Translation Businesses:
How to Respond to Price Pressure

Translation Businesses:
How to Respond to Price Pressure

Translation Businesses:
How to Respond to Price Pressure
1920 1465 Andrzej Nedoma

You have likely considered that although you closed many projects and done a tremendous amount of work, the financial results did not reflect the amount of effort you exerted. It is easy to get bogged down with projects that do not bring a satisfactory return relative to the work involved.

The rapid changes in the Translation Industry budget not matching the increasing demand for services, and the constant and numerous small requests, all cause the above problem.

The solution to this conundrum is by regaining control over your profitability. That translates into being determining precisely the margin of each project. As we can only control what we can measure, appropriate tools and processes must be in place to help you to obtain the necessary information needed. Then you can start improving your situation.

When relevant margin tracking procedures are introduced for the first time, one fact becomes apparent – taking all factors into consideration, some projects cost more than they bring in. One would be better off not doing them at all. Getting rid of such deadweight projects helps focus on those projects that are crucial for the bottom line.

In the Translation industry, one important factor must be included when calculating the real costs of a project. This easily overlooked factor is the cost of managing the project, or simply the amount of internal staff time that must be allocated to the project. To improve your margins you need to improve your efficiency. The market pressure forces us to do more with less time, so working smarter, not harder, is the only option left.

Below are four tips that will help you improve your efficiency, and hence your profitability:

  • Track and measure the profitability of each project so that you can focus on those that are the most profitable. Be ready to reject jobs that would cost you too much. In rejecting these projects can be difficult or strategically unjustified, standardize their handling processes and automate them where possible.
  • Measure the production costs of a project and the cost of time allocated by project managers and the rest of your team.
  • Minimize the amount of manual and tedious work – this is usually the most error-prone items that are easily automated. Especially when managing several small projects.
  • Reduce mistakes by using the appropriate tools. Preventing discrepancies in Purchase Orders, Invoices, Specification, etc. as preventing errors is more efficient than correcting them.

Many translation companies do not have enough knowledge or pay insufficient attention to their profitability. A dynamically changing market with growing price pressure and reduced turnaround time imposed by clients, along with higher salary expectations and pressure for increasing rates from vendors, does not allow us to put it off any longer. The issue of profitability must be brought to the forefront of any modern and competitive translation business.


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Andrzej Nedoma

Andrzej Nedoma is the Co-founder and CEO of XTRF Management Systems, a global translation management platform provider for translation companies of every size, in-house corporate language departments, and public organizations. His company helped hundreds of translation and localization agencies in 30 countries to leverage their potential. Andrzej was awarded the Polish Entrepreneur of the Year 2006 title in the category “Services”. He has been building his translation industry expertise since 1996 as a business development manager and as a Managing Director for a leading Central European translation company LIDO-LANG Technical Translations which was eventually sold to Sepro Group from Spain. Apart from work, Andrzej is also an engaged triathlete, competing in IronMan triathlon races - this year on Half-IronMan distance and preparing for full-IronMan distance in the near future.

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