tranfree issue 46 - 5 March 2002

Bulk Discounts - The Ins and Outs

By Alex Eames

Firstly, let's define bulk discount (also known as volume discount).

Bulk discount is when you offer a (slightly) lower rate in order to be more competitive and secure a larger than normal project.

In my ebook, How to Earn $80,000+ per Year as a Freelance Translator...

http://www.translatortips.net/ht50.html

...I say the following about bulk discounts...

"You may wish to give a discount for texts over, say, 10,000 words. This could attract high-volume work, but it is also pure erosion of your profits, so be careful how much you give away! Discount is a dirty word in business!"

The last comment bears repeating for emphasis...

...Discount is a DIRTY WORD in business!

Benefits of Bulk Discounting

So what are the benefits of offering a bulk discount?

Security
It may make you more likely to get a large project which will keep you in work for several weeks or months. If you are already busy, you can certainly afford not to offer a discount.

Slack schedule?
If you can negotiate a slack schedule for the project in exchange for a lower rate, you should be able to fit in other projects around the discounted one. If you can't, you'll have to decide how likely you are to get other work (and how much) during this project.

Less admin
Simple really. If you have one large project with one client, there will be one invoice and one entry in your accounts. For example would you rather process and chase...

• one invoice for $5,000, or,
• ten invoices for $500?

Which of the above is better use of your time?

Disadvantages of Bulk Discounting

Lost business
You may end up getting a large project which means you have to turn away other clients who are paying you a higher rate. You could even lose clients, as they would be forced to go and "try out" other translators if you are not available.

Can't always invoice until project completed
Depending on your arrangement with the client, you may not be able to issue an invoice until the project is completed.

If you are working on a project for 3 months, it is much better if you can get staged payments, otherwise you may not receive any money until a month or two after project completion. 5 months without pay? OUCH. How are your savings?

Overexposed to one company?
Balanced against the lack of admin above, if your $5,000 client decides not to pay, you're in big trouble. If your $5,000 is spread out among ten clients, you're certain to get some of it.

Five years ago, we did a lot of work indirectly for ENRON. But suppose we had been exposed to a large amount of ENRON work in the last few months? Most likely we would have lost money on the deal one way or another.

As I mentioned a few editions ago, for us, non-payment has had a very minor impact on our business.

So don't let this risk scare you too much. But it is worth bearing in mind.

Online Opinions

In a recent online discussion I came across, the majority of translators are...

... strongly against bulk discounts.

When deciding whether or not to offer bulk discounts, you have to consider the fact that 10,000 words usually takes roughly ten times as long to translate as 1,000 words.

At best, it may take slightly less time because any terminology research you have to do, is used more than once.

If you use a CAT tool, it may mean that repeated phrases can be quicker - particularly on large repetitive texts. But that should be your benefit not the client's, unless they buy you the CAT software.

A Recent Example

We recently offered a client a competitive quote on a large project of ~100,000 words. We gave them 15% discount.

Before you brand me a hypocrite and a price-eroding menace to the translation industry, let me outline the circumstances.

It was a job, which was an update of a previous project that we did for the same client 3 years ago. A lot of the text from the previous version was able to be used again. It was not applicable to use CAT tool(s) because we had the original in hard-copy.

Not only that, but the project involved two sections of around 50,000 words each which were very similar.

So the overall situation was that one set of documents was created, partly by new translation and partly by cutting and pasting from the previous version. This was roughly half of the project. The other half took about one third of the time of the first half.

So we saved 2/3 of the time on 50,000 words, or basically 33,000 words' worth of time = 1/3 of the overall project.

So in the end we gave away 15% and gained 33%, with a net gain for us of 18%.

Argue Away

You could argue that we might still have got the project if we insisted on our full standard rates. Indeed, it's possible.

But it's also possible that we would have missed out on a very comfortable job with an easy deadline that enabled us to carry on our other business activities with very little pressure.

Without bugging the client's offices, we'll never know, and neither will you. We went with our gut feeling and we're happy with the results. We couldn't ask for more really!

As always you should be prepared to be flexible and dynamic in your policies, and treat each situation as unique. You can't be completely black and white in a grey world.

Alex Eames is the founder of translatortips.com,
editor of tranfree and author of the eBook...

How to Earn $80,000+ Per Year as a Freelance Translator
http://www.translatortips.net/ht50.html

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