Thursday, December 3, 2009

OTM workflow – Part 2 – Budget calculations

OTM supports project managers in their project budgeting.
The agency administrator sets his/her own agency’s project budgeting calculation basis in the OTM administration section.

The starting point is the price at which the service will be sold to the end client. Then the administrator sets the margin that covers the agency’s expenses as well as its entrepreneurial risk and desired profit. The sales price minus that margin determines the purchase price, i.e. the fee that can be paid to the freelancer:
Sales price (price at which the service is offered to the customer) less margin (calculated as a percentage) for agency’s expenses, entrepreneurial risk, and profit
= purchase price from the translator
This procedure has the advantage of taking into account different parameters that affect the sales price in the determination of the purchase price. For example, a source file in PDF instead of Word format can generate additional processing work, or the customer’s desired weekend turnaround may involve a higher fee on the part of the translator.

In other words: Higher customer prices trickle down to improve translator remuneration. At the job offering stage, the system automatically shows the PM the freelancer’s fee computed according to his/her agency’s calculation parameters. This is only a guideline; in actual fact, fees can of course be adapted by the Project Manager to each individual case.

Fair Play
Years of practical experience have proven that this procedure has decisive advantages. Freelancers develop the positive perception that fees per word are not always the same but that they may sometimes also be higher (e.g. because the agency may have been able to negotiate a higher price with the customer). Of course the reverse conclusion is that freelancers will occasionally also accept lower fees (because the agency may have granted the customer a discount in order to obtain the job). Calculations must in any event be handled with care. Agencies cannot endlessly grant discounts to customers and try to make up their margin by dipping into the translator’s share. This would most likely quickly lead to freelancers no longer taking on that agency’s jobs.

For all OTM users, the goal is to develop balanced and overall equitable relationships also in regard to fee arrangements in order to live up to the networks motto of “Fair Play”.