Calculation of rates is not a rocket science, but with so many things to take into account it is easy to forget something.

I think all of us have a basic idea of how to calculate one’s rate: food + rent + bills + taxes divided by the number of hours per month one is planning to work, and then divided by the number of words one is planning to translate per hour. But are those items of expenses enough to properly calculate your rate? The answer is … “No!”

So, what did we forget in our calculation above? A lot of things.

Business expenses

The downside of every money-earning activity is the fact that you have to part with a certain percent of your income. The most frustrating thing is that you pay not only with your money, but also with your time. There are some activities that require your presence or active involvement, thus, they keep you from making money. For example, you have to send invoice before you can get paid. Preparation of an invoice takes your time. The same goes for the declaration of taxes and Pension Fund contributions (if applicable). You need to calculate how much you owe your government in taxes before you can actually pay them. The process of payment also takes time even if it is just 5 minutes.

Obvious things to consider:

1. Taxes and pension fund contributions

2. Bank charges (monthly fees for servicing your account, as well as bank fees for receipt of money)

3. Payment and declaration of taxes and Pension Fund contributions

4. Preparation of invoices to your clients

5. Accountant fees (if you can’t or don’t want to calculate expenses on your own)

When you calculate your rate, don’t forget to deduct the time you need to prepare invoices from the estimated number of hours you plan to work.

Less obvious things to consider:

6. Inflation

Inflation is not something you can ignore when you determine a price of a service. Unless your contract makes provision for review of rates and their adjustment on the basis of inflation, it will be difficult to raise your rates and you are at risk of depreciation of your services and falling into debt.

Translation expenses

The age of typing machines is gone. Now, even translations that have to be certified are made on computers, so the first thing you’ll need to do your job is computer and stable Internet connection.

Obvious things to consider:

7. Computer

8. Operating system (if it isn’t free)

9. Office applications (if they aren’t free)

10. Mobile + Internet package

11. Computer assisted translation software (CAT-tools)

12. Electronic dictionaries (if you prefer offline dictionaries)

13. Price of additional software if you provide desktop publishing services, subtitling or transcription services

14. Price of printer (plus consumables) and scanner. Or, you might find a copy center where you would be able to print and scan everything you need

You may ask: “Why buy expensive software if I can download it from the Internet for free?” It is not a secret that you can download pirated software and earn money without spending anything, but think about confidentiality and the message you send to potential customers. There’s no such thing as a free lunch, so even if you get the software for free you might actually be paying for it without even knowing. The pirated software may contain malware that can steal your passwords, bank card details and other sensitive information. Some of your clients may ask you to sign confidentiality agreements. Having illegal software may breach some clauses of the agreement. Moreover, having cracked software might reflect on your image and jeopardize your integrity in the eyes of your clients. If you knowingly conduct a crime (and computer piracy is a crime), who knows how you will treat the information you are dealing with during translation. Will you sell it to the highest bidder or will you leak it into the web free of charge? Usage of licensed software also sends a positive message to your clients. It gives them assurance that you are a professional translator dedicated to translation. If you own the tools you need to do your job, it means that you are serious about it. People think that being bilingual is enough to become a translator, but it isn’t. Having proper tools [and knowledge] is what differentiates between a professional and someone doing a side job.

Less obvious things to consider:

15. Impossible goals

It is worth noting that it is not easy to keep a schedule fully loaded, so it might not be possible to live up to the expectations laid in the desired number of working hours.

16. CAT-tool discounts

Another thing to consider is CAT-tools discounts. Translation agencies feel that they are entitled to discounts and like to arbitrarily impose them. You are free to refuse to work with such agencies, but if you do agree, you need to adjust your rate to cover the words, for which you will be paid only 50% of your rate or nothing at all.

17. Intermediary

Only 30 to 50% of actual cost of translation is paid to translators. The other 50 to 70% is profit of an agency, so, if you decide to work with direct clients, you might want to keep that thought in mind.

18. Rarity of a language pair

The rarer your language pair, the higher is the price.

19. Qualification of a translator

If translation requires knowledge of a specific field, the price goes up. If translator has a professional qualification in the subject area s/he translates, the price goes up.

Education expenses

My education was free and I am lucky that I don’t have debts resulted from my studies in the university. Not everyone is so lucky.

Obvious things to consider:

20. Payment of student loans (if applicable)

Even if you graduated, it doesn’t mean that you learned everything there is to know about translation. You might want to invest in:

21. Continuous education

22. Webinars

23. Seminars

24. Workshops

25. Conferences

Professional associations

Joining an association of professional translators might be a good idea if you want an internationally recognized institution to confirm that you are a good translator. Membership in translation associations gives you an opportunity to visit members-only events, conferences, seminars, workshops and networking events. Being a certified member of a translation association may be very prestigious.

Obvious things to consider:

26. Membership in a professional association

Marketing

How are clients going to know that you provide translation services if you don’t tell them? There are free means to spread the word like LinkedIn and the word of mouth, but there are also those that require subscription.

Obvious things to consider:

27. Subscription to portals where you can promote your services

28. Your own website

29. Company that will market your services for you, or deduct the number of hours you’ll spend per month to market yourself on your own

Food, bills, medications, clothes and rent

I’m, sure you know how much you pay for food, clothes, medications, utilities and rent, but if you move from your city to another or to a different country, Numbeo may help you.

Less obvious things to consider:

30. Medical insurance

If you are in perfect health, it’s cool, but if you aren’t — working is going to be a problem. People tolerate sickness and medications differently, therefore, working the whole day might not be possible for you. Serious problems are unpredictable, so you can’t know for sure if you are going to end up in a car accident that will force you to go through expensive and extensive treatment and render you incapable of work. Do you have an insurance policy, or payment for every single service, procedure and drug you receive will come out of your pocket?

31. Family

Are you on your own or do you have a family to support? Being the only bread-winner in the family is tough.

32. Mortgage

I am not so courageous that I will ever take a loan to buy an apartment or house, but those who are braver will have to remember that credits have to be paid.

Leisure

You are not going to work all year long. It is unhealthy, so you might want to take a break and go on vacation. Translators spend the day in front of computer screens, so it is a good idea to visit a fitness club. You might also want to go to a cinema or a restaurant once in a blue moon.

Obvious things to consider:

33. Vacation time

34. Fitness and sports

35. Other leisure activities

I listed here some things to take into account when calculation of a rate is made. Feel free to leave comments and add points I might have missed.