Barter—Part 4: How Does It Compare to Cash?
August 29, 2008 by Lillie
Table of contents for Barter
- Barter—Part 1: What Is It?
- Barter—Part 2: What Is the Benefit?
- Barter—Part 3: Who Does It?
- Barter—Part 4: How Does It Compare to Cash?
Question from a reader: Would you ever perform a service for “trade dollars” when you can get an equivalent amount of “real dollars”?
Answer: Of course, if there is a choice, cash is usually preferable. However, I have accepted trade dollars when I could have been paid in cash. For example, the writer who was originally referred to me by a trade exchange periodically has trade dollars to spend. I always accept trade at those times because he would not be my client if the trade exchange had not referred him to me. Any time I get business from the trade exchange, I accept trade dollars from that person/company for future business. Also there are times that I am trying to build my trade dollar balance for a specific purchase (such as when I needed extensive and expensive dental work) so I would choose trade dollars over cash dollars.
I first joined a trade exchange more than 20 years. I was quickly hooked on barter and have been happily trading ever since. Just like cash business, sometimes I want more trade business … and sometimes I have more than I handle. A milder version of the notorious feast or famine cycle of freelancing. But, like freelancing, I would never give up bartering.
This whole series resulted from an e-mail exchange with a reader who wanted to know more about barter. If you want to know more, ask your questions in comments so everyone can read the replies. Even if you don’t have questions, read the comments—there are excellent ideas there from readers.
What a great series, Lillie. I have done a bit of barter work. It’s fun. Nice to see someone touch on the subject in a series.
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When you engage into barter, don’t you get the feeling that the goods being exchanged don’t really have an exact measurement or gauge compared to cash which is definitive?
Amy,
Thanks for the compliment and your support of bartering.
The goods and services have exactly the same value they would for cash. Trade exchanges have rules that businesses must not charge higher than their standard price. You don’t get discounts, but you pay the going rate. If you go into a restaurant and order a meal, you pay the price that’s printed on the menu—you can’t use a buy one-get one free coupon, but you pay the standard price. If you go to a doctor, you pay the price s/he normally charges for an office visit. When I do barter work, I charge the clients the same hourly rate I would charge if they paid me cash.
Interesting site, I have done some barter work over the years but only for friends /aquaintances and normally for straight exchange values. I’ll have to look into this deeper.
Thanks for a great site.
Pad
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The bartering you have done is a good start. I think you’ll find that bartering through trade exchanges will give you even more opportunities.
You know, that is an attitude I understand. Even though it isn’t that natural really. When confronted with trade dollars as payment my initial reaction is, to be honest, no way! But thinking of the future dollars when he orders again … yes good thinking. Thank you. I think I will change my view!
You have to evaluate each situation. In general, trade dollars are advantageous, but if you have a large balance of trade dollars or if you don’t have the resources (time or inventory) to provide the service, then you may be better off without that business at a given time. In many cases, trade customers will wait until it’s a better time for you unless there is a reason they need the product or work right away.
Hi Lillie – thanks. I’ve really enjoyed this series. What sort of commission do the trade exchanges charge?
Cath,
Most charge 10% to 20%—some on sales, some on purchases, and some on both. Most charge a membership fee, which also varies—it may be a one-time fee, an annual fee, or a monthly fee. Sometimes, the fee will be waived or discounted to entice a business selling something a lot of members are asking for.
Most exchanges also will pay a finder’s fee to members who refer new members, especially if the new member is in a high-demand business. The exchange has to keep a good balance of businesses to make the system work so they’re always looking for businesses offering the products and service the exchange members want.
Lillie, I have learned more from you in this series than from all the past sources combined. Thank you again for sharing this information and introducing us to a service which provides such great mutual benefits!
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Karen,
I appreciate the compliment and am glad the series was informative.
Nothing can comparable with cash.Your point of view may be different.
As I mentioned in the article, most of the time cash is preferable if you have a choice. But trade is great when you have inventory or time available that you don’t have immediate cash customers for. Most services businesses, especially, have time that will be lost forever if not generating income from clients. It’s far better to generate trade dollars than nothing.
I’ve bartered before and agree, although cash is preferred, it can work out. One time, a client paid me with Best Buy gift cards.
Ken,
Most people can use Best Buy gift cards, so it sounds like a good trade for you and your client.
Really liked your series. I think barter is everywhere e.g. you barter money for time (what we call outsourcing).
Will,
I’m glad you liked the series. Yes we barter/trade all the time,and I’m glad to share about another way to do it.
Really it is great series and it is very useful and thanks for sharing it.
Anand,
I’m glad you found the series helpful.
When confronted with trade dollars as payment my initial reaction is, to be honest, no way! But thinking of the future dollars when he orders again … yes good thinking. Thank you. I think I will change my view!
Nike (if you wrote YourName@Keywords, I could address you as a real person, and you would still get your keyword link),
You have to consider each situation on a case-by-case basis, but if I have the time (or in your case, if you have the inventory), barter can be very profitable.
I would prefer dealing with real money as they make my hands warm. Definitely, bartering is not for me.
flash (if you wrote YourName@Keywords, I could address you as a real person, and you would still get your keyword link),
You can certainly choose to do business however you choose. If you get all the business you want for cash, great! I enjoy a little extra now and then—and you won’t get cash from someone who wants to barter. You simply don’t get that business. I get plenty of business for cash but still can work in a little barter from time and time, which I usually use for fun things and luxuries.
Really liked your series. Thankyou.
Steve,
Glad you found the series helpful.
Hi Lillie,
It is great that you always give answer to reader.Ii is great series, i really enjoy it.
Thanks, Aditya.
Your post is great and too true. I would much rather recieve a payment in trade than no payment at all. And who knows the future business that barter transaction can bring your way, that you may not have gotten otherwise. Kudos on a great article.
.-= Sylvia@barter´s last blog ..Barter Arbitrage updated Fri Jan 29 2010 9:56 am CST =-.
Sylvia,
Yes, trade payment is certainly better than no payment. And trade business often does lead to cash business, either to that same customer (as in the case of the author who needed far more work from me than he had trade dollars to pay for) or in referrals. People who scoff at bartering don’t understand those two facts.
Hi Lillie,
It is a nice series. Thanks for sharing this. You are answering all replies. This is very good and it makes this series more enjoyable.
Glad you found the series helpful, Mike.
It can be intimidating to get started with trade dollars because its one more thing to think about, but it is fun and you can use it to your advantage once you get it down.
Dave,
The great thing is that it’s money/assets you wouldn’t have had otherwise. Generally people who trade will use their trade dollars first even if the vendor is new to them.
A lot of people may not be comfortable with “trade dollars” or barter at first. But come to think of it, it is really a sensible idea. Especially in the blogging world. There are tons of things that one can trade to have some services done. And I’m sure there’s also a lot of bloggers out there willing to participate in this kind of trading system.
Jane,
Barter is even more effective with services than with products because of lower costs.
I know what you mean–of course I would rather be paid in actual dollars instead of other things.
Jan,
I would just as soon have barter dollars if there are things I want to buy for barter dollars. And I can always find good restaurants … and since my husband and I love to go out to eat several times a week, scrip for restaurants is as good as cash for me!