Knowing how to balance Barter with getting paid

Bartering services for services can be a great way to get some needed tasks done by other people. A business also needs to make money to be successful. In this article I explore the balance between barter and making money.

Written Oct 30, 2008, read 188 times since then.

Since I've started my life coaching business, I've run into the occasional scenario where I meet someone who is interested in trading my services for their services. I have to admit, I always weigh these offers very carefully, because such a relationship can quickly go sour if either or both parties feels that they aren't getting adequately compensated by the service being rendered. In fact, I'm more likely to consider exchanging service for service only if there is a delineation offered on when service might turn into monetary payments. In situations where it appears that there will only be an exchange of service for service, I usually turn down the offer. While the service might be useful, I also have to consider the time I'm investing in that person and whether or not I'm really getting compensated in a way that is going to benefit me.

However, there are times when exchanging services can be beneficial, if handled in the right way. The right way involves determining how much of a service both parties are willing to exchange before monetary payment needs to start and also determining how much you need that particular service.

I have a client right now who is taking several courses I'm offering. She's paying me for one of the courses, and for the other course she is offering me some services that I happen to find useful. She is helping me create professional certificates and a brochure and a sign for some of the expos I travel to. In return she gets to take my class and learn what I can offer. It's a good exchange for me, because I can use her professional skills to improve my marketing and promotion, which can result in more clients down the line. At the same time, she is paying me for one class, which still brings in some income I can put toward other projects.

In another situation, a potential client has asked me if I'd be willing to exchange my life coaching service for her service as a professional photographer. This is something I'm willing to entertain because having a professional photo will certainly help me. I still, however, have to figure out how much of my own services I'm willing to offer before, I would expect to be paid, as I know that the services I offer involve a significant time commitment on my part. I determine this by estimating how many hours it takes for the other person to accomplish his or service work for me and then measure that against the hours I can give in return. Once those hours are exceeded, I then charge for the time and services rendered.

If you know what services you need and you also know that someone offering those services is willing to barter with you, then take advantage of that opportunity. That barter can help you get a particular service as well as help you learn more about that person's business, so that you can refer them. Likewise since that person will have worked with you, s/he can refer potential clients to you with an added bonus of speaking confidently about your services.

Barter for services can be a useful economic model, when used wisely. At this point, it's unrealistic to always barter your services for other services, simply because the amount of time you would have to do that would ultimately prove unprofitable and time consuming. The medium of money demands that we be realistic in how much we barter for services. Know when to offer your services for barter, but also recognize that you are in this to make a living, and doing so necessarily requires charging money for your services. Balance how much you're willing to barter, with how much you need to make. If you do this, you can get some services for free or at a discounted price and also continue to grow your business.

Learn more about the author, Taylor Ellwood.

Comment on this article

Posted by Matt Garry, University Place, Washington | Oct 30, 2008

We barter all the time, literally three to five times a week. But we do it for specific amounts. For example, we have a company that is going to do some landscaping for us this weekend. His estimate was $550 (fair market value). We are giving him gift certificates to our spa that add up to that amount. We let them know, they can use the certificates or give them to their clients (which we would prefer). Every one of these certificates is going to be used by a new client. When they each use their certificates, they will love their massage so much they will come back for life (and pay cash).
Posted by Kare Anderson, Sausalito, California | Oct 30, 2008

I think barter will grow in popularity in a down economy so both Taylor & Matt offer great examples, all 4 parties were providing services incidentally.

It helps if the barter is short-term, that is the work is to be done "soon."

Another benefit is when a barter enables one party to enter a niche market with a warmed-up introduction by the other party.

Also, this kind of article + comment motivates me to want to learn more about the authors' businesses.
Posted by Taylor Ellwood, Portland, Oregon | Oct 30, 2008

Matt,

Certificates are certainly useful. I do certificate exchanges sometimes as well. However, there's no guarantee a potential client will use them. It's entirely up to the person who gets the certificate. I'd be curious as to how you measure your metrics for the certificates, i.e. how many you get back compared to how many you gave out.

Kare,

thank you. The entire point of this article isn't to discourage barter, but to encourage a strategic use of it. The benefits you list above are great examples and would apply to Matt's use of certificates.
Posted by Matt Garry, University Place, Washington | Oct 30, 2008

You're absolutely right that there is no way to guarantee that someone will use their gift certificate. I don't mind. I don't trade my gift certificates for someone else's to hand out, I trade my certificates for their items or services for me to use and I call that "pure profit".
Posted by Taylor Ellwood, Portland, Oregon | Oct 30, 2008

As long as you're getting the service you want, then congratulations. I'm picky myself, but that's because not every service has the same value to me. Some services have more value than others would. I consider it pure profit when I get what I want from the relationship and also provide what the other person wants.
Posted by Terra Vita, Seattle, Washington | Oct 31, 2008

I barter quite frequently with many different people with varied services or products. Long ago I decided to barter hour for hour. My services are a compilation of my experience and education.

Usually, my co-barterer gets this and we work it out. It might not be equal or equitable but I try to bring it to that place where it works for everyone. The important thing is to agree up front and do the exchange relatively quickly.

Sometimes, I end up with unmeasured deals. I have facials for life from a client/friend and she has copy and print for life. It is not an exact science and is dependent on the personalities involved.

I have been happy with my barters-great way to introduce both sets of talents.
Posted by Matt Garry, University Place, Washington | Nov 03, 2008

I wrote an in-depth article on my bartering if anyone is interested.

http://biznik.com/members/matt-garry/articles/bartering-its-like-free-stuff-for-your-business-sort-of