Profitability Guide for Interpreters

by Luis R. Cerna

[Note by SiteFounder: Article Discussion in Forum Diskussion Artikel 27]

In: The Linguistic, Vol. 39, No. 3, 2000 (published by Institute of Linguistics, GB), Paul Wood, AIL, commented my article as follows:

"In the February 2000 issue of FORUM [...] there is an article hinting broadly that interpreters should aim for an average yearly income of DM 150,000 or the equivalent of DM 150.00 per productive hour (to each productive hour you add a non-productive hour for preparation, review and office time). This is clearly a step in the right direction. I am pretty sure that, in this money driven society of ours, the professional status of translators would shoot up. There would be more attention paid to our fact sheets, if our fees were to match those of the people we work for - sales managers, lawyers etc. - and those of the people we work with: advertising agents and graphic designers."

Below you will find my revised version:

Profitability Guide for Interpreters

The article at hand tries to present the existing material as well as its use in a way that allows interpreters who are not trained in business management to use it as a rule of thumb for preparing professional decisions.

The fact that this article is aimed at profitability calculation for interpreters does by no means mean that it cannot be used for decision-making in other professions. The figures, procedures and conclusions described, can rather be used for any type of freelancing business and only in some cases a modification of the figures may be necessary.

Regardless of your knowledge of economics, this article provides useful, practical facts about the necessity of perspective investment calculation, its procedures, conditions and limits, as well as considerations regarding the process of decision-making.

Prerequisites

Qualifications

Generally university graduates or degree holders with similar higher education background (often multiple degrees).

Hours of productive time

In order to come up with figures that can be compared with other professions, it is necessary to convert the usual rates per day into rates per hour. You will have to take into consideration, that the calculated rate per hour is a virtual one. No professional interpreter will normally agree to an exclusive rate per hour.

During one hour of productive time, Tom Cruise earns approx. EUR 15.34 million, Bill Gates approx. EUR 1.28 million, the senior consultant of a hospital earns approx. 2,046 Euro, a dentist approx. 512 Euro, an architect approx. 103 Euro, a computer specialist approx. 77 Euro, a translator approx. 67 Euro (?), a plumber approx. 46 Euro, a construction worker approx. 16 Euro, a labourer in China approx. 0.10 Euro. In contrast, an interpreter makes at least 128 Euro, based on a daily rate of 768 Euro for 6 hours.

Tom Cruise might have to work a whole year at shooting the film, but only about 90 minutes run time will be sold. Bill Gates' productive time amounts to approximately 2,000 hours of marketable time. Figures extracted in part from the article by P. Oehmig ("Was darf es denn kosten?" ((How much should it cost?)) in: technische kommunikation 3/00, ISSN 1436-1809, pages 15-18).

Annual income and number of hours

The annual income of an employee ranges from 27,610 to 61,356 Euro where s/he works 1,650 to 1,900 hours per year. An interpreter should not place him-/herself below that. Thus the minimum figure would be 51,130 Euro per year (a freelance interpreter has to pay social security etc. from his/her own pocket and thus needs more money) excluding project-related extra costs and general costs (based on Peter Oehmig, op. cit.).

After an initial starting phase a freelancer should not work more than 2,000 hours, otherwise this will be at the expense of his/her family and health.

A gross working time of 2,000 hours per year includes time for project canvassing, professional training, organisation and maintaining one's work place. According to P. Oehmig (op. cit.), a freelancer should divide this time up as follows:

Percentage	Task	Hours
50%	Production	1.000
25%	Canvassing	500
15%	Organisation and work place maintenance	300
10%	Professional training	200

51,130 Euro divided by 1,000 production hours amounts to 51.13 Euro per production hour.

Amount of the annual performance to be sold

According to these prerequisite of budgetary levels for the interpreter is as follows:

Model of annual income depending on daily production

in days	in hours	Annual income
67 at 768.00 Euro	402 at 128.00 Euro	51,456.00 Euro
167 at 768.00 Euro	1.002 at 128.00 Euro	128,256.00 Euro

In order to be able to earn 51,130.00 Euro per year, an interpreter will have to sell 67 days at 768.00 Euro/day. If s/he is able to sell all available hours, the interpreter will earn a maximum of 128,256.00 Euro ceteris paribus.

Costs and VAT will have to be added to the daily rate. Calculation will be different if the interpreter is not able to charge for preparation time.

Conclusion

I recommend - particularly to newcomers - not to deviate from the calculated price, since it may prove very difficult to raise rates with a particular client, once the first project is completed. It would mean that the interpreter would have to work longer hours and do more canvassing, thus endangering his/her family life and health.

I have noted with much satisfaction, that interpreters are generally very disciplined when it comes to establishing prices: those who serve already at least 60% of direct clients will not easily be fooled by the rigmarole some agencies offer: "Please state your most competitive prices as a service provider for an agency, in Euro." or "Please do not state sales prices for end customers, but rather purchase prices for agencies. We will pay the agreed price without deduction." Such concessions only serve to disrupt the pricing structure. Should the interpreter agree on special conditions, s/he must insist on a guaranteed minimum turnover per year, e.g. a retainer.

The average of 120 sold per diem rates amounts to at least 92,160 Euro/year keeps the interpreter busy and is highly desirable.

Figures unrelated to interpreting were taken in excerpt from the article by Peter Oehmig (op. cit.) and do correspond to my own findings as presented here.

Hourly rates of 30.90 to 61.50 Euro, charged by some, are not accepted by any professionally working interpreter and therefore have not been taken into consideration. In order to accurately evaluate the economic damage caused by accepting such low rates, you find the amount of the resulting minimum income below:

400 hours at 30.90 Euro amount to a mere 12,360 Euro.

Whether clients can offer 400 hours/67 days per year, is another question. Such prices could only be considered by those, who have no background in the subject because the net value of services sold at this price reacts sensitively to the changes in the factors that determine the current income and expenditure, and because the resulting income is close to critical figures of business failure. Future market development in this sector will need to be examined with alarm.

Interpreters' price dumping and companies' greed are a bad mixture, causing much damage for the private sector. The costs for a professionally organized press conference are negligible when compared to the damage to a company's image when an international press conference is presented raggedly. More embarrassment will be the order of the day, if the interpreter (in charge) does not speak one of his working languages correctly (as seen during a state visit of the US-President to Poland).

For completeness' sake I would like to mention that some interpreters may ask for daily rates of 2,557 Euro and above, provided their field of specialisation is accordingly marginalised.

In conclusion, I would like to emphasize that this calculation blue print based on economic aspects presents only a basic, however important component for comprehensive assessment of professional services in our freelance industry.

.-L. R. Cerna

Translation into English by Korina Hansel

1st. Proofreading: Bellinda Zabcic

2nd. Proofreading: Luis R. Cerna

We would like to thank Bellinda, who volunteered for proof-reading, and Luis, who gave us permission to translate and publish his article. Also, we would like to invite everybody to take part in our discussion about prices and rates.

[Note by SiteFounder: Article Discussion in Forum: Diskussion Artikel 27]