Translation Prices: Cost of Translation and Localization Services

by: Argos Multilingual

No, it doesn’t start with an "S” or an "F” and there is no "Q” in it. This word in our industry is ‘cena’ and it is the Polish word for"price”. Translation prices is exactly what we’ll be examining here. Price is usually, as anyone and everyone knows, the defining factor for customers on whether to purchase, and the defining factor for producers on how to target their products to the client base.

What horrible secrets about Eastern European translation pricing will be revealed in this article? Probably nothing too revolutionary. Hopefully this article will expose some common sense responses to issues with pricing, and probably address several universal problems shared by all translation companies and localization service providers in the rest of the world.

1. ROI – ‘Don’t bother localizing if you can’t make a profit’

There is plenty of talk about localization ROI and how it affects pricing. The decision of whether it pays to localize something before you decide to enter a market sounds obvious. Why then do we see companies complaining about localization costs in the context of their ROI?

The underlying issue here is that companies are complaining about their products’ lack of competitiveness. It happens, there’s no shame in that. No matter how you slice it, it comes down to money. And if there is not enough demand backed by money for a product, then localization, in the eyes of management, doesn’t seem to pay off. If an application is designed for Eastern European end users, then it either has to be relatively inexpensive or should be tailored to a specific niche market where lower sales volumes give an acceptable return. The Eastern European software market will not usually generate huge sales based on its size alone anyway.

As such, localization decisions are often put on a back burner, and investment decisions are based on poor information about the market. The result - a company finds itself in Eastern Europe before it has properly estimated sales potential. Then, normal business processes come into play; managers are pressed to make a profit, and we see the localization problem handed over to the local distributor.

All of a sudden, a company that specializes in software distribution is responsible for the software publisher’s image and quality in the local market. Local distributors are often very small, with little infrastructure, inadequate resources and small translation budgets (coming out of their own small pockets). Nonetheless, localization responsibility for the product is suddenly literally dumped upon them. This imposes additional problems on the distributors not only associated with added incurred translation costs, but also the problem with answering questions such as: ‘how to localize’, ‘what agency to hire’, ‘how to go about adapting the product to this region’…

It all boils down to one simple fact, distributors usually lack the experience in localization, and that lack of experience will further result in declining sales numbers and added costs.

Software publishers fool themselves into thinking that it is so much in the distributor’s interest to do a great job localizing the product (ergo, the distributor will have an easier time selling the product) that they, themselves, don’t need to worry about it. However, distributors usually don’t understand the complex issues connected with localization. Even if a distributor does recognize what’s involved, the "simple, low-value added service” attitude toward localization services prevails. The real world consequences are poor-quality localization and serious harm to the software publisher’s image and brand.

2. What’s going on among the bigger buyers of translation/localization services?

What are the organizational structures of larger buyers of localization services, and how do they affect the price of translation? It seems as if Microsoft is getting its act together by limiting the number of vendors and giving the remaining more work. IBM and Oracle also seem to be well-organized in this respect. Unfortunately, there are other large buyers of translation and localization services that have not addressed the issue of centralizing or streamlining costs.

It is quite remarkable how some large buyers deal with this problem. Our translation company, Argos Translations, works with one particular client directly through two different offices and indirectly through three other localization companies. Of course, we are paid different rates, negotiated completely independently with each of these channels. And now the punch line: the rates we receive working through one localization company are 50% higher than what we receive working directly for the client. So where are the client savings? Where is the streamlining? What about consistent terminology? The value of working through a limited number of MLVs is understandable, but what is the point of doing it a little this way and a little that way?

How the biggest clients deal with their translation and localization is only one issue. Another question is how far these companies are willing to go to lower localization costs. Last year, our company was in negotiations with a very large global company to take over a large portion of their Slovak localization work. I am not going to name any names here, but suffice it to say that this is one of the elite, with over $50 billion in annual global sales. Since this was a large, long-term client, and there were significant volumes involved (mostly documentation), we decided to quote this client the extraordinary attractive localization / translation price (at that time) of Euro 0.12 per source word.

The company got back in touch with us to tell us that they really liked our experience and wanted to choose us, but they had an issue: price. We asked whether it was a question of 1 or 2 Euro cents, and they made it clear that the price would have to be "significantly” lower. It was obvious that we weren’t even close to their price expectations. They were looking for Euro 0.07-0.08! How is it possible that the rates being paid by this particular global giant were so low? How does this reflect upon our industry? The only answer I can offer is that such clients receive low translation prices at the expense of similarly low level of quality that they obtain.

3. Quality: does anybody really care?

I was recently dozing through a translation conference as one of the speakers, a professor of linguistics, was discussing the ethical importance of a high-quality translation. I was suddenly jolted awake by a statement he made along the lines of "it is the translation vendor’s ethical responsibility to ensure the highest-quality translation.” When question time arrived, I duly asked what we should do if our client does not give us enough time to do the job in an "ethically responsible” manner. The gentleman told me that it was our moral responsibility to ask for more time.

As good and applicable as his reasoning is, unfortunately it almost never applies in the real world. I tried to imagine the response that I’d receive if I were to call my client and suggest, "Listen, I know this is a 1.2 million-word project, but you really should have met your development schedule. And I know that your priority was to ship FIGS first, but this was delayed. And now, on top of all that, you want us to use this outdated TM software because this is what your previous version was in, yet the TM database we have received is full of inconsistencies that need to be removed before we start translating the new version. What it really comes down to is that we are only going to have time to do the translation and have it reviewed independently TWICE. This won’t be enough to maintain our ethical language standards.”

Unfortunately, the truth is (maybe I shouldn’t be saying this too loudly) that our business is full of concessions. It is a humorous concept, really, when you take into consideration that we are supposed to offer incredibly high-quality, incredibly fast turnaround times at incredibly low rates. Obviously, something has to give here, and I believe that the way localization services providers handle this contradiction is by diminishing the definition of excellence in our industry.

The best companies in our industry are the ones that have the best systems in place to provide the highest quality possible while trying to maintain costs at a level that does not hinder such quality, according to "real world” business conditions. Otherwise, we’re all familiar with the concept of ‘garbage in, garbage out’. It is that simple, really.

Corporate Blog of Elite - Professional Translation Services serving ASEAN & East Asia