Guide to Professional Freelance Translation and Interpretation | Part 5: Calculate Your Baseline Fee

How To Calculate Translator And Interpreter Baseline Fees

Before we continue any further I would like to review what we have discussed thus far.

·         You are more than just a freelancer, you are a a business owner.

·         You are more than just a translator or an interpreter, you are a professional.

·         Your time, expertise, quality, professionalism, credentials, experience, and so much more justify the salary you determine for yourself.

·         You decide your billing method per-word, hourly or per project because they all boil down to your time.

In other words, since you are a business owner and professional, don't feel bad for charging like one.

 First things first.

Translator And Interpreter Minimum Hourly Baseline Fee

Your minimum hourly baseline fee is your break-even number.

In other words, the minimum amount you are willing to accept in order for you to stay in business.

I'm sure you have come across a formula or simple business guide to help you figure out your minimum hourly baseline fee.  There are plenty online. [1]

It's not rocket science.  It's common sense.

And it's simple math.

Translator And Interpreter Annual Salary

Remember back in part 3 where we spoke about your target annual salary.  

Now that you have had time to think and research your specific circumstances you should have an idea of what you want your target annual salary to look like.

Your target annual salary is part of a bigger formula.

Why?

Because a freelancer is not an employee.

Because a freelancer is a business owner, a company.

The Internal Revenue Service defines business as, "any activity carried on for the production of income from selling goods or performing services." [2]

It is crucial we understand the distinction between owning a business (self-employed/freelancer) and working for a business (employee/worker).

This difference is key because although we have looked at the median wages for translators and interpreter, that is precisely what they are, wages, referring to employees, not business owners.  As a business owner, you are responsible for the expenses of doing business, like any other business, so you can't simply guide yourself by the median wage numbers alone.

Why?

Simply because employees have benefits you don't.  And you have expenses employees don't. [3]

Only you can figure out how much you need to earn to make a living, save for retirement, and make a profit.

Translators And Interpreters Are Free To Set Their Own Fees  

It's the law!

In fact, in the United States, only you, the company, are required to establish fees and policies on your own.

The Federal Trade Commission States:  "The antitrust laws require that each company establish prices and other terms on its own, without agreeing with a competitor.  When consumers make choices about what products and services to buy, they expect that the price has been determined freely..." [4]

Translator And Interpreter Annual Business Expenses

Your business expenses includes costs of doing business and overhead.

These may include:

• Accountant Fees/Tax Prep [5]
• Association Memberships 
• Bank Fees 
• CAT Tools/Word Processing/Misc Software 
• Continued Professional Development/Training/Events/Airfare/Accommodations/Meals 
• Foreign Exchange Fees
• Healthcare/Dental/Vision 
• Home/Shared Office Space 
• Internet 
• Invoicing/Project Management Tools/Accounting Software 
• Marketing/Client Gifts/Business Cards
• Office Equipment/Printer/Maintenance/Repairs/New Laptop or Computer
• Office Supplies/Stationary/Paper/Pens/Dictionaries/Glossaries/Misc 
• Phone 
• Taxes/VAT/Social Security [6], [7]
• Travel 
• Web Hosting

Translator And Interpreter Adjusted Annual Salary

Your Target Annual Salary + Your Expenses/Overhead = Your Adjusted Annual Salary

Translator And Interpreter Annual Working Hours

First Consider Time Off

Factor in vacation, sick time, or weekends, etc.

Weeks per year (-) Your week(s) off = Number of your working weeks.

Second Figure Out Annual Billable Hours 

What will your typical schedule look like.

Number of your working weeks (x) Number of your working hours per week = Your working hours yearly

Third Delegate Your Time

What percentage of time will be spent working on translations and interpretations and what percentage will be spent on administrative work (emails, invoicing, marketing, CPD, providing quotes, etc.).  For example 75% working and 25% admin.

Your working hours yearly (x) 75% = Your billable hours

Translator And Interpreter Minimum Hourly Baseline (MHB) Fee Per Hour

Your Adjusted Annual Salary (/) Annual Working Hours = Minimum Hourly Baseline (MHB) Fee

Your minimum baseline fee will be different from all other professionals like I mentioned before because each professional, each job, client, and circumstance is different. [8]

So now that you know your MHB or break-even number, how do you justify your fee to your potential clients?

The answer lies in your communications, relationship, and agreement with your clients, that's next!

Here is a recap of the guide:

Part 1: Consider Yourself A Business Owner

Part 2: Be Professional In Everything
Part 3: You Determine Your Target Annual Salary
Part 4: Fees: Per-Word, Hourly or By The Job
Part 5: Calculate Your Baseline Fee
Part 6: Working with Clients Before, During, and After I
Part 7: Working with Clients Before, During, and After II

As always, thank you for reading and sharing my posts.  Please, if any of my blogs inspire you, give credit where credit is due.  Let's be fair, honest, and professional.  Let's help each other be great and stay great!

Feel free to connect or email me, Carmen Arismendy.  I'm a professional Spanish interpreter-translator and founder of eLingual.Net.  I started the eLingual Network because I could not find a fair, no middleman, no job bidding, ethical, and transparent meeting place for translators, interpreters, and clients online.  The website is in beta phase and by no means perfect but it's a step in the right direction.

eLingual.Net's mission is to spread happiness worldwide through happy translators, interpreters, and clients.

For the professional translator and interpreter, this means no middleman, no job bidding, the freedom of setting their own fees, having control over their services, and who they choose to work with.

For the clients, this means working directly with ethical and professional translators and interpreters committed to quality and value.

Join our happy community, let's work together!

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References

1. Infographic: How to Calculate Your Freelance Hourly Rate (Creative Live Blog) Retrieved May 16, 2016, from http://blog.creativelive.com/how-to-calculate-freelance-hourly-rate-infographic/?utm_source=freelancers-union&utm_medium=blog

2. "Trade or Business" Defined (Internal Revenue Service) Retrieved May 16, 2016 from https://www.irs.gov/Charities-&-Non-Profits/Trade-or-Business--Defined

3. Here’s What You Should Know About Your Paycheck (Time) Retrieved May 16, 2016, from  http://time.com/4286602/paycheck-101/?xid=time_socialflow_twitter

4. Price Fixing (US Federal Trade Commission) Retrieved May 16, 2016, from https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/dealings-competitors/price-fixing

5. Bookkeeping Basics for Small Business (US Small Business Administration) Retrieved May 16, 2016, from https://www.sba.gov/blogs/bookkeeping-basics-small-business-0

6. Just Started a Business? Understand your Tax Obligations (US Small Business Administration) Retrieved May 16, 2016, from https://www.sba.gov/blogs/just-started-business-understand-your-tax-obligations 

7. Tax Information For Businesses (Internal Revenue Service) Retrieved May 16, 2016, from https://www.irs.gov/Businesses

8. What to Consider Before You Price Your Products (Services) (US Small Business Administration) Retrieved May 16, 2016, from https://www.sba.gov/blogs/what-consider-you-price-your-products 

Updated 12.1.16