How to make a living as a conference interpreter: Part 1 – Understanding expense
Daily fees for simultaneous and consecutive interpreting need to be based on real data, not just pulled out of the air.
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Everyone works to make a living, hopefully a decent one. A steady job brings a steady income and certain benefits (health insurance, pension plan contributions, etc.). A freelance, however, is on her/his own. Planning is essential; if you spend everything you make in a good month, you'll have nothing put away for a poor one. Plus, you have to plan for the future. “Not easy," you may think – but not all that difficult either.
Some years ago we formed the German Profitability Working Group to delve into what we needed to do to make a profit. Let's take a quick look at some of our conclusions, moving from expenses to fees.
What we spend
After studying various scenarios back in 2010, we concluded that a self-employed person has to cover the following annual expenses:
- Old-age/retirement provisions: 10,000-12,000 € (twice the amount if you have to provide for a partner).[i]
- Insurance: 7,000-10,000 €.[ii]
- Operating costs: 15,000-25,000 €.[iii]
By deducting these costs from your gross annual income, you get your taxable income. Insurance and old-age provisions, however, are not always (or completely) tax-deductible in Germany; German fiscal authorities define part of such expenses as “costs privately incurred", i.e. they have to be paid out of your after-tax income. Other “costs privately incurred" include:
- Personal consumption (food, housing, clothing, telecommunications, leisure activities, education, etc.). According to the German statistics office, in 2008 German households spent an average of 26,940 € or 2,245 € per month (single-person households 17,016 €/year, couples with child(ren) 36,204 €/year) on personal consumption.
- Capital reserves set aside for use in slack times. (The amount recommended is 5,000 € or about twice the monthly amount usually spent on private consumption.)
For example, if you have gross income of 80,000-100,000 € and 30,000 € in tax-deductible expenses [iv] your taxable income will be 50,000-70,000 €. Tax on this amount in Germany would range from 13,554 € to 22,396 € for a single person. Assuming that additional non-deductible amounts of 5,000 € are set aside for old-age provisions, non-deductible insurance costs and capital reserves respectively, you'll end up with a net after-tax income of between 21,446 and 32,604 €.
Note: In order to compare your income to the annual salary of a staff interpreter, you will have to consider your net after-tax income minus all non-deductible outlays such as those mentioned above.
Fees and working hours: How much do we charge for the lifetime we invest?
If you work 40 hours a week with five weeks of holiday and two of sickness, you'll end up working a total of 1800 hours per year. About a third of them (600) will not be remunerated directly by clients; this is time dedicated to administration, tax matters, publicity/advertising/marketing, networking, seminars, reading, etc.[v]
That means you will have to earn between 67 and 84 € for each client-remunerated hour (1200 per year) in order to reach the annual gross income mentioned in the model calculation above. These numbers must be taken into account when calculating daily fees.
For example, if you were to charge 750 € for a 9 a.m. to 4 p.m. assignment with two hours of travel and four hours of preparation time (i.e. a total of 13 hours), you would be earning 58 € per hour. In the unlikely case that you didn't need to prepare at all for the job, that would go up to 83 €. But if you needed five hours to prepare and working hours were 9 a.m. to 6 p.m., you would be down to only 47 € per hour. In order to reach the hourly rates mentioned in the previous paragraph, you would have to charge between 871 and 1,092 € per day for this job (based 13 hours).
In another scenario, consider that just one hour of consecutive interpreting usually involves about 4 to 5 additional hours of standing around, traveling back and forth and talking to the speaker beforehand. In addition you have to consider preparation and organisation (preparing a quote, consulting/negotiating on the phone, etc.). If the latter do not exceed another five hours, a daily fee of 880 € would represent 88 € per hour.
Sometimes the going rates for full-day assignments just aren't profitable. We are seeing a trend toward longer workdays, denser agendas, and more technical topics. As a result the number of days per meeting is decreasing, while each conference day requires more hours of preparation and we get fewer days paid.
In Part 2 we'll take a look at further examples as we explore best practice for profitability.
The German profitability working group was created in 2009. Its current members are Julia Böhm, Angela Drösser, Angelika Eberhardt, Almute Löber, Oliver Pospiech, Anja Rütten and Klaus Ziegler. We would be happy to share information and experience with colleagues from other regions, so if you are interested in joining our informal network, just drop us a line (email@example.com)!
[i] One common recommendation is to invest 15% of annual income in retirement accounts.
[ii] Health, occupational disability, third-party liability, accident, legal protection, etc.
[iii] [iii] These would include office, computer/phone, software, books and periodicals, continuing education, professional associations dues, tax advisor, publicity/advertising/marketing, work-related transportation, etc.
[iv] 2,800 € health insurance, about 22,000 € for overhead and operating costs, 5,000 € in old-age provisions.
[v] These figures are based on 2010 time-tracking trials in which various interpreters participated.
Articles published in this section reflect the views of the author(s) and should not be taken to represent the official position of AIIC.