November 2019

Technology, process automation, and continuous localization changes pricing strategies in language services

Will the language services industry follow the lead of industries like marketing and music that changed their pricing models to survive? Or will it fall victim to completely different approaches inspired by gig-economy entrants?

In a recent study based on survey responses from 67 buyers of language services and interviews with 20 LSPs and globalization consultants, independent market research firm CSA Research’s examination of the pricing models of the industry reveals how some forward-looking language service providers (LSPs) and their customers are considering adjusting their pricing models. The results are detailed in the report: "The Future of Language Services Pricing."

 

 

Changing pricing landscape

Buyers of language services and their providers are now experiencing change as a result of machine translation (MT), Artificial Intelligence (AI) and machine learning, process automation, and continuous localization.

"LSPs do not want to be blindsided by the language industry equivalent of Napster or Uber. They want to proactively identify and address advances in technology and changes in expectations driven by customer experiences in other markets. As a result, some are considering redesigning their pricing models, moving away from commodity-style per-word pricing and toward structuring the charges for services in a different way," comments CSA Research senior analyst Alison Toon.

Per-word pricing as the fundamental pricing strategy for the localization industry is under review as translation transforms from computers-aiding-humans to humans-aiding-computers. Word-counts are less of a simple measure of effort when the variables are not only the time and expertise of the linguist, but also the efficiency of the various forms and augmentations to MT, translation memory (TM) lookup, workflow, and business processes enhanced by AI and machine learning. 

CSA Research analyzed the strategies that LSPs use to structure the cost of services. While lessons learned from other industries have application across the entire localization industry, this report focuses on pricing models for written translation services – the area of the industry where per-word invoicing is the de-facto standard.

The two CSA Research reports, one buyer-focused and another aimed at LSPs, include: 

 

  • LSP feedback on their pricing strategies
  • Disruptive forces in the language sector
  • How other markets’ pricing models affect translation through buyer expectations
  • What happened to pricing models in eight other industries
  • Buyer insights on pricing
  • Translation model alternatives
  • Recommendations for buyers when evaluating how they pay for language services

 

www.csa-research.com