How to negotiate prices and discounts with translation agencies

At the start of most business partnerships, there will inevitably be some negotiation of prices. If you’re not familiar with the translation industry, you might not know what exactly you can negotiate. Here are 12 areas where you can negotiate with your translation partner to make sure you get the best possible terms for your business.

Price per word

Translation services are usually offered with a price per word (only in rare cases will some agencies use the outdated per-line calculation method). The price per word varies depending on language and service level, but tends to be somewhere between 0.11 and 0.30 euros. So negotiating the price per word is one of the most obvious strategies for saving money from your translations – and it can make a big difference. Although it might not look like much at first glance, given that you’re talking about a few cents either way, the difference between paying 0.13 euros and 0.18 euros per translated word really adds up in the final analysis. Here’s the maths.

A 130-page manual will have about 80,000 words on average. Compare the price per word:

• 80,000 x 0.13 = 10,400 euros
• 80,000 x 0.18 = 14,400 euros

A difference of 4,000 euros can be crucial for companies of any size, especially because manuals are often translated into more than just one language – it’s not uncommon for translations into 25 languages (or more) to be required. So straight away, the savings to be made can be 100,000 euros or more. 

It’s definitely a good idea to focus on the price per word. But it can be risky: if you go too far when negotiating, you may end up paying less, but you might not get the high-quality translations you need! So rather than thinking solely about the price per word, you should always consider the service level in your negotiations.

Service level

When a Purchasing department negotiates with a translation agency, it’s clear what they need: translations at the best possible price. But there’s more than one way to get a translation, and the way that works best for one language and source text might not work best for others. There are various service levels:

• Machine translation with full post-editing (MTPE)
• Machine translation with full post-editing (MTPE) and review
• Human translation
• ISO 17100 human translation with review
• Transcreation

To make sure you save money, you should check that the translation agency uses machine translation for projects where it makes sense, as that will give you the lowest price for your translation. Likewise, make sure the agency uses human translation or transcreation for marketing texts and insists on an ISO 17100 review for sensitive projects such as contract translations. The price per word for the latter service levels will be higher, but you’ll be getting peace of mind – the costs that errors in a legally binding agreement could cause don’t bear thinking about. And don’t think you can simply pass on the blame to the service provider: when choosing the service provider and their services, you need to exercise due diligence. In short, you can’t afford to take a broad-brush approach to translations, and the translation agency should take the time to explain all the issues and advise you on your best options. Agreeing on a suitable service level will save you lots of money and stress in the long run.

» Find out more about service levels, and which service levels are suitable for which source texts.

CAT grid

When working with a translation agency, the CAT grid determines the discount structure. The percentage figures in a CAT grid relate to the price per word, so the grid shows what percent of the price per word you’ll be paying. That means a figure of 60% in the CAT grid gives you a discount of 40%. Find out more about how exactly a CAT grid works. There are three main issues to bear in mind when buying translations:

• The lower the percentage figures in the CAT grid, the better.
• Ask the agency to explain the CAT grid and their thinking behind it in detail, and ask about the benefits and drawbacks of working with and without a review.
• The more familiar you are with CAT grids, the easier it will be for you to have your say and the stronger your negotiating position will be. 

Here’s an example of a slightly complex CAT grid: 

• The green box in the table shows three different service levels (human translation, machine translation and full post-editing, and review).
• The orange box shows the percentage figures from the CAT tool analysis. The CAT tool analysis compares the new documents to be translated with previously translated texts and the translation memory. The more similar individual text segments are, the higher the match rate (in the orange box) and the less you’ll pay. 
• 101% matches (segments previously translated and saved in the translation memory) give you a decision to make: do you accept them “blind” (i.e. without a review), or do you want a translator to check them again (i.e. with a review)? Your decision will depend on the quality of the translation memory, and this is another opportunity to save money – if you focus on high-quality translations from the start, you’ll avoid constantly having to review the entries in the translation memory. 
• The blue box shows the percent of the price per word to be paid. In this case, for a human translation you’ll pay 90% of the price per word when the match rate is between 85% and 94% – essentially a 10% discount for that category.

Different ways to get discounts

Bulk discount

If you work in a Purchasing department, you’ll know all about bulk discounts. And the total amount you’re getting translated can be a major factor when it comes to saving money. From the perspective of a translation agency project manager, there’s no difference between a job with 100 words and a job with 10,000 words – the amount of work involved in setting up and managing the job is more or less the same, and of course that means a 10,000-word job is much more lucrative. That means your Purchasing team should liaise with the other departments at your company and make sure as many translations as possible are ordered from one translation service provider, rather than sending lots of smaller jobs to different places. Bulk discounts range between 1 and 10%, which can make a big difference to the price you ultimately pay.

» Find out more about the benefits of sticking with one translation service provider.

Advance planning discount

This form of discount is often overlooked when negotiating prices, but it can be a great way to save money if you don’t need your translations in a hurry. A typical clause in an agreement might look like this:

A translation agency may be willing to give you an advance planning discount, as the ability to plan projects in advance makes project management considerably easier – the more urgently a translation is needed, and the shorter the deadline, the higher the stress levels and the workload for the project managers. So if you can give the agency the chance to plan ahead, you as the client can benefit from a discounted price. 

Minimum rates

Minimum rates are effectively the reverse of bulk discounts, and they can apply when very short texts need to be translated. Because the work that goes into managing a 100-word project is more or less the same as for a 10,000-word project, translation agencies (and the freelance translators the agencies work with) have to apply minimum rates for these small jobs so that they don’t end up out of pocket. As the purchaser, there a few ways to make sure you get the best possible terms:

• If you regularly send the agency large projects (adding up to around 450,000 euros a year or more), you’ll be making such a big contribution to their turnover that they should be happy to handle the odd smaller job without insisting on minimum rates.
• If you won’t be giving them that much work, but you know you’ll regularly have small jobs for them, you have two options:
  • Talk to your various departments and find out if you can wait until you have enough texts to send the agency for translation in order to avoid paying minimum rates.
  • Agree that there will be no minimum rates, but accept a higher price per word.

If you choose the latter option, we recommend crunching the numbers with the various departments at your company.

For example:

The Marketing department regularly needs short texts translated. You could get the team to wait and work out when they have enough text for the minimum rate to be worth it, but you’d rather avoid complicating things and “wasting” time like that.

Accepting a slightly higher price per word – in our example 0.17 euros per word with no minimum rate, rather than 0.15 euros per word plus a minimum rate of 40 euros for each job – may save you some money, provided that the Marketing team regular needs texts shorter than 235 words to be translated. Here’s how:

Say you have 200 words to be translated:

So it’s worth consulting the various departments at your company to find out what they need.

Layout design and desktop publishing (DTP)

Good translation agencies will always try to give their clients the best possible service. That often means delivering ready-to-use translations, so that clients need to do as little as possible with their texts once they get them back. This service comes at a price, of course – and that offers clear potential for you to save money. If you prefer to handle layout design and DTP yourselves, you can reduce what you pay the agency by telling them that in advance.

And the reverse is also true: If a translation agency can’t go any lower when negotiating the price per word, you could at least try to get free DTP as part of the package. Again, it’s best to talk to your in-house departments and establish whether they’re happy to do DTP themselves, or whether they’d prefer to outsource it.

Cancellation fees

Cancellation fees are another chance to save money and use it more effectively elsewhere. If a department knows that cancellations almost never happen, this can be a useful bargaining chip in your negotiations. Cancellations are extremely time-consuming for translation agencies, and they cost money too, so framework agreements between agencies and clients often include cancellation clauses.

Express fees

Time is money, and sometimes you have neither. Stress is the biggest problem for every project manager, and translation agencies sometimes have no option but to calculate and charge clients for the extra work that goes into meeting tight deadlines to avoid making a loss on the project. And that gives you as the purchaser room to negotiate: if you know that you will never have projects with an urgent deadline, you can agree a higher express fee and can negotiate lower prices per word or other beneficial terms “in return”.

Alteration fees

Clients telling the translation agency that they’ve made changes to the text once the project has already begun is one of the main bugbears for project managers. The changes can be incorporated into the project, but it takes time and slows things down. Alteration fees should cover the costs that arise when this happens, but they should also serve as an incentive to ensure that texts are always finished before they’re sent to the agency. So we recommend making clear to everybody involved in sending texts for translation that these changes cost money and that changes should not be made to texts once the translation order has been placed. This will put you in a stronger negotiating position with the agency.

Project preparation

To help the translation agency work as quickly and effectively as possible in their CAT tool, the source texts must be prepared so that they’re easy to import into the CAT tool. Depending on the file format, that can take time. So as the purchaser, you should pay close attention to which file formats are included in the price per word and which file formats will incur additional fees. As before, it’s best to talk to the people at your business who order translations – they know which file formats they send to the agency, and that gives you another opportunity to reduce costs. 

Terminology management and reference materials

These are two other areas where you can influence the amount you pay. Terminology management matters, and in the long run it can save you lots of money – though of course in the short term you will have to invest time and money in implementing effective terminology management. Talking to the translation agency about what you expect from them in terms of terminology management, and what you don’t, can help you make savings here and there. 

The same applies to reference materials. If you need them to be taken into account during translation projects, this will result in extra work that needs to be paid for. The better prepared your reference materials are, the less extra work your translation agency will have to do. We also recommend that you ask the agency: “We need to make more savings, and we’re prepared to put the work in to do that. How should we prepare our reference materials to make using them easier for your agency, and cheaper for us as a result?” If the agency views its relationship with you as a true partnership, questions like these are bound to result in a solution that benefits everyone!

Looking for an all-in service?

This is the dream for all purchasers and all translation agencies, where money is secondary and everyone’s focus is on producing top-quality texts. Then the whole situation looks very different. You can draw up the framework agreement and all workflows to suit the actual needs of your in-house departments and ensure you get high-quality translations. Agencies have a good approach to this: they tend to set higher prices per word, but they don’t charge any extras (such as express, alteration or cancellation fees and so on). For this to work, you and the agency have to be clear about what’s needed and what isn’t, so that you’re on the same page when negotiating prices. After all, clarity is key in every relationship, whether in business or anywhere else. 

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