The ATA Chronicle - January/February 2018 - 12

WHY CAN'T I RAISE MY RATES? continued
the skills needed to be a professional
translator or the experience required to
translate in a specific field. The upshot
is that the more scarcity there is in a
"valuable market," the greater the relative
value of those scarce professionals.
Marginal Utility: Likewise, we need to
have a basic understanding of marginal
utility, which in our case refers to the
relative usefulness of a service being
offered. For instance, if there aren't
any qualified translators available in a
language pair, then the first translator to
offer these services is going to have very
high marginal utility. In other words,
she will be "valuable." But as more and
more translators begin offering that same
language pair, the less valuable each of
their individual services will be to the
market as it becomes saturated. This leads
to a more general concept in economics
called the law of diminishing marginal
utility. In short, the more of a given service
there is on offer, the less valuable one
more "unit" of that service is going to be.
Supply and Demand: Our market,
like any other, consists of supply and
demand. Normally, we think of ourselves
as consumers, on the demand side, while
businesses provide the supply. But to
understand the language services market,
we need to flip this model so that we, as
language professionals, are the supply. We
supply words, and our supply is limited
by both our productivity and time.
On the other side, demand comes from
those who need translation services, such
as agencies, businesses, the government,
hospitals, or even individuals. The
important thing on the demand side is
to bear in mind that anyone who wants
our services is also going to face a budget
constraint, which means they have a
certain amount of money they are "willing
and able" to spend on our services.
Consumer Perception: Consumer
perception is another factor affecting
market rates, which, for language services,
means how businesses, agencies, or the
government view them. When consumers
perceive value, they are more willing
to pay for it, which raises a series of
questions for our market. Do buyers of
language services understand the services
being offered? What value do they
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The ATA Chronicle | January/February 2018

Anyone who wants our services
is also going to face a budget
constraint, which means they
have a certain amount of money
they're "willing and able" to
spend on our services.
place on them? What are their budget
constraints? And can any other competing
services (for instance, machine translation)
be used instead? All these variables will
have an impact on final market rates.

THE INTERPLAY OF
SUPPLY AND DEMAND
Both supply and demand are subject to
economic "laws." When discussing these
laws, economists employ a Latin term,
ceteris paribus, generally translated as
"all else being equal." In other words,
to simplify our analysis, we start by
examining just supply or demand, without
any other variables coming into play.
The law of supply is fairly simple. As
the market price increases for a service,
suppliers, or in our case, translators, will
offer more of their services because they
can make more money doing so. Hence,
there is a direct relationship. Price goes
up, supply goes up-ceteris paribus.
The law of demand is the opposite.
As the market price increases, consumers
will demand fewer services because more
expensive services eat up more of their
budget. This is an indirect relationship,
which depends upon both marginal utility
and budget constraints. Price goes up,
demand goes down-ceteris paribus.
The interaction of supply and demand
results in a market. Conflicting forces
push one another toward equilibrium.
The rub is that they won't ever achieve it.
Prices are always changing. Equilibrium
is a moving target. But it's these forces of
supply and demand that help determine
prices, or, in our case, the rates available
for language pairs.
Why are supply and demand always
shifting? Scarcity tends to be the key. In
general, when supply exceeds demand,
prices fall. And when demand exceeds

supply, prices rise. Why? To answer that
question, we need to examine the market
supply of translations in more detail.
There are lots of variables that determine
supply. First, as already stated, is the existing
price on the market, which is sometimes
referred to as the going rate. As the going
rate rises or falls, supply will change
accordingly. The next variable is the labor
required to offer it. In our case, this means
the number of translators on the market
and how much, on average, they get paid
for their services. We also have to take into
account available technology, taxes, and
subsidies, plus the prices of related services,
such as machine translation. Clearly, this
analysis is not simple. But isolating these
factors is the first step to being able to
explain the market's machinations.
On the demand side, we also start with
the going rate. Then we look at variables
such as consumer budgets, the price of
complements and substitutes, consumer
tastes and preferences, the total number of
consumers out there for a given language
pair, and expectations about current
and future pricing, as well as advertising
and marketing. As each of these factors
change, the demand itself for translation
services will change in response.

COMPETITIVE MARKETS
Of course, not all markets are the same.
They range from what economists call
a monopoly-where one provider or
translator completely dominates the
market-to pure competition, where there
are so many translators and buyers of their
services that no individual has any market
power over any other. As you are probably
aware, most markets fall somewhere in
between these two extremes.
The language services market, for most
language pairs, is one in which there
are lots of translators on the supply side
and lots of consumers on the demand
side. Hence, our market is relatively
competitive. What is the implication?
People sometimes (erroneously)
talk about language services as being
commodities. That is, a situation where
everyone is offering the same thing. But
for an economist, commodities have
a specific definition: a commodity is a
standard, interchangeable product. It's
a good, like corn or gold, where there
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Table of Contents for the Digital Edition of The ATA Chronicle - January/February 2018
