Is The Translation Business Profitable? – Lion People Global
Not all industries are equally profitable. And not all areas of all industries are equally profitable either.
The translation industry is no exception.
Uniquely, the translation industry touches on almost every other industry. It also covers hundreds of language combinations, several different services, and a couple of different business models.
So, the short answer to this article’s main question is: it depends.
Let’s look at what this depends on: the different parts of the industry and each part’s profitability.
What is ‘the translation business’?
At its core, the translation business is the industry based around the translation of texts from one language to another for a fee.
However, in practice, it also includes associated tasks, including document formatting and proofreading, and related services, such as:
- Interpretation (both simultaneous and consecutive)
Many outside of the industry aren’t aware of all of these services or the terms used to describe them. They often confuse translation and interpretation, for example.
There are two basic business models for translation.
1. Language service provider (LSP)
Outside of the industry, the term ‘translation agency‘ or ‘translation company‘ is still often used.
However, within the industry, the term language service provider (LSP) is commonly used. This is because translation agencies usually provide more than just translation services.
How do LSPs work?
On the most basic level, LSPs obviously require translators first and foremost. But they generally make money from being able to scale translation (and other) services.
To scale efficiently (and gain the required LSP industry-standard certification), project managers are also needed.
And in order to grow – or even simply to survive – they need a good sales and marketing strategy tailored for the translation industry.
Early on, some LSPs can use their translators to fulfil non-translation roles. But this may become unsustainable quickly.
After all, once new clients are brought in, there will be more language services to provide. Suddenly turning off marketing efforts will ultimately lead to inconsistent marketing.
Besides the costs of translators and other employees, LSP overheads often include (but aren’t limited to):
- Business-level software subscriptions (especially translation memory tools)
- Office space
- IT maintenance services
- Industry certification costs
- Membership costs for industry associations
In order to gain a significant share of the translation market, agencies need to be able to service companies of a certain scale.
However, there often isn’t the time (or long-term value) to achieve that scale in-house. This means that there are also often costs around recruiting and onboarding freelancers.
Beware of outsourcing to scammers!
As with many industries, translation has its bad actors.
When outsourcing work to freelancers, the first task LSPs should carry out is checking for quality.
However, there is no guarantee that the freelancer will maintain this level of quality once they have secured work. This is why proofreaders, project managers and – of course – long-term working relationships with trusted freelancers are so important.
Another issue is direct scam artists. These often pose as professional translators yet only run text through Google Translate, or simply send text pasted from other sources on the web.
Scammers often trick translation agencies by using fake names and fake CVs. They also often offer agencies relatively low rates to increase their likelihood of securing projects.
The potential for the damage these scammers can do to your LSP’s reputation and earnings is huge.
Websites such as translation-scammers.com help keep translation industry workers up-to-date with the latest scammers’ details. And tools like Copyscape help you spot plagiarism.
There is also another protocol you can follow to reduce your exposure to this (which we will write about at a later date!).
2. Freelance translation services
Freelance translators make their money by working with multiple clients and projects.
Their success often depends on their relationships with direct clients or translation agencies. However, some manage to find a regular stream of work from freelance platforms like Fivver, Upwork, etc.
Freelance translation work and earnings variety
Freelance translators’ work and earnings vary a lot.
A freelance translator can generally work from anywhere in the world. However, they are obviously limited to working within their language pair(/s) and (for more specialist work) fields of knowledge. Ideally, the linguist should be a native speaker who is also fluent in the culture for which they are doing the localization.
They also have to work with different going rates for different tasks, such as localization and transcreation.
Freelance career progression paradox
As freelance translators gain experience and expertise, they can naturally command a higher rate.
Though in itself this is obviously good, it can create a situation where experienced translators price themselves out of certain projects.
The most effective way to counter or prevent this situation from occurring is to diversify your portfolio.
In practice, this means avoiding hyper-specialisation in industries where there may not be enough work to sustain full-time hours, or simply offering lower rates for non-specialised translation projects.
The practice of using translation test samples
Free translation test samples are part and parcel of building new relationships in the translation industry. This practice is fairly unique to the translation industry.
250 words is generally accepted as the maximum length of a free sample. Translators shouldn’t expect to always get detailed feedback on samples.
However, they should, of course, receive a response later on as to whether they were successful or not.
Minimum charges, deposits, payment terms
As with LSPs, freelancers also need to consider a multitude of payment terms around their services.
Minimum charges are important if freelancers want to effectively manage their time. Deposits of half the project’s cost are often needed up-front, especially with new customers. And payment terms should be carefully considered for all clients.
OK, there’s variety, BUT is the translation business profitable?
Whether for LSPs, or freelancers, the following services are (with exceptions) the most profitable in a purely cost-per-task sense (see below section, ‘Scale is key’).
Translation is usually charged per word.
For example, translators translating from English into Spanish can charge on average between $0.08 – $0.11 per word.
This means to translate 1,500 words of text (about 3/4s the length of this article) would cost between $120 – $165.
In this case, the reverse language combination will cost about the same. But generally, translation into English costs more because of the relative scarcity of native English speakers available for translation.
Whereas translators of English to Hmong (spoken in several countries in Southeast Asia and by Hmong diasporas abroad), can charge between $0.11 – $0.15 per word. However, they have the disadvantage of working in a much smaller market.
These rates can vary in different global locations.
You will also likely find that specialist/technical translation (medical, legal, industrial, etc.) is charged at a higher rate – often double that of the rate for general translation.
However, the disadvantage for translators (and their income) is that specialist translation takes much more time to complete.
Scale is key
A general industry consensus is that a translator working alone, without the aid of computer-assisted translation (CAT) tools, on standard (non-technical) documents, can usually translate between 2,000 – 3,000 words per day.
If this is charged at any of the standard rates mentioned above, then the translator could expect to make between USD $3,500 – $9,000 per month [GBP £3,090 – £8,000] (or USD $38,400 – $108,000 per year [GBP £33,00 £95,500]), before taxes.
Of course, these costs don’t include other administrative tasks and time between projects.
After all, being a freelancer isn’t always straightforward…
Freelancers are also limited by how many words they can process each day. They have to turn down projects for scheduling, size, or deadline-related reasons.
This is not as big a problem for larger LSPs. They can divide up projects between translators. And because other administrative and sales tasks are done separately, they can further maximise their translators’ effectiveness.
This compensates for their higher overheads. But they need a steady stream of projects for their translators to be working on in order to make a profit.
Relative to freelance translators, LSPs also have the inherent added fragility of operating a more complex system.
In other words, if anything goes wrong with any part of their process, it can hold up the rest of it. But this is not unique to the language services industry!
Is literary translation profitable?
Literary translation is quite different to ordinary, commercial translation.
The global book market is currently valued at USD 138.38 million. It’s difficult to find an up-to-date figure on how much of this is made up of translated texts because it varies so much from country to country.
One commonly quoted statistic is that only about 3% of books in the English-speaking market are translations into English.
A decade-old study also found that the number of full-time literary translators around the world is also relatively low (less than 500 in the UK, for example).
Rüdiger Wischenbart et al’s ‘Diversity Report 2020’ (‘Trends in Literary Translation in Europe’) found a number of interesting patterns across the literary translation industry. This included the shares of translations of given original languages globally.
The book industry more broadly makes a disproportionately large number of profits from a select few bestsellers. So, translators, like authors, are statistically unlikely to be involved in particularly lucrative publishing sensations.
Perhaps the comments by writer and translator Simon Leys, who translated R. H. Dana’s Two Years Before the Mast (1840) into French, will give some insight:
“I rewrote the manuscript three times and was eighteen years on the job. Even though my French version […] was well received by critics and the public alike, I had fun with a little calculation, placing my royalties alongside the number of hours spent on this work: it’s as clear as day that any street sweeper or night watchman is paid a hundred times better.”
The copywriting profession: similar to translation?
Copywriting is the activity (/profession) of writing text for marketing materials, including adverts, communications, brochures, etc.
Like translators, copywriters make their living from words.
Also, like translators, copywriters vary in how they charge clients. Many charge per project, but others charge per word or per hour.
They vary even more in how much they charge clients. At the bottom end, you may be able to find freelance copywriters willing to work for as low as $20 per hour. At the top end, high-level copywriters like Dan Kennedy are said to charge over $20,000 per day.
The translation (and interpretation) industry does have a variation in fees, too. However, they are not as wide as in copywriting.
In the language industry, interpretation is the live oral translation of languages.
It is divided into two main types (see below). Some interpreters specialise in one kind of interpretation, but many do both.
Interpreters usually charge day rates. Like translation rates, these vary according to the language combination and industry. They also charge for expenses, such as travel and (if needed) accommodation.
Interpretation projects often require prior preparation and a lot of travel. So, marketing services and managing schedules are difficult to do whilst working directly on projects.
Consecutive interpretation requires the interpreter to repeat the speaker’s words in another language immediately after the speaker has spoken them.
An average day rate for consecutive English to French interpretation, for example, would be anywhere between USD $170 – $550 [GBP £150 – £500].
Simultaneous interpretation is often more difficult than consecutive interpretation. It requires interpreters to sit in sound-proof booths with audio equipment in order to effectively and accurately focus on the task.
The fast pace and intense concentration needed means that it usually requires two interpreters to switch every 15 minutes.
For simultaneous interpretation, the pay would more likely range from USD $280 – $1,000 [GBP £250 – £1000] per interpreter.
In the language industry, localization is the process of adapting or editing text as it is translated in order to better suit the target language (that is, the ‘going into’ language).
All kinds of linguistic and cultural expertise are required to do this well, which makes it more challenging and time-consuming to do than straightforward translation.
It is often charged by the word. Generally speaking, localization rates are nearer the higher end of translation rates.
So, for example, if English-to-Greek translation usually costs USD $0.11 per word, then English-to-Greek localization might cost USD $0.15 per word.
4. Transcreation (and other marketing services)
Transcreation is when text is transformed as its translated. It involves not only translating the content but also requires creative treatment and solid interpretation of the text’s meaning.
The resulting output needs to flow, marketing materials could require it to read well and “snappy”. It essentially borders between localization and copywriting services.
Transcreation often requires a lot more preparatory and explanatory work than straightforward translation. Clients’ feedback can also result in multiple iterations of the same material.
Transcreation is usually charged at a per-project level. Projects can vary from small websites to the transcreation of large brands and all of their associated marketing materials.
Will machine translation and AI reduce the profitability of translation?
Machine translation and AI look set to make a big impact on the translation industry.
Both are predicted to drive down translation rates and reduce the need for human translators.
There are potentially positive aspects to these technologies though. For example, it’s also possible that they will help increase translators’ work capabilities and capacities.
At the very least, it’s likely they will significantly change the translation profession and how its economics work.
According to Statistica, the global language services industry is worth about $57.7 billion and is growing.
It is a competitive industry, which will reward those who can both market themselves well and, of course, provide high-quality services.
There are two main business models in translation: freelancing and language service providers (LSPs).
Within the industry, there are many different services, including interpretation (both simultaneous and consecutive, localization, transcreation, project management, and more.
The key to increasing profits is scale. But with scale comes complexity.
However, understanding how to nurture your LSP or interpreting company through growth and where to navigate the changing language services landscape is vital.
Fortunately, understanding and building that complexity is easy if you find the right partner or consultation service to help you with it.
If you would like any consulting on staffing or M&A in the translation industry, we could be that partner for you…