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.
One thought on “The value of MSRP in barter”