Price is What You Pay. Value is What You Get. (Part I)

Imagine you won an amazing last-minute vacation on an exotic island. Maybe a Caribbean wildly beautiful island in January, where the sun is shining on stunning white beaches. Your skin needs sunscreen, and you rush to the supermarket to buy your favourite suntan lotion for 30 dollars. When your flight finally lands, your luggage is lost. No way. You cannot lose one single day at the hotel and decide to buy another sunscreen tube to enjoy your vacation. You go to the hotel shop. There, you may choose a cheap “second choice” lotion at 15 dollars, or you may buy the same high-SPF suntan lotion you like for 50 dollars. What? Yes, you buy it, even if you know it is almost double the price.caraibi (2)

What I want to point out is that value is something different from cost, and perceived value in case of emergency is higher than normal perceived value.

That is the reason why you pay a surcharge for the product (or service) you receive. We pay surcharges all the time. When we call a plumber on Saturday because the kitchen tap needs fixing, or when you need to deliver a letter in one day instead of standard three days.

Translation is a service. Surcharges are sometimes justified.

Imagine. You have an important meeting with a foreign investor. Urgent translation in one day is needed of a ten-page document that you forgot to prepare in advance. You are willing to pay a surcharge.

If you just need to broadly understand the meaning, you will probably need a rough translation or no translation at all. If the document is technical or marketing material – and for an important meeting, you are willing to pay more for the translator’s specialisation and timely delivery. If your translator is able to remove your pains and increase your gains, then the value delivered is higher (and it will be perceived as such).

Probably, the most common approach to pricing a product or service is cost-based. A company (and a freelance translator) simply calculates its unit cost, and applies a mark-up to set the price. The mark-up is its desired profitability. Another common approach is to price products based on what the competition charges. Then, there is consumer based pricing or value pricing, which begins with the customer.

“Price is what I pay. Value is what I get” (Warren Buffett)

The value approach is based on each client’s willingness to pay, on negotiation, and above all on the provider’s understanding of what the client actually needs, as well as why and when he/she needs the translation service.

Value based pricing focuses on how much value your service will add to the customer and requires deep analysis of the customer and how they will benefit from the service. Finally yet importantly, the translator’s ability to provide the service that can satisfy their needs.

Know your customer; offer the “right” service at the “right” time and at the “right” price. To achieve a win-win situation.

What do you think? How could you increase the perceived value of a translation service? (To be continued)

 

You may also like:

How to Price Your Services as a Freelancer

10 Tips for Pricing Your Product

 Value Pricing vs Cost based pricing

Price Your Product or Service

7 Tips for Clients to Get a Translation that Works

 

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