Cutting your exchange out of a deal

Fairly early on in my “barter experience” I ran in to a couple different people who found me through a barter exchange, but wanted to arrange a deal outside of that exchange.  This comes down to a basic ethics issue.  Barter exchanges send business to me.  That’s really their primary job as far as I’m concerned.  They are my “outside sales” force.  So with that in mind, I think it’s a VERY bad idea to cut them out of a deal.  My goal is to establish a reputation among brokers that it is a positive, easy, and PROFITABLE experience to send folks to me for a  deal.  Beyond the obvious that Test you are cutting your own throat when you fail to pay your sales team, it is also unethical to do so.

That being said, things are rarely black and white.  The world is full of shades of grey so you need to look at situations individually.  Here are a couple situations where I would consider doing business outside an exchange with contacts who are in my exchange network:

  • Business started outside the exchange
    If you are doing business with someone in your barter network, where the original contact did not come wholesale jerseys from your exchange, I see no problem working with post them directly for cash or barter or even cash & barter.  If the sale did not originate with a lead from the exchange all bets are off.  For example, I have a long time client that we did cash business for years, then later on we realized that we are both in the same barter exchange.  I see no problem continuing to deal with them directly or even on doing a part cash part barter deal with ?bn them (that might be normally prohibited by my exchange).
  • Long term vs. short term
    I have a vendor that I found through my barter exchange and it turned out that he wants some of my services directly.  He wanted to work directly and totally Publications cut out the exchange to save the commission fees.  After much conversation, I agreed that if our first job was run through the barter exchange, I would be willing to do some work on direct trade after that.  My goal is for this to be a long term vendor and I fully cheap nba jerseys expect that after a relatively small amount of direct trade we’ll be back to 100% through cheap jerseys the exchange.  My reasoning in making this deal was two-fold.  Firstly, much like an outside sales person, I don’t think it’s reasonable to always expect that a commission will be earned from every sale that is ever made with a client that a on salesperson brings in.  Often sales people earn their commission Coffee is on that first sale only.  In this case, the exchange will be earning for the first sale and (most probably) many wholesale mlb jerseys more down the road after the direct deal is done.  Secondly, I had to look at the “greater good” here.  It seemed quite likely that the whole deal would fall apart if I didn’t make some kind of a concession to this vendor.  The exchange would have earned nothing if I hadn’t agreed to do some trade outside of the exchange.

As usual, please feel free to post back about your experiences with this issue.

4 thoughts on “Cutting your exchange out of a deal

  1. When you join a trade exchange you sign a contract to pay a fee on all transactions. When trade brokers find out their members are direct trading they will either end the relationship (close your tradng account) or no longer provide special offers to the offending member.
    Trade brokers do not like to work and not get paid. Just like you want to get paid for the work you do.

    Like

  2. Thanks Debbie!

    It’s great to get a broker’s point of view on this. Your comment brings up a couple items for me:

    1) Of course the main thrust of my post was to say that barter exchange members should not cut their exchanges out of deals.
    2) Your comment implies that some exchanges may require that you go through the exchange even when you have a business relationship with someone that pre-dates joining the exchange or if your initial contact with the client/vendor didn’t come through the exchange. This sounds like something that potential exchange members should watch out for and (I would hope) should be pretty easy to negotiate out of their exchange agreement.
    3) With regard to the last item in my post, what would your preferred method be to handle it? I mentioned this situation to another broker who approved of my solution. I twisted the vendor’s arm as much as I could to to secure the maximum possible commission for the broker. If I’d pushed any harder the deal would have fell through and the broker would have made nothing.

    Like

  3. More than just being an “outside sales rep” for your company, the barter exchange is keeping track of all your debits and credits and doing the necessary to the IRS. So our commission is not just on the sale, it is on all the other work we do to keep your account correct at all times.

    So you do one trade through your exchange and the rest outside of the exchange. I have seen that done in the exchanges that use my software as well as my own exchange. And this is the part that has me laughing hysterically when it happens (and it does!) One side of the direct trade doesn’t produce, doesn’t do what was promised – whatever. Inevitably the person who was wronged comes crying to ME asking if there is something I can do.

    End result – there is nothing I can do. It is like calling Visa or Amex for help when you paid with Discover. And, both sides get kicked out of the exchange.

    You run so many risks doing direct trades, even your “justified” version of them, isn’t it better to pay our small trading fees and you can be sure you and your account will be taken care of?

    Like

  4. Just to be clear here…my standard mode of operation is NOT “one trade through my exchange the rest outside.” The main thrust of my post was that you should stay inside your exchange. In all of the tens of thousands of dollars of trade that I conducted in my first year of aggressive trading the particular situation I was describing came up once and even in that situation I thoroughly expect that future business will be going through the exchange.

    So….moving on from there…I LOVE your point about the extra protection you get from an exchange that is unavailable to you in a direct deal. That is totally true and unfortunately, I’ve had a deal go bad and was very grateful that my exchange was able to help me out.

    That being said, I think it’s important not to overstate that point: Every cash deal I make is a “direct deal” that I’m performing without a net. I’m certainly not going to stop making direct deals. The same applies to barter. If I find a potential bartering partner outside of my exchange networks, I may try to recruit them into a network or I may barter with them directly. It is no more risky than making a cash deal. The primary reason that I have in making direct deals is that it can be difficult to recruit some people into an exchange. Some people just “don’t get” barter exchanges and no amount of explanation will get them over that canyon. I’ve also had a lot of luck bartering for firearms and because some exchanges are not interested in those trades (don’t get me started) I’ve done those deals direct.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s