Friday, November 25, 2011

Why high-volume discounts seldom make sense

I'm sure you can all recognize an exchange such as the following:

“I'm sorry, we cannot accept your rate of $ 0.X/word. But if you accept $ 0.Y/word, instead, we can guarantee you plenty of work."

A problem, sometimes, is that the promised "plenty of work" never actually arrives but your new customer insists you have to bill them at the high-volume rate. The real problem, however, is if they keep their word and start to swamp you with plenty of big projects.

Yes, your income might appear to go up, and you'll feel the thrill of always being busy. Doubts will begin to creep in, however, when you find yourself turning down assignments from other prospects because you are always busy working for your high-volume customer - especially when you have to refuse higher-paying projects.

Also, if you are always busy working for your high-volume customer, the percentage of your work coming from them creeps up over time, which puts you in a risky situation: you are letting yourself become a hostage of a single customer.

If (but I think I should really say "when") your high-volume customer comes back to you demanding further discounts (maybe lamenting the difficult market situation, or whatever), and you have allowed yourself to rely on them for 80% of your income, you'll be hard pressed not to give in (not only that, but you'll have already showed them you are an easy mark - after all you already lowered your rates for them, didn't you?).

So, in short, if you give in to request for volume discounts:

  • Sometimes you will give the discount, but won't get the volume
  • When you do get the volume, you'll find yourself turning down higher paying jobs because you are so busy on the lower paying ones
  • And finally, you'll find yourself an easy target for further discount demands.

So tell me again: why did you think it was a good idea to agree to your customer's high-volume discount request?


  1. That's really a good point! It's the other side of the coin we should all think about. We should not fall into this trap and let us tempt by these proposals because in the long term they won't pay back.

  2. Check out Mox's blog on discounts for high volumes of work (and other defense techniques for translators):

  3. This is so true! Especially the part where you end up turning down better-paying jobs because of previous commitments. Unfortunately there will always be people willing to work for peanuts, I learned not to be one of those. It's risky but it pays off.

  4. The thing is that an individual translator cannot enjoy economies of scale, unlike an LSP. In other words, whether you work 10 hours or 100 hours, your effort (cost) is pretty much linear.
    They might say that you save marketing costs by not having to look for other jobs, but they save in procurement costs, so the argument goes both ways.

  5. Great post, I completely agree! In fact, when I get asked for discounts I tend to argue that my time is worth the same... always. I would only accept it if was a very easy job that would take me much less time to complete.
    And great point about avoiding relying on one customer for most of your income. It's a dangerous situation that could get you in trouble pretty quickly if that client decides to change supplier or goes under.

  6. This high volume issue is certainly a problem. I face it every spring with financial statements, although the last couple of years I have just told the other clients that I am not available during this period. If it went on all year, I'm not sure what to do. The fact of the matter is that large projects at the same rate as miscellaneous ones are FAR more lucrative.

  7. Thank you.
    I sometimes need to know, that other translators think the same way I do.

  8. This just cannot be blogged about enough. Very well put, thanks.

  9. Thank you for the post! It really gives me the 'power' to make a wise decision in accepting 'big project' promises.
    Having another income source helps avoiding this trap.


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