The Changing Currency of Barter

Posted on | November 11, 2009 | 6 Comments

I remember when I first heard of barter, it made me think of a idyllic, utopian society where one neighbor trades tomatoes for another’s squash. Shells for pelts and all that jazz.

However, this was about 10 years ago and it didn’t quite come down to one neighbors garden for another. What bartering was being used for was one of three things:

1. Inventory that was no longer a salable product on its own. (e.g. Company XYZ orders more winter boots than they can reasonably sell and decides to barter them for advertising space)

2. Enough spare service time to justify selling it for the ability to buy something useful (e.g. a photographer is having slow month but could barter services for accounting work)

3. Unused product or service. (e.g. a plane only half full still costs as much as a full one so why not liquidate extra seats for a magazine ad)

So the theory behind barter was compelling and seemingly feasible, right? But, when faced with the functionality of bartering, there was a tipping point that had not been reached and without it, barter was not strong enough to be a viable currency of exchange. What good is selling your photography services if it bought you nothing usable for your business. Barter is only as good as the size of its network and that takes a lot of people having faith in the same theory at the same time.

How times have changed!

When asked almost a decade ago if I found barter helpful, I replied “I find bartering incredibly valuable only because I am consistently and creatively trying to find ways to spend it.” After all, earning barter is easy and there are always plenty of buyers for a quality product. But spending your barter dollars can be more than challenging.

Bartering has recently come across my desk again though and this time, it might be ready for a second go. According to American Express, 23% of small businesses increased barter activities during the recession. And why not, the consumers were not buying the way they were and businesses had excess product, time, energy and overhead.

So, let’s figure out the ways to use barter.

#1 Way to Barter – Mano a Mano – Suppose, you are, like I am, a marketing professional. The single best way to barter is mano a mano – hand to hand. Suppose I want printing done, which I plan on reselling to a client. I have a graphic designer on staff who is facebooking instead of working because we have a lull in graphic design business. I call the printer (better yet, I show up at the printing office and speak with the owner or manager) and say, he can resell X amount of graphic design hours for X amount of printing I need.  This is the best, least complicated and most authentic form of trade.

Pros:

You pick the business you like based on quality, location, whatever.

There are no middle man fees.

Cons:

You have to put on a good salesman cap to pitch this idea.

If not executed well it could create bad blood in existing business relationships.

#2 Use a barter Exchange - There are exchanges such as ITEX and BoA that will give you a currency to weight your product to. For instance, the printing I need done will cost $1000. I sell $1000 worth of graphic design work and use that income to pay for the printer.

Pros:

You have many more seller options.

The exchange has already sold the idea.

There is a neutral third party to coordinate transactions.

The exchange usually rates buyers and sellers based on performance and good standing with the company and client.

Cons:

You pay fees (in cash) for transactions based on a percentage of the sale.

There is a monthly fee to be associated with the exchange.

There is no choosing companies based on quality or performance.

#3 Community Websites such as Craigslist – This is a great place to post what you have, post what you need and see what else is out there.

Pros:

Lots of exposure and potential advertising opportunity

Easy to use and free

Cons:

A bit hit or miss with prospects.

Some unwanted contacts or unusual responses

Do You Barter?

In a service industry, barter is a no brainer at least on some scale. Even on a personal level, why wouldn’t someone trade a couple of couches for some computer troubleshooting?

1. To start using barter, make a list of things that you have to offer and the things that you could use.

2. Start at home – try negotiating with those you already use and are happy with first. Why not see if your hairstylist will trade service for a laptop? Or if someone will trim your trees for financial advice?

3. Check out a barter exchange service in your area and see what buyers and sellers they already have. If it looks like one service is already one you could use, consider trying out the service.

Also try:

www.craigslist.com

www.U-exchange.com

or fee based sites such as:

www.ITEX.com

Barter of America

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