New perspective: a case for value pricing

With the intention of this book being to grow or streamline your business, the first step ought to be to set out an overall approach to follow.

The basic premise of this book’s strategy is simple: you are not a commodity. Not only that, you are in fact a scarce resource and your full potential value is, in all likelihood, still to be reached. The plan here is to justify the actions you will take to approach your full potential value, but not at the expense of clients, your health or life outside of work.

One way this is done in other professions is to move from marketing themselves as a freelancer to a consultant. Although they often do exactly the same work, the income difference can be significant. Let me give you an anecdotal example of the software consultant (read: programmer) who fixes the same bug that they could have solved as a freelancer, taking 3 hours in either case. The consultant goes on to invoice $500 on their day rate, whereas previously as a freelancer they might have invoiced for 3 hours at $75-100, for $225-300 in total. This revenue doubling is the real potential and is most times irrelevant to the client if the bug or problem to solve would have cost them anywhere from $500 to $1000 per day if not fixed.

The best clients highly value their jobs and their businesses and would typically opt for an expert who has provably delivered results over a general freelancer to fix their potentially costly problems. The freelancer charges less, but has a much lower perceived value, a higher perceived risk and offers less peace of mind. And so with this approach the clients we will be seeking out are these, the ‘best ones’.

As we’ll come to see, many other factors are at play in this line of thinking, but the basic idea is that the right price for a client is based on what they will pay, when weighed against either the costs of not doing the work, or the value the work will bring to their business or career.

They will never pay you more than the benefit they receive, of course, but if we always strive to understand what value they get from each project, we can optimise our pricing structure accordingly. This thinking has some additional bonus side-effects on the health of your business in the long-term, which can only be good for yourself and your clients.

The subject of pricing psychology has filled many books, and I won’t presume to be an expert on the subject, if that is ever even possible. However the results I continually see from experiments of my own, and those of others, is that clients will pay much closer to the future value of the work to be done than us freelancers realise. In addition, they often get work with an improved return on investment (ROI), as the work done is more tightly aligned with solving the client’s business problems. As translators we can rarely measure the exact returns clients get on their investment in our work, but the more we align ourselves with their goals, the more value we offer, and subsequently the more we can charge.

For a translation industry example let’s take a website of 2500 words. This will cost a typical freelancer’s direct client around €300 to have translated within 3 days (planning 2 days for the translation, 1 for QA). Payment is arranged for 30-60 days net. One or two jobs like this a week will net a translator around €500 a week, or €2000 a month. A fair reward, in line with the average monthly revenue for many workers in Europe and North America. But we are not most workers. Our work in cases like this is under-valued. There is effectively money ‘left on the table’ by the freelancer who doesn’t realise that they can offer more to the client. They also unwittingly risk de-stabilising their business by under-pricing, creating future cash-flow problems.

Consider the same website, 2500 words, but quoted at €600 for two days’ work at €300/day. Payment is agreed either upfront or within 14 days, using a professional set of terms of business. For a site that likely cost many thousands to produce, this price won’t shock the client, especially as, if done well, the new site will likely lead to many multiples of this amount in new sales. The freelancer has more time to work through the detail of the text, consider SEO and localisation implications, have a colleague proofread their work and build a TM or glossary for the client. On a per word basis the freelancer is keen to move on to the next project, leaving little time for as complete a service, focusing only on the purely linguistic aspects of the text. This approach also heightens the risk of reducing future work with this client. The work might be a technically brilliant translation, but if it misses the client’s overall goals, perhaps to increase enquiries via the website using specific terms and keywords, then it won’t be as effective as a more considered translation.

If the freelancer can then quote this project rate twice a week, for the sake of argument, they have doubled their income by pricing on value. They have positioned themselves as a freelancer who offers a higher level of service and considers the client’s business objectives: an offer much closer to that of a consultant. I should stress that we don’t have to necessarily refer to ourselves as ‘consultants’ but in borrowing from and displaying the same level of attention to the client’s needs we can become more attractive to those ‘best clients’ mentioned earlier.

From the client’s point of view the day-rate is similar to what they usually pay their contractors, and the service is professional and complete. There is no shock and no question of commoditising the work when presented in this manner. The example given above is actually very close to positions I have taken myself to great effect many times. It certainly helps to essentially give yourself extra time on the project in question. The extra income it generates then allows for training and work on growing the business and improving service levels.

It has been effective with both agencies and direct clients. Sometimes there is a round of negotiation, and there is a simple solution to dealing with this. Rather than quibble over the price, you can simply remove any services the client deems unnecessary from the project, such as external proofreading, glossary building etc., reducing the project total accordingly. This way you don’t have to work the same amount of time for less compensation, and you maintain the value of your work in the client’s eyes. I have provided a project brief at the end of the book to help you prepare quotes in this way.

The idea is tried and tested. Freelancers in many other industries do this. They solve problems on a per project basis and profitable companies of all sizes pay much more than they would pay a standard freelancer in order to access the best of their expertise. Designers do this. Copywriters do this. Programmers do this. It’s high time we did this.

The benefits are clear:

o   More time per project

o   Client typically wins on quality

o   Less treadmill-style low-value work burnout

o   Increased revenue for both translator and client

o   Places a real-world, results-based value on the work done

o   Attracts only the best clients who value their work

Remember that if your quote is under budget for the client, achieves their objectives and is above your daily minimum rate (which we’ll calculate later), then it stands every chance of being accepted. We’ll move on now to looking at the practical considerations of ways to grow your business.