To accurately calculate the return on investment, a manager needs to calculate the localization cost and the expected revenue from the localized product. Fortunately, many investments in this regard need only be made once, and can be leveraged in future product updates. Once the initial localization investment is made it can be repaid many times through a few release cycles.

Cost of Internationalization

If a product is well-designed, internationalization costs should be virtually nothing. Ideally, the application already provides a single code-base that houses all user-interface text in separate resources, allows the operating system to control any locale preferences (such as time, date, sorting, and currency format), and accounts for the various character encoding requirements of single- and multi-byte languages.

The internationalization process should be integrated into code development. Using operating system or programming language Application Programming Interface (API) calls to manipulate input, format dates, display strings, sort lists, and provide other character-processing functions eliminates the need for additional internationalization programming. In fact, use of these built-in utilities often simplifies application development by replacing days of manual programming.

If software is not well-internationalized, the initial investment required is higher. An assessment to determine the current global functionality of an application usually costs $10,000 to $20,000. Implementing the changes recommended often requires an additional $60,000 to $800,000, depending on the scope of work required and the division of labor between internal engineers and an outsourcing partner. This type of work is often very challenging, requiring work of top-level architects at a cost of over $200 per hour.

Throughout the internationalization process, it is important that developers are heavily involved. The software engineering team must learn what changes are being made to the code and what techniques should be used in updating the internationalized application going forward. It is a big mistake to allow source code to be branched between internationalized and non-internationalized versions. The primary goal of the endeavor should be to develop a single code-base that will be used globally. By maintaining the application in this way, there should be no need for future internationalization work.

Cost of Localization

The bulk of the localization expense is actual language translation work, followed by engineering efforts, documentation and help formatting, and project management. These costs vary depending on the size of the application, the engineering processes and tools used, the level of testing required, and the complexity of the software and documentation. Schedule requirements also can affect the final costs since additional review is required if components are divided among a large team of translators.

Localization companies each charge for services differently, incorporating line items, discounts, and services in a variety of ways. Obtaining a thorough analysis and proposal for a specific project is the best way to accurately figure costs. There are also methods for calculating ballpark localization costs for budgetary purposes.

One approach to estimating cost involves taking the total project word count (including software user interface, help, and documentation) and dividing by two to get an approximate per-language cost. For example, if a project had 128,000 words, you would expect to spend around $64,000 per language on localization, including the translation, engineering, publishing, and project management costs. Costs vary from one language to another (where you might pay $48,000 for Spanish and $82,000 for Japanese), but this gives a general average to use for a quick calculation.

Revenue from Localized Product

Calculating the revenue from the localized product, or at least the net return, is more challenging than determining the cost. Existing market data and sales history numbers are the most reliable components. Without current data, many companies use estimates to predict expected revenue, basing them on sales forecast, advance orders, or current sales of the English-language product in each target market.

Ongoing Return on Investment

While the initial cost of localization may seem high, fortunately much of this work can be leveraged across various similar products or subsequent releases. By using translation memory, where text is memorized into a database the first time it is translated, each sentence need only be translated by a human translator once. When the text appears again in an update or another document or product, the translator is prompted with the existing translation and can accept the translated text from the database.

Use of translation memory can lead to savings of 10–50% or more over subsequent releases. By taking advantage of memory tools, the cost of localization decreases and the return increases over time. For example, a company with four product releases may pay $146,496 for the first localization round and only $91,479 for the fourth update, saving $145,267 (approximately 25%) over the releases.


Please read Part II, available soon, for more information about the calculation of localization ROI, covering the following topics:

- ROI Calculation
- Tips to Reduce Localization Costs
- Cost-Cutting to Avoid