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:
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.�
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.)
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.
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.
BarterNews FastStart Program we devote 26 pages to the subject of
direct trade, also known as one-to-one, back to back, and reciprocal
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.)
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
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?�
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.�
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.
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
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
barter transactions do take more time, normally, to both find and
negotiate. But the potential profits derived are more than worth the
For another look at this subject see �Twelve
Steps To A successful Barter Negotiation.�
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.