Should the lowest Price Always win the Contract in the Language Solution Industry?

By: Jack Xu

I am sure you are all familiar with the old adage that lowering prices will lead to lower quality services. Does this hold true in the Canadian Language Services industry? You could say that the answer is yes and no. It all depends on which actual services you are providing. When looking at interpretation and translation services, we see completely different cost structures impacted by: expertise, credentials experience, technologies and service delivery channels.

Pricing is one of the four pillars of marketing, and setting the right pricing levels is a cornerstone of the marketing mix. The pricing strategy you implement for your services sends a message to clients about your worth, creating a perceived value for your language services. A premium pricing strategy may imply superior quality services and customer service while lower prices may convey your services are not as good as the other competitors in the market. For a buyer, it is difficult to make apples to apples comparisons between service providers. Therefore, they tend to use pricing as one indicator of quality.

One way to overcome this challenge when bidding for a new interpretation contract is to make sure that the buyer understands that pricing should not be the first and only consideration in awarding business. They need to be cognizant of the value propositions a service provider can bring which in the long run may result in cost savings to the organization. Instead of asking who has the best price, they should ask: Does this organization understand my problem? Can this service provider solve my problem? Can I trust this organization? Do I like their approach and the solutions they have to offer? Once these questions are answered to their satisfaction, they should then focus on unique value add-ons such as: certified interpreters, subject matter expertise (legal, health, finance, insurance), variety of languages (including ones of lesser diffusion), geographic coverage, account management team, customer service, liability insurance coverage, additional services such as on-demand and user friendly billing/scheduling process.

Clients need to understand that there is an incurred cost for the language service provider to make these value add-ons available. Large investments in technology which simplifies scheduling, billing, communication and other mundane tasks saves the client time and money in the long run. Hence, if the lowest price is the deciding factor in awarding contracts, eventually all these value adds will disappear. The impact of a low pricing strategy will compress profit margins which will force the service provider to operate on a low budget. With a low budget comes cutbacks, which will negatively impact all the value-adds offered. Quality, fulfillment, and customer service issues will eventually dominate.

Translation services is a little more forgiving when it comes to competitive pricing. Increased levels of globalization, corporate expansion and immigration are boosting the demand for translation services worldwide. The overall industry is growing because of the amount of unprecedented content out there. Statista forecasts that the Global Languages Services industry will generate $47.5B in revenue by 2021 and this is being spearheaded by technological advancements in translation. Machine translation is allowing organizations to churn out high volumes of content faster and cheaper. However, if highly specialized content needs to be translated, the industry still recommends human translations for the best possible accuracy. This of course will be available at a premium price.

The bottom line is that there is always flexibility in pricing but taking the cheapest route may impact the quality of your language services. If your documents relate to health and legal issues or are catered towards a large audience, your best option would be to pay for the quality that satisfies your needs.