable reason why may set a precedent for offering the lower rate in the future. Raising your rates can cause your client to think you’re unhappy working with them at your current rate. As in many things, communication is key; talk to your clients, talk to your colleagues, and be honest with yourself about what rate will ensure your work is sustainable, profitable, and rewarding.

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Readers, have you found this information helpful as you set about establishing rates for your translation or interpreting services? Have we answered some of your questions and made the conversation about rates just a little bit less awkward?

We hope you’ll find these resources helpful and continue to engage with us about Freelance Finance. Leave a comment below on any topics you’d like to hear more about!

[1] The most recent report on the results of ATA’s compensation survey is available to ATA members by logging into the Members Only area of ATA’s webpage.

So you want to be a Freelance Translator (or Interpreter): Money Matters

This post is the fourth (first post, second post, and third post) in a series of five posts written in response to questions we at The Savvy Newcomer have received, sometimes from people within the translation world, but also from bilingual friends and family who are interested in translation and interpreting (T&I). Our hope is that this series will serve as a guide for people who are considering a career in T&I and want to know where to begin.

In the first post in this series, I alluded to a question I’ve been asked several times since I began freelancing—sometimes more subtly than others: “Do people actually pay you to do that?” Some days it feels surreal that, yes, people really do pay me for this and I get to read in Spanish, write in English, and sometimes even correct other people’s spelling and grammatical mistakes (Grammar Police Alert!), but the underlying question is whether translation and interpreting are viable career options for bilinguals. The short answer is yes—if you have the right skill set.

If you’re just beginning to consider whether a career in T&I may be for you and are asking the same question, you are not alone. Some of the biggest questions many beginning translators and interpreters have about getting started also revolve around money: How much do I charge? What kinds of expenses will I have? How do I make sure my clients actually pay me (on time)? I’ll do my best to cover these tricky yet essential questions in the following lines.

What should I charge?

Translators often charge per word (source or target) or per hour, while interpreters may charge per hour, half day, or per diem rates. Rates can vary significantly in different segments of the market, while your specialization and language combination can also play a major role. Quoting too much relative to the importance and budget of a particular project may make it hard to secure enough work. However, quoting too little could put you in a vicious cycle where you work long hours at low rates. Long-term business prospects and finances can be affected by your choice of rates because it’s difficult to make time to find higher-paying projects and invest in the skills development and training needed to qualify for them if you are too busy with smaller or lower-paying projects and clients. And on top of all that, you could end up undercutting your colleagues.

While newer translators and interpreters may logically earn less than more experienced professionals—like in any other industry—you can earn fair compensation for your experience and education level, if you are putting the right amount of time and effort into your work and business development. But again, this begs the question: What should I charge? There are a few good ways to figure out what that means in terms of specific numbers.

First, the American Translators Association (ATA) has conducted and reported on a survey of professional translators and interpreters regarding their compensation and rates. The results of this ATA Translation and Interpreting Services Survey, Fifth Edition can be accessed for free in summary form or in full form (free to ATA members, $95 for non-members). The results cover information on rates, language pairs, and annual income.

Calpro is another resource you can use to determine what rate you should charge in order to bring in your target income, taking into account working hours, holidays, and other expenses. This spreadsheet was first developed by the Spanish association of translators, ASETRAD, and was adapted by ATA volunteers for use in the U.S.

Tracking the time you spend on each project is a great way to generate data that can help you figure out how much you actually are earning and which projects are more or less worthwhile for you. Start by using a time tracking tool like RescueTime or Timecamp and then use an Excel file or other method to compile your data and divide the total fee for a project by the number of hours spent on it to see how much you earned per hour. This will help you determine whether you might need to charge more next time for a similar type of text, or whether you would be better off rejecting a project that you will likely earn less on in favor of a project that would earn you more per hour, or even in favor of spending time on business development to grow your client base.

How do I make sure I get paid?

Two common issues when it comes to getting paid for freelance work are scams (where a fake client orders work from you and either never pays or scams money out of you by means of a fake check) and late payers. Several resources exist to help freelancers avoid these issues, including Payment Practices and WPPF (and check out this article on the topic).

How do freelance finances work?

I could write pages upon pages about freelance finances, but at the end of the day, the important thing is to understand that earning money as a freelancer (what we would refer to as “1099 income” in the U.S.) is vastly different from earning money as an employee of a company (“W2 income”). Freelancers need to send invoices to request payment from their clients, pay their own taxes (usually there is no withholding and you make estimated payments throughout the year), manage their own retirement savings, cover their own business expenses, and meet their own insurance needs. All of these are things that employers will often handle for their employees, while freelancers need to build them into their time and finances. I won’t go into detail about each of these topics, but I do want to provide a resource or two on each topic in case you need somewhere to start looking.

  1. Invoicing and Expenses

Some freelancers choose to create their own invoicing processes and others prefer to use software to help manage the process for them. The following are a few popular invoicing tools for freelance translators and interpreters: Xero, Translation Office 3000, Express Invoice.

  1. Taxes

Some freelancers choose to do their own taxes, but many prefer to outsource this service to a professional accountant or accounting firm. Since there are so many extra factors that go into freelance tax filings (e.g. multiple 1099’s, a Schedule C/1040, possibly other business filings depending on your setup and location, and deductions for business expenses), options like TurboTax and TaxAct would probably make for a stressful springtime… So unless you want to forego a lot of afternoons going crazy trying to decipher the tax code, I would suggest reaching out to other translators in your area to get recommendations for an accountant you can trust to take care of your tax needs.

  1. Retirement

Employers generally contribute to your retirement savings when you are a W2 employee, so it is extra important to start early if you’re a freelancer. Options for freelancers include traditional or Roth IRAs and SEPs, whether through financial planners or using online options like Vanguard and e-Trade.

  1. Insurance

Another expense that is often subsidized by employers for W2 employees is insurance (health, vision, dental, life, etc.) As a freelancer you’ll need to take care of this yourself, but you won’t be alone! Many options are available outside employer-sponsored health plans. For instance, Freelancers Union offers a private marketplace for members to connect with insurance companies (and Union membership is free!).

We hope this information has helped you get a better idea of what to expect as you consider a career as a freelance translator or interpreter! Stay tuned for the fifth and final installment in this series: Technology and Tools.

Image source: Pixabay