Barter Smarter: Opportunities & Cautions

This post is part of the January Word Carnival — a monthly group blogging event specifically for small business owners. (It’s the most fun you’ll have all month!) Check out the rest of the fabulous carney work here. And don’t forget to join us for our Twitter Chat on Thursday (Jan 26) at noon (Pacific). We’ll be tweeting up a storm under the #WordCarnival hashtag.

I’ll be clear from the beginning: i’m totally a fan of the barter philosophy, as it’s especially good for new businesses, folks with skills but little dinero (hey, that’s me!….is it you, too?), and moving unusual or one-off tasks or items. There are some bits of how to barter, however, that i’ve not completely figured out yet. Fortunately, bartering goods and services is not a new concept, and it’s even a re-emerging one, so there are lots of online and offline resources to draw from.

Part of the reason that bartering seems attractive is because it takes the proverbial “middle-man” – $$$ – out of the equation: i have something (a good or service) that i’ve not yet converted into money, and you have the same. As long as we can figure a fair exchange rate, we’re golden. So money doesn’t completely leave the picture: it’s important to know the value in money of the things being exchanged so that they can be matched up properly, whether that means using the monetary value as a hard exchange rate or simply as a guide. That’s one of the parts i haven’t gotten a firm grasp on yet, so i like what Arthur at has to say about formalizing the process just a bit to protect the arrangement. This advice seems particularly sound if an actual business is involved:

clipboard with barter checklistEvaluate the Value
You want to make sure the arrangement isn’t lopsided, and that both parties are getting what they put into it. A mismatched barter can result in resentment, frustration and potentially even legal issues. To start, assign a dollar value to the goods or services that are to be traded. If there isn’t an even comparison, adjust the trade to make it comparable (i.e. trade 5 hours of a service A for 8 hours of service B).
Check References
Do your research into the person you’re considering bartering with, just as you would if you were hiring them to do something. Ask for references, check past work, dig into who they are and verify they have the skills and experience they are claiming. Just because bartering doesn’t involve money doesn’t mean it should imply discounted or less professional services, and you’ll save yourself a huge headache by verifying this in the early stages.
Use a Written Agreement
Again, just like any other business relationship, you should have a written agreement that explicitly outlines the terms of the arrangement. This is especially important when there isn’t a clear one-for-one exchange. Your agreement should outline the scope of the work on both sides, identify the deliverables, specify the duration or deadline for the work and spell out what happens if either side wants to end the arrangement before completion.
Keep Open Lines of Communication
Stay in the loop with your bartering partner to ensure that the trade is effective and that both sides are happy with the service they’re getting. If something isn’t working out as expected, or if you’re unhappy with the work you’re receiving, speak up and work toward a resolution. It’s also a good idea to schedule regular check-ins and milestones to make sure the bartered services don’t get dropped below paid work and forgotten.
Don’t Forget About Taxes
The rules for reporting barter transactions may vary depending on which form of bartering takes place and where you are located. According to the IRS, in the U.S. barter dollars are identical to real dollars for tax reporting, so you need to treat barter income as you would any other business activity. Keep good records and consult an accountant if you have questions or need advice.

Now, i’ll admit easily that formalizing a barter situation also seems to grate against the point of this human-connected, get-everyone’s-needs-met, don’t-fret-over-to-the-cent-accuracy exchange practice, and i definitely wouldn’t take it to that level for every arrangement. “I’ll let you borrow my ladder if you give me a few of the avocados” is just fine the way it is. If the goods or services up for exchange are of great monetary value, however, or if they’re completely unrelated, a little something more might be required to ensure that expectations are met and nobody gets burned.

In the small town where i live, there’s a thriving Facebook Group called the Ojai Barter Bin, and some amazing things are on the move around here: juicers for graphic design, tables for different tables, produce when the Farmer’s Market runs out, massage for just about anything, piano lessons for pilates…you get the picture. The Group operates on some reasonable ground rules:

This is a place for bartering or trading goods and services in the Ojai Valley ONLY (please no outside members). Please refrain from posting anything that involves a money exchange or blatant advertising of your business. All offers must be well described and an equitable detailed exchange noted (be specific and fair).

PLEASE also delete your post once a transaction is completed!

cartoon from


One thing that rises out of such forums that i see as problematic – well, perhaps a minor nuisance – is the posting of “Here’s what I need…what do you want?”. For me, this feels like a lazy, one-sided entrance into “bartering”…i am always left unclear about what i’d want in exchange. It’s too nebulous, the wide range of possible fair trades are too great for me to consider. So, i’d say the Barter Bin’s guideline of “All offers must be well described and an equitable detailed exchange noted (be specific and fair)” is a great practice for any bartering situation.

Last thing: don’t barter for things you don’t need, just because it’s what the other person’s offering. To me, that just seems like setting yourselves up to be disappointed or resentful, and what we’re after here is a mutually beneficial exchange. Bartering has a smidgeon of human soul in it that money transactions rarely do, so let’s be careful with one another’s living investments, shall we? Bartering only works when we are honest and fair, so it’s a great way to practice being that way for all of our relationships and transactions.

digital portrait of evan austin

evan austin is a graphic designer and social media helper in California, and has bartered those services for massages, website help, business advice, advertising, and has even received one offer to pay part of a logo fee in “medicinal herbs”. See what he has to offer at .

[tweet2download file=”Barter-January2012.pdf” tweet=”#Barter Smarter: Opportunities & Cautions + free ebook! %%post-url%%” follow=”@graphicsbyevan” /][/tweet2download]
barter ebook - Jan2012

You can barter with me right now! i have this great ebook with myself and 10 other amazing business bloggers dishing out their best bartering advice, and you have a Twitter account! Wanna trade a tweet for a download?

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17 Responses to Barter Smarter: Opportunities & Cautions

  1. I love our carnies…so kewl to read all the different approaches to the same topic. I like your bartering checklist…great suggestions! Good stuff as always!
    Michelle Church recently posted..Bartering Increases Business OpportunitiesMy Profile

  2. Excellent post – I love those tips from BarterQuest, and think I’ll do a separate post on that site and maybe others, too in the future. I have a question for ya, evan – do you think our barter exchange (the header for marketing story guidance) was well done, or could we have improved on it somehow?
    Annie Sisk (Pajama Productivity) recently posted..Barter Your Way to Biz+Life BrillianceMy Profile

    • evan says:

      Hey Annie, GREAT question! Frankly, i think our barter may have had the value weighted in your direction, meaning that i think you provided me more than i provided you. i’m open to the possibility that that’s me undervaluing myself or enjoying what i do enough that it doesn’t feel like hard work, but nevertheless that’s my inclination at the moment. i feel like we were pretty clear about the deliverables from the beginning and i now understand that we could have formalized it with a contract, but i don’t think that turned out to be necessary in this case.
      How ’bout you?

      Which brings me to my new campaign: Barter with carnies…it’s good business! :)

      • Yes, carnies are good peeps!
        And let’s not forget the agreement we’ve all made with each other is a form of bartering, too:
        We all trade comments and shares, lifting the whole group up in the process! (Yay, team!)
        Tea Silvestre recently posted..Nominate Your Favorite Tastiest Small Business BrandsMy Profile

      • I have to disagree, Evan – maybe financially, on a strict dollar for dollar basis but I think you underprice yourself a little, too. At that point in time, for me, that header was INvaluable! I was concerned that the value was imbalanced in MY favor. Which just goes to show – maybe we both need to reevaluate our price list! Basically, I think we can conclude: we’re both better than we think we are, and in fact, we’re just intuitively fabulous. 😀
        Annie Sisk (Pajama Productivity) recently posted..Barter Your Way to Biz+Life BrillianceMy Profile

        • evan austin says:

          Well that certainly speaks to some of the other carnies’ references to “perceived value”, in which case the strict dollar-for-dollar isn’t going to match up. i’d say in barter it seldom will, and we have to go into such arrangements understanding that. Hard numbers exist underneath as a guide, but that’s about the strength of it. It’s not like i’m gonna call a whole deal off because my $90 service and your $100 one don’t balance perfectly, as long as we’re both aware of and okay with it.

          …but then when it’s done, it’s done. No fairsies hanging onto the (in my example) $10 discrepancy and holding it over someone’s head or applying it to the next deal! :)

          With that, may the Mutual Admiration Society meeting never adjourn!

  3. Good tips, Evan, especially about the contract. There’s often a tendency to take it less seriously when it’s barter, but it’s still a business transaction, isn’t it?
    Sharon Hurley Hall recently posted..Teaching an Old Business Writer New TricksMy Profile

  4. It’s a great point, Evan, about how the social web allows us to open up our offers to a wider audience through Facebook groups like the one you mentioned. I’m sure that if people Google for local and national barter groups they’ll find lots of resources. Thanks for your article.
    Ilana Rabinowitz recently posted..How To Barter Using LinkedInMy Profile

    • evan says:

      Hi Ilana! It’s so interesting: i’d never considered (and didn’t even stumble across in my own research, with the direction i chose) the concept of national barter groups. Freecycle came to mind, but i guess that’s not really barter since items are typically not being exchanged, although there’s the opportunity for that. A whole other aspect of bartering with goods is the re-use principle which is good for our planet, too!

  5. Nicole Fende says:

    Evan we are absolutely on the same page! Money is the middle man. Check. Make sure it has real value. Check. Get it in writing. Check. And so much more! I love some of the other points you make, and appreciate learning about Great new find.
    Nicole Fende recently posted..Is Your Biz Cash Low? Use Bartering to Grow!My Profile

  6. I love the idea of checking references before you do any pro-bono or barter work with someone.

    Excellent point, and I haven’t seen it mentioned elsewhere.

    When you’re doing “free” work for someone else, it only makes sense to check out who they are and if they deserve it first.

    Great post, Evan! :-)
    Nick Armstrong recently posted..The Flip-side of BarteringMy Profile

    • evan says:

      Too true, Nick. Even then, however, sometimes one doesn’t know the true dynamics until work has begun. i have a values-aligned client right now who says money is coming from investors, but keeps telling me about the people they’ve fired. My commitment to that project is waning. :/

  7. SandyMc says:

    Gosh Evan, what your post has opened my eyes too is a culture of barter.

    I have done some research as a result, as I wasn’t aware of such a strong culture existing here in Australia. It appears, according to our tax department, that there is a system called Better Barter Credits, whereby one credit equals $1 and the 10% General Service Tax (GST) applies. I’m wondering with this sort of arrangement why one would not just agree to working to the value of say $1000 each and then issue an invoice and a credit for that amount to each person? Sort of changes the spirit of barter a bit!

    There is however a culture of strategic alliance, which works when two businesses perceive that they are servicing the same market from a different skill set, (graphic design and web building for example). Then they may join forces and present wearing one hat. It’s not barter so much as mutual benefit I suppose.

    I agree with you that it would be difficult to answer a request for barter that was not specific and checking references is excellent advice. Thanks Evan.
    SandyMc recently posted..Master barter and become a key person of influenceMy Profile

    • evan says:

      Whoa, Sandy…great stuff! Clearly there are so many ways to exchange things of value, even beyond money and true barter. As some of the other posts this month mentioned (and echoing from last month’s topic), creativity is the key! i’m liking your description of “strategic alliance”.

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