“Making the price” of your translation services (as opposed to “taking the market price”)
Every business, whatever its nature, including your translation business, is pursuing a number of objectives to guide its activities and mandate its actions. One of the main business objectives is to be profitable. While there are other important factors -growth, adding value to the company, etc.- without profitability it will not be possible to sustain your translation business in the medium to long term.
Determining the ideal price for your translation services should follow a proactive approach rather than a reactive one. You need to become a smart competitor by learning to maximize your profits and avoid direct competition. But how do you do that? Benson Shapiro, a professor of Marketing at Harvard Business School, points out the importance of differentiating yourself from your competitors. You need to concentrate on your own success and not put all your energies into beating your competitors. Large clients put a lot of pressure on translation suppliers to reduce prices. In turn, in a highly competitive market such as the translation industry, translators tend to respond to these pressures by reducing their prices in an attempt to gain market share. The result: the entire translation industry is self-destroying its profitability. You cannot just resign yourself to accepting this trend. You need to take action and become a ?price maker? and stop being a “price taker.”
Competitors, in an attempt to gain market share or market position, often succumb and thus destroy the profitability of whole markets.
— Benson P. Shapiro
The following are seven recommendations offered by Shapiro to “make” your own price.
- Create value for your clients. In order to create value for your translation clients, you need to know what you can do to enhance the benefits of your translation offering and eliminate the reasons for not buying from you. Value has to do with perception and, therefore, is very subjective. The translation business is a “credence service.” Credence means trust. Most of your clients do not have the skills or knowledge to assess the quality and value you are offering, so they rely mostly on how you manage the perception of value. Effective communication is necessary to help your clients understand the value they are receiving. Focus mainly on the benefits they are receiving and not so much on the process. Create compelling reasons for clients to buy from you and eliminate those that prevent them from doing so.
- Be selective as to whom you want to sell your services. When you concentrate on meeting the needs of a particular target market, you will be better positioned to offer value to that market. Be “picky” about whom you work for. Find clients that value your professionalism, work ethics and dedication to exceed their expectations. Focus your capabilities on meeting the needs of a specific niche market in which you can provide superior perceived value. Do not waste your time and energy on those clients that care only about price. Those types of clients are not loyal and are always on the lookout for deals. Stay away from them!
- Dare to be different. In the translation industry, it is very common to follow the “Joneses.” Resist the pressure of doing what everybody else is doing in the industry. Avoid falling into the trap of following your competitors. Learn what they are doing so you can come up with something innovative. The difference can be in the nature or form of your service or for whom it is created. The more unique your translation offering, the greater the opportunity to set your own price.
- Keep it simple. Don’t complicate things for your clients. Minimize complexity in your service offerings. Avoid so many options and technical lingo that might make your client walk away. Make sure your clients understand the difference between each offering in plain vanilla language.
- Charge according to the perceived value of your services. This concept relates to the quality or quantity of the perceived value you are offering to your clients. For example, is the turnaround time important to your client? You can charge more for finishing your translation earlier. You can set different price levels according to variables of value, like quality and time.
- Keep your word. Your work and professional ethics play a critical role in the success of your business. If you don’t deliver on your promise, your client will have an excellent reason to focus on the price. When you promise to deliver by a certain date and time, make sure you do. Don’t come up with excuses for your delays. Your clients might forgive you a couple of times, but, if this becomes a habit, you quickly lose your right to be a “price maker.” When your clients are satisfied with your services, they tend to focus less on price. In addition, satisfied clients tend to pay faster than those that are not.
- Be courageous. This is the most difficult one, especially for translators. When a client comes with a high-volume project, it is very likely he/she will try to negotiate a cheaper price. While this practice is common in the industry, succumbing to it will erode your value proposition and automatically place you on the “price taker” side of the market. It then becomes very difficult for you to maintain control of your business. When you know that your offer is of great value, nobody should set your price for you. Be courageous enough to say “no.” Rather, negotiate by increasing the perceived value of your offering (faster turnaround, more quality checkpoints, etc.).
It is not easy to get clients. You must work every second to obtain new clients and then expend all your time and efforts to generating their loyalty towards your business. The worst that can happen to a business is to begin “working” with a client, to invest a lot of time and effort, only to eventually have that client take its business to a competitor.
The interesting thing is, if you are guilty of this, the solution is in your hands. Focus instead on increasing the perceived value of your services and not in cutting your prices to get more sales. Strive to deliver value from the first moment, with courage and differentiation in an ideal market so that price is not the sole deciding factor in buying your services. In the end, most clients make the decision to buy based on the benefits being offered. Rarely is the purchase decision made solely on price.
Marcela Jenney (MBA) is a globally expert entrepreneurial marketing and business coach and consultant with over 20 years of experience. She holds an MBA in marketing, is an internationally known speaker and frequently published author.
Illustrated by Juan Manuel Tavella www.hombreilustrando.com.ar