3 Calculations Every Freelance Translator Should Make On A Yearly Basis
As we enter the last quarter of the year, one of the ways we can reflect on the year that passed and what’s to come is by crunching some numbers. Sure, unless you’re a financial translator, graphs and accounting figures might look like hieroglyphics to you.
But to keep a healthy business, we need to balance the art of translation with business pragmatism. Before you set your goals for 2021, consider doing these 3 calculations to draw actionable insights from the results of last year’s work.
Differences in profitability between clients or services
If you’ve been following us for a while, you’ll know we’re very fond of time tracking. Assuming you’ve been tracking your time for all projects last year, you’ll be able to calculate how much you made per hour from each client and service.
Manually, you can calculate this by taking the total amount invoiced for one client and divide it by the hours you spent. Same goes for each service. LSP.expert generates these reports automatically for you.
This calculation may be a revelatory takeaway for when you plan where you should take your business in 2021.
Although 2020 was a very special year, less affected by seasonality than global crises, you should still look at seasonality trends. Do you get more work in certain months than others? Keep track of this over 2021, so that you can get a clear idea of what periods in the year risk being famine periods. That way you can buffer and plan for them.
Be sure to include your expenses for each month. If you map out an income-to-expense ratio and create a year-over-year graph, it’ll be easier to plan next year out.
Job scope accuracy
Have you ever heard of scope creep?
That’s every time you hear “oh, there’s just one extra sentence we’d like to get translated” and “can you just check this for me really quick?”.
We think it’s important to calculate and have an idea of how much this is really costing you. Since LSP.expert’s time-tracking tool syncs with your invoicing, you can see how much time you actually spent vs how much time you meant to spend on a project.
Then, you just calculate the percentage of extra time worked with this formula:
(Hours worked – hours expected) / hours worked x 100
Example: One month’s work with big translation agency
Hours expected: 21
Hours actually worked: 27
(27-21) / 27 x 100 = 22.3%
That’s 22.3% of your work for this client done for free! Of course, this calculation will require you to be a time-tracking ninja, to begin with (even if you’re charging by the word). If you find you’ve been working a lot for free (those many hours can add up to a lot!), it may be time to rediscuss pricing with your client.
Having these calculations on paper should help support your case.
It’s never too late to start keeping track of your finances
Maybe you don’t have enough data yet to do the above calculations for 2020. If you do, good for you! If not, you can start tracking now so that you can have enough insights next year to take the right action.
With LSP.expert, you can track your time and link it directly to invoices. LSP.expert takes this data and draws up the reports for you automatically.
Do you track your time for each job?