Barter�s Value Questioned

Within the past 10 days I�ve come across two articles, both written by business women, who have voiced their opinions regarding the use of barter. In both cases they suggested it is not the way to go.

Regardless of their arguments, which were rather weak (showing they weren�t entirely conversant on how to ascertain the value of a direct trade or how a trade exchange functions providing value to a member), the commercial barter industry should take such writings into account.

Why? Because many, if not most, of the readers of such stories will not have any prior barter experience, and therefore will accept unquestioningly as true what they read.

Below we have printed parts of the article (published in the Herald Sun, Australia�s largest selling daily newspaper), written by Ms. Karen Morath...a speaker, consultant and writer:

Is It Good To Barter?

�It is tempting to exchange business services. It can be seen as a way to preserve cash flow and get all the legal/accounting/marketing help we need. But is a contra deal (an exchange or a trade) more trouble than it is worth? I think so.�

BN rebuttal: The headline of her article should more appropriately have been, "Is Barter More Trouble Than It�s Worth?" Obviously she feels it is. Of course what we don�t know are some important facts...like how often she has actually traded and in what amounts? (Nor do we know if the reason for the article was actually to get some valuable coverage for her business. If this was the case, I say congratulations to her. To this end she was certainly successful.)

But now let�s look at her reasons why she says barter�or more specifically, contra or direct trading�is more trouble than it�s worth.

�One big problem is that the various service providers almost certainly use different methods to calculate their fees. Some have hourly fees, others charge all-up for the job. This complicates the trading process. But that is nothing compared with having to tell your would-be accountant that he or she needs to work three hours at their rate of $85 per hour as a trade for one hour of your time at $275 per hour. 

BN rebuttal: Fees and different pricing structures for services/products become an impediment in a direct trade only when both parties are rigidly-focused on a price, rather than on the value they are obtaining. Fees are a starting point, an area of reference, but not a deal killer.

(In the BarterNews FastStart Program we devote 26 pages to the subject of direct trade, also known as one-to-one, back to back, and reciprocal trading.)

More often the experienced trading individual looks at the merits of the transaction...is it beneficial? Does it further the building of the business, or meet other goals? The answer to those questions will be answered by looking at one�s variable cost of making the trade and the value received. (Additionally, the sophisticated trader will have ascertained the other party�s variable costs as well.)

For example, in the FastStart Barter Program is an example of a trade that illustrates how easy it was to turn a $5,600 trade into $11,200 retail value simply because the trader knew the other party�s variable cost to make the trade and that they desired what was offered.

In a nano-second by asking the right question, the value of the trade was doubled...without an additional cost to the trader. That is the power and significance of barter.

�And then there are products, another complicating factor. If you seek to exchange your products for someone else�s services or your services for someone else�s products, should the product price be at retail or wholesale? And what will be the wholesale cost of your service provision?�

BN rebuttal: Morath�s concern in the entire article revolves around pricing issues, rather than the more important consideration (the value one obtains in an exchange)"which revolves around the cost of one�s bartered goods or services. She feels the effort to resolve these issues are more trouble than it�s worth. Her perception is her reality, and it is summed up in her closing comments...

�If you want to support other businesses, use and recommend their products and services, just do it. Engage them commercially and hope they will support your business too. In my opinion it is cash that fuels businesses, not bartering.�

BN rebuttal: Cash may fuel businesses, but barter (new incremental business) enables you to move well beyond the constraints of the cash world. Your wealth is not tied to just the cash you or your company earns. Nor is your financial success governed solely by the dollars (or lack thereof) in your pocket...because you�re changing the method of payment.

With knowledge and commitment you can harness and utilize a powerful multiplier. One ruled by ingenuity, creativeness, and the ability to perform. Barter, when used intelligently, is a powerful adjunct to a company�s operation.

Contra deals, direct trades or exchanges can be the most profitable ones undertaken because there are so few limiting parameters, plus one�s negotiating abilities and business acumen play such an important role.

Direct barter transactions do take more time, normally, to both find and negotiate. But the potential profits derived are more than worth the added effort.

For another look at this subject see �Twelve Steps To A successful Barter Negotiation.� Click here.

Coming soon: we will look at the second article that revolves around bartering through a trade exchange. The author contends there are five reasons NOT to join a trade exchange. You won�t want to miss this story.