Bartering Can Increase Our Sales Volume
By James Stout, Former Writer For
Bartering helps us to
sell more goods and services. It does this in various ways:
It attracts customers. Whether we use a
barter club or one-to-one deals, we might get these
types of customers:
Customers who could not afford our goods or services
if they had to pay cash.
Customers who could afford our goods or services,
but they would rather barter, so they come to us
instead of going to our competitors who do not
It allows us to do more advertising.
can barter for advertising. In the segment
regarding "bartering for advertising," we see that
we can acquire ads from many sources without cash.
the money we save by bartering for our other needs,
we can afford to pay advertisers who must be paid in
cash. In the early 1980s, the Mattel toy company had
$12 million worth of electronic games which were
stagnating in its warehouses. When Mattel asked
Deerfield Communications Corporation to take the
games, Deerfield paid $5.5 million in cash plus $6.3
million in barter-units. Those units would be spent
to advertise Mattel's other products.
We can use the special programs which are
offered by some barter clubs.
National or international territories. If we join a
nationwide or worldwide barter club, we can receive
orders from any city which has a franchise of that
club. When members from those other cities visit
our city, they will know about us because we are
listed in the club's directory.
Affiliations. Usually, we can spend units only
within our own club. But some clubs create
affiliations with other clubs, so that we can spend
our units in the businesses of those other clubs.
"Trade fairs." Some barter clubs conduct trade
fairs, where members can exhibit their wares. Trade
fairs are particularly popular among non-profit
We can use barter brokers. These brokers
will find the goods and services which we need -- and
then either (1) arrange a one-to-one deal between us and
another company, or (2) trade directly with us from
their own inventory.
Many businesspeople say
that bartering attracts customers.
The co-owner of a health club said, "We
get people who probably wouldn't spend the money to join
for cash. We've had some real big- ticket items --
memberships, pro shop purchases, and restaurant bills --
on barter." (Irvine World News. "This Orange
County Resident Runs a Different Kind of Trade School.''
by Debbie Whistler.)
Charles and Diana Marr got $5,000 worth
of orthodontics for their son by earning units through
Charles' appliance store and Diana's telephone-answering
service. "We drove all the way from North Hollywood to
Santa Monica to deal with the orthodontist," Ms. Marr
said. "We wouldn't have driven that far normally, but he
was a member. The same thing happens to us; you've got
people outside your own community who'll do business
with you." (Moneysworth, Feb. 14, 1977.
"Work-Swap Firm Swings.")
When Hanson Galleries, a wood-specialities
store in Houston, was getting $1,000 worth of barter
business each month, it opened a second store, using
$12,000 worth of the club's units to pay for the office
furnishings and supplies.
In one of its ads, Business Exchange
lists its "Century Club" members, who have had over
$100,000 worth of trades. The list includes a jeweler,
dentist, attorney, a tire store, a few clothing stores,
and other businesses. Some of the Business Exchange
members reported their successes:
"Thanks for the new profits. As we work on about a
40 percent margin, the $70,000 in new sales has
meant $30,000 in new profits. We recommend it
towing service reported: "I notice that it has been
just four years since we signed up with you people.
And we just passed the $10,000 mark. That's a lot of
extra income for any small business."
"Business Exchange helps fill vacancies," said
(the official publication of the California
Apartment and Motel Management Association).
Francisco Chronicle, a member said that
his membership "has really helped me. I get business
from people who never heard of me before, because
they checked the [barter-club] directory ..."
We might attract too
many customers who want to barter. Bartering will not pay
for all of our expenses. If we know how much cash we need
each month, we can set a limit on the amount of bartering so
that we are still receiving enough cash. (Refer to the
section regarding "controlling our balance of cash and
barter" in the chapter regarding business expenses.)
We can have a variable policy. Depending
upon our cash situation at any moment, we might have to
say: "Sorry, I'm low on cash right now, so I can't
barter with you." We might be less willing to barter
during our peak season, when we have plenty of
We can set a limit based on a percentage
of gross. Some experts say that we should limit our
barter-income to about 10% to 15% of gross -- but this
would depend on our ability to barter for the goods and
services which we require (so that we don't need as much
We can set a limit based on the number of
barter-club units. For example, we might decide that we
do not want to have more than $1,000 worth of units in
our account at any one time. When we reach that limit,
we can refuse to make further sales to other members
until we have spent enough of those units to reduce our
account to less than $1,000.
We can convert our excess units into
can sell some of the units to the club's management.
Some clubs will not buy units from their members;
others will buy them -- but at a reduced price
(perhaps 70 cents on the dollar, which would still
be profitable if we acquire our merchandise at
less than 70 cents on the dollar, or if we
provide a service rather than merchandise).
can sell some of the units to other members. Again,
we might have to sell them at a reduced price --
perhaps 70 cents on the dollar.
can spend the units on goods and services which we
can re-sell. For example, if a friend needs a new
lawnmower, we would use our surplus units to buy it
from a club member, and then we would sell it to our
friend for cash.
Some barterers do not
attract new customers. Some of the possible reasons:
Problems with the barter club.
enough members. For example, if there are only 20
members, we might not have enough barter-income to
justify the fixed expenses, e.g., our annual dues.
many other members who offer the same goods and
services which we offer. Many clubs limit the number
of members within any field, e.g., computer sales.
publicity for the members. The club might not have a
directory or any other easy way by which the other
members can find us.
Lack of negotiating skills. If we are conducting
one-to-one deals, we need to know how to bargain.