I’m having a barter Christmas around my house this year…kinda. As it was getting toward Thanksgiving my wife mentioned to me that we had a bunch of Christmas decorations that we don’t use any more and this would be an ideal time to post them on ebay. Of course this was a brilliant idea and over the next couple weeks I posted several hundred dollars worth of items. As they sold I directed people to pay me via paypal and the cash funneled in to our account.
On the opposite end of the spectrum I started shopping for some presents for my family and usually I find the best prices on ebay. When I found what I wanted I payed using the funds that were already in my paypal account. It was beautiful. Of course what I did wasn’t really barter, but it felt pretty close to me. What I did really is essentially what we do when we barter; we give someone else something that we don’t need and get something back that we want. Best of all I didn’t have to fork out any pre-existing cash for my gift purchases.
For those of you (like myself) that don’t closely follow the world’s top financial newspapers, the easiest description of the Financial Times is that it’s a British Wall Street Journal. It’s one of the best newspapers of it’s type in the world. For that reason I was very pleased to be interviewed by one of their writers a few weeks ago about my favorite topic and even more pleased that they published the article complete with a link to our humble little blog barterfantic.com.
You can read the full article at the link below. It’s behind a “paywall” but you can get free temporary access by completing a short form.
Here’s a short excerpt:
Oct 10, 2012
The art of good bartering
By Alicia Clegg
With his twins about to start middle school, Brian Petro, owner of Bright Productions, a Californian web development business, faced a dilemma: how to pay for their education without draining the family finances. His solution? Barter.
A month or so on, he says, his sons are doing fine. The school is happy too. In lieu of fees, Mr Petro is redesigning its website and has procured $1,000 worth of art materials for the school by bartering his services with a local store: “Bartering allows us to go on vacation, maintain our cars better and educate our kids privately.”
Mr Petro, who has a blog, Barterfanatic.com, is not a lone enthusiast. Businesses have always bartered, often as a way of overcoming liquidity problems or bypassing currency restrictions. But according to the International Reciprocal Trade Association, a US-based body, the recession has encouraged more companies to offset the effects of shrinking order books and tight access to credit by putting excess capacity to use…
Please use the link above to continue reading the article.
My twin boys are in 5th grade this year. Because the school that they were going to last year only goes to 4th grade, my wife and I needed to find a new school for them this year. We knew that we wanted to send them to a private school, but we also knew that we didn’t have the cash to do so. This is how we successfully found a great school for them 100% on barter.
- First we put together a list of requirements for school prospects and found schools that fit our requirements.
- We called up all of the schools on our list toward the end of last school year and asked to get a tour from the principal and for our boys to have a “shadow day” at the new schools. This got us a good feel for the school and gave us an introduction to the principal.
- We then put together our final list of schools all of which we thought would work for our boys. We ended up with 3 contenders.
- I then put together an email to each of the principals. I requested that the principals share the email with their school board. It explained that we are interested in their school and that we would like to pay the tuition in barter. I gave a sample list of products/services that we’d be able to provide. I was also clear to point out that there was almost no additional cost to the school by enrolling my kids. I explained that the school would have a credit with me for the total amount of tuition (about $10k for 2 kids) and that the balance would decline as I provided products/services throughout the year.
- Of the three schools, one was interested in a trade. I was invited to present my idea to their school board and they accepted. My boys started school 3 weeks ago and everything is going great.
As I’ve noted before in this blog, some people “get” barter and some people don’t. That was the problem with the schools that declined my offer. Instead of understanding that I wanted to pay the full tuition, they would offer for us to apply for financial aid. There was also a concern that our deal might make other parents that volunteer, unhappy. I tried to explain that the types of things I could provide on trade were generally not the type of things that folks could volunteer to do, but that mostly fell on deaf ears. The craziest objection I heard was from a school board member that insinuated that if we weren’t paying cash we wouldn’t be as committed to the school. I’m afraid the joke is on him because as we all know, barter relationships are much more involved and comprehensive than cash ones.
It was a lot of work to set up this deal, but I’ve been really pleased with how it’s been going at my boy’s new school. My goal now is to make sure the school board is happy with the deal so they will be open to it in future school years. I’ve applied to join the school board because I think I will be more effective at finding good ways for them to spend their barter if I’m more involved in the school’s inner-workings.
One of my favorite ways to spend barter credits is on my kids. Over the years there have been MANY activities that my kids simply couldn’t have done if it were not for barter. This summer is no exception. The camps that my kids are looking at are all on barter and are as follows:
- Traditional Summer Camp (swimming/hiking/zip lines/horses/crafts/etc)
- Fencing Camp (foils, not 2×4’s)
- Karate Camp
- Art Camp
- Sports Camp (basketball, touch football, etc.)
- Racing Camp (indoor Kart racing)
All of these camps are within 15 miles of our house. I suggest that you check around and see what is close to you. If your broker doesn’t have anything appropriate, let your fingers do the walking. Start calling local camps and see if they want to add your kids to their schedule on trade. Sure, you’ll get plenty of “no’s” but occasionally you’ll get a “yes” that makes it all worth it. Don’t forget that most businesses that offer children’s classes offer camps during the summer even though you might not usually think of that business as a “camp.”
One of the things I like about barter is that it’s relationship based. In the cash world, especially in the current economy it’s very easy for a transaction to be adversarial. You want the best possible product/service for the lowest possible price. Additionally if something doesn’t work out exactly as planned you somehow feel like you’ve been ripped off. The relative ease of a cash transaction takes the humanity out of the deal. I would like to encourage you to have a relationship with your trade partners. Even more than that, I would encourage you to look for the win-win deal instead of only looking for the best possible deal for you. Now I’m not saying you should be a chump: I’m just saying to look at both sides of the deal. Here are a couple examples that I ran into in the last couple weeks.
I called up a local florist in my trade exchange last week to arrange for flowers to be delivered to my wife and daughter for Valentines day. I can say that here because my wife doesn’t read my blog! <grin> I opened the conversation saying that I knew that she was probably already slammed with cash orders on Valentine’s day, but would she be able to conduct a barter deal with me for delivery on the day before Valentines day? She said she could but that she already had sold all the roses she had available. I told her just to put together whatever she had that would be nice. Everybody wins.
I had carpet installed in my home on barter last week. The deal included the materials because my trade partner had an over-stocked warehouse and was looking to move the carpet. As the installers were getting close to finishing they told me that it appeared they were short on materials. They had misjudged and didn’t have enough carpet for a couple closets. They said they could order another roll of the same carpet but it would be a week or so before they could install it. I told them that the whole reason this deal was happening was because the owner was trying to clear out his warehouse and that I didn’t want him to have to order new carpet. They said that they probably had some remnants from another job that were very similar to my new carpet and that if I was OK with that, they could install it in my closets the next day. Again…everybody wins.
It’s my goal to be my barter partner’s favorite customer. More on that in another article soon.
I can’t help it! I just have to brag! My wife and I had the most wonderful meal at home tonight 100% on barter. Yesterday morning I went by a local butcher shop that I barter with and picked up two of the biggest dungeness crabs I have ever seen. I drove from there to a local bakery that I barter with and got a big loaf of fresh sourdough bread. What a feast! I was so excited about getting the crabs that I forgot to ask the shop to clean and crack them so I had to do it myself. <grin> To be fair though, it wasn’t quite 100% barter….I paid cash for the lemon and butter. I’d be happy to hear you brag about your barter meals with the “join the discussion” link below.
My family got back today from a fantastic 100% barter micro-vacation! These things take a little planning but they are really worth it. We left yesterday morning, drove an hour north and stopped for lunch at a great Mexican restaurant, then proceeded north to Vichy Springs. It’s a resort that dates back to the 1800s centered around a naturally occurring soda (carbonated) mineral spring. We swam in their big pool (that we had almost to ourselves in the middle of the week), soaked in the hot tubs, played basketball, Frisbee and catch with a football. We brought food with us for a BBQ last night. This morning we enjoyed the resorts continental breakfast, then hiked to a waterfall and came back for one more swim before we hit the road. On the way home we hit yet another restaurant for lunch. What a great way to wrap up the summer with school starting for our kids next week. The whole trip was 100% barter (meals and lodging) other than taxes and tips. Every bit if it was just a little sweeter because it was purchased on barter.
I have found yet another side-advantage of barter. It makes me a better salesperson.
When you talk to seasoned salespeople or sales coaches, they will all tell you that good sales from a REAL salesperson boils down to caring about your clients. Rather than try to sell them something, you need to try to solve their problems. You have to actaully want to help them. The second it’s about the money you’re done. Plenty of salespeople make a living pushing whatever they have to sell down their client’s throats, but those aren’t REAL salespeople and they will never reach their true potential.
So what does this have to do with barter? Simple. Barter helps take the pressure off the money aspect of the sale and concentrate on helping the client. Every good salesperson that is honest with you will admit that their desire to help people and their desire to earn a commission battle against each other on a regular basis. The beautiful thing is that when I’m bartering it takes the pressure off me to make the sale. Business that I do on barter is extra business that by definition I don’t HAVE to HAVE to make it on a day to day basis. What that means is that it makes it easier for me to let go of any self-imposed pressure to close a sale and simply concentrate on helping the client. If I get the job…great! If I don’t…no big deal. Additionally from the client’s point of view the pressure is off too. Although we all know that purchases on barter are not free, they are definitely cheaper than paying cash. Because of that the client’s first question in a barter deal isn’t always “what will it cost?” They can settle down and think about what is the BEST way to solve the problem rather than what is the cheapest way.
There are some things that are harder to barter for than others. Some of those more difficult things to barter for are physical products like construction materials. For a year or so I’ve been consistantly told that I will not find double paned windows for my house on barter. Every time I was told this I would smile and say that it can’t hurt to ask. I am pleased to announce that my new custom-ordered 100% barter windows and sliding glass door will be ready in about two weeks. The supplier is only an hour and a half away so I can pick them up myself and avoid shipping! So….the lesson is to just keep trying. And with that in mind I should probably remind you all that I am looking for a late model Toyota pickup (4wd). Yes…..I know….I’ll never find it.
Depending on your medical insurance (or lack there of) the value of bartering for prescription drugs will vary. In my family’s case, we have excellent insurance, however it has a high deductible which means for the first half of the year I pay cash on the barrel head for all things medical. So at the beginning of the year, I’m paying cash for prescription drugs. I’ve been buying perscription drugs on barter for about a year and this is what I’ve learned.
- Although I have found a number of pharmacies that will barter for prescription medications, they have never been near by. That means that you are working through the mail. This is not necessarily a problem, but it does mean that you need to plan ahead. It also means that it’s unlikely that you will get antibiotics for your children when they have an ear infection. Bartering for medication is suitable for ongoing treatments that you know about ahead of time.
- Pricing is not fantastic with barter pharmacies. Especially if you are used to simply paying co-pays. If you are bartering for prescription drugs, get ready to pay more than the retail rate. That being said, I’ve found that when I take into account the wholesale price that I acquire barter credits at, the pricing works. There are a couple reasons for the high prices: First off, as with all hard goods that are in demand, it’s pretty normal to pay a relatively high barter rate. Secondly, it’s generally smaller independent pharmacies that are open to trade. They don’t have the muscle to negotiate the kind of prices that big chain pharmacies do.
- While my wife was recovering from major surgery, she was on pain killers that are more strictly regulated than most medications. I was able to barter for these, however these prescriptions cannot be called or faxed in to the pharmacy. The pharmacy needs the original prescription. I would personally recommend that you have all prescriptions like this mailed directly from the doctor’s office to the pharmacy. That way if it gets lost somewhere along the way, no-one will ever think there was any funny business on your part.
- Because timing and accuracy are so important with prescription drugs you really have to watch for good customer service. I’ve worked with two pharmacies. One was fantastic and the other one was horrible. Find one you like and really take good care of them. Pharmacies generally aren’t used to dealing with barter and adding another layer of complication in a business were mistakes are not allowed can be tough.
- It has not been my experience that pharmacies work with insurance when they are bartering. What I have done is paid for the drugs on barter, then submit them to my insurance company myself. Each insurance company while allow a different price for a particular medication and it will probably be considerably less than what you paid on barter. As I mentioned in my last post…once I hit my deductible, I can submit my receipts to my insurance company and they will send me a cash reimbursement check.