08 Oct

“Bird-dogging” with barter

Posted in Training by

dog

“Bird-dogging” is an old salesman term that refers to paying a commission to your own customers when they refer business to you.  I assume the term draws from the concept of a hunting dog pointing to a bird for you.  I recently ran into a barter version of this that I thought was interesting.   This vendor was being promoted within one of my barter exchanges saying that they would pay $100 in barter currency to any exchange members that refer clients to them that end up doing business.  Here’s the best part;  they are looking for BOTH barter clients as well as cash clients.  If the promotion worked, they would be pay $100 in barter for new cash clients!  How great would that be!!!

If you wanted to expand your bird dog program to your cash clients, what you would do is find a really good give-away that you could purchase on barter (like a restaurant gift certificate?) and then offer that to all your cash clients as an incentive for referring business.

I haven’t tried this technique myself yet but I can’t think of how you could lose in trying.  I’ll let you know how it goes when I give it a try.

Join the Discussion

22 Sep

The value of MSRP in barter

Posted in Ethics, Training by

apple_orange

At the most basic level, barter is about making sure that two potential trade items/services are of relative equal value.  You want to make sure you are comparing “apples to apples” and not “apples and oranges.”  This not only means that both trade items should be the same price, but that they are both priced using the same methodology.  Common pricing methodologies would be wholesale pricing, retail pricing and sale pricing.  It would not work to trade your time at wholesale prices while trading for an item at retail prices.

Recently I had a gentleman unhappy with me because I was charging significantly more for an item on barter than I was for cash.  As you know I’ve repeatedly warned against price gauging in barter and that was what this trade partner thought I was doing.  There is (in my opinion) a very important exception to my general rule of barter/cash pricing being equivalent.  That exception is when your cash price for an item is discounted, which was the case for this trade.  Although I absolutely will stick to my guns that barter prices should never be above retail prices, we also need to agree that they really can’t go under them either.  It simply isn’t equitable to sell your products/services at wholesale prices, and turn around and use that credit to buy products/services at retail prices.

But what is the retail price?  That’s the rub isn’t it?  Anybody can make up a price and say that it’s their retail price.  In the case of the item that I was selling, it was easy because the manufacturer of the item has a lock on the market and everyone is selling the item for the same price (MSRP).  Another good source of MSRP is the manufacturer’s website.  Just as an aside, you cannot necessarily trust what Amazon.com says the retail price is for an item.  I recently found that often 3rd party Amazon sellers will make up higher-than-reality retail prices to offer fake discounts.

Bottom-line is that you should expect to always pay full price when you barter.  Conversely you should always charge full price when you barter.  That keeps everything fair for the buyer and seller.  If you want a discount go to Costco, pull out your wallet and pay cash.

Join the Discussion

25 Aug

Being fair to your Barter Exchange

Posted in Ethics by

iStock_000014633821XSmall

Barter exchanges help you by acting as a broker hooking you up with potential barter partners.  They make their living by charging a commission on each transaction (usually around 5-6% per transaction).  Because there is a transaction when you earn barter credits and a second transaction when you spend them, you end up paying a total commission of 10%-12% in cash on your barter.  If you trade a lot (like I do) then your monthly bills from your exchange can be substantial.  That being said, I do not begrudge them their fees.  They earned them.  Honestly I look at my exchange like an outside salesman.  I will happily pay a salesman a 15% commission on any business that they bring to me so really my barter fees are a deal to me.

That being said, I have found that there are many barter members who REALLY don’t like paying their transaction fees.  Because of this they often look for ways to rationalize why it’s OK to cut out their exchange from transactions and steal their fees.  The most common excuse I hear is that members feel it’s fair to pay their exchange on an initial transaction when they first introduce a new barter partner, but if they continue to trade on an ongoing basis, they don’t feel that it’s fair for the exchange to earn fees for doing “nothing.”  I understand this point of view, but if you want to conduct business in an honest and moral way the decision is quite simple:  What does your agreement with your exchange say?  If it says that you are not to barter directly with members that were introduced to you through the exchange, then you should not.  If your agreement with your exchange does not include that stipulation then you are free to trade direct.  If you have an agreement that you do not like, then certainly feel free to renegotiate or cancel the contract you have with your exchange.

Bottom line:  Your barter exchange is a great asset to your barter business.  Treat them well and pay their bills happily.  Cutting corners to short their fees is the same thing as shorting your employees part of their wages.

Join the Discussion