Time Banks


For those of you who are not familiar with the concept, a time bank is a form of barter organization where members “bank” credit by doing hours of work for other members and can then purchase other member’s time with those credits.  Although I haven’t been directly involved with a time banking organization, my wife has performed some trading this way that has worked out really well.  My wife is a nail technician and she often does the nails of a local massage therapist.  As you may guess, getting a massage is much more expensive than having your nails done so it would be very lopsided to barter at cash value.  Instead they roughly trade their time.  A massage takes about twice as long as nails so my wife gives her massage therapist two gift certificates for each massage she receives.

There is also a life philosophy that is lived out through time banks.  At it’s most basic level, trading time values everyone’s time equally.  Although I would be the first to acknowledge that all people (and their time) have great value and that no one person is any more important or valuable than anyone else, it’s difficult to live that out in the marketplace.  For example, I have a hard time justifying a brain surgeon and a landscaper trading hours.  It’s not that I don’t value a landscaper or his skills.  The truth of the matter is that the surgeon had to invest a lot more time and money into his profession than the landscaper and his skill set is much more scarce in the marketplace.

Bottom line is that I like the concept of a time bank, but I think it works best for folks that are earning and spending hours of approximately the same value in the cash marketplace.  It can still work when the values are uneven, but in those cases the member with higher cash rates will need to look at the time bank as his own personal social justice program the same way one might look at pro-bono work.

The value of MSRP in barter


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.

Being fair to your Barter Exchange


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.

Don't demand your rights when you barter

Angry Brunette Through A Fisheye Lens

That sounds strange doesn’t it?  Why would I encourage you not to demand your rights?  This is America!  The land of rights and liberties!  Here’s where I am coming from:  Your goal with barter partners is to establish and maintain life-long relationships.  Generally speaking digging in your heals and demanding your rights is not a good way to encourage that.  I want to be my barter partner’s favorite business person.  Sometimes…that means overlooking where they may have fallen short of my expectations.  Don’t get me wrong here…I’m not advocating that you let yourself be used as a doormat.  What I’m saying is that I try to give my barter partners a little extra leeway with how they provide their services.  In the long run you more than make up for it simply because you are bartering with them instead of paying cash.  That being said, if you just plain get a bad deal, you can’t ignore that.  If a serious problem crops up talk to your barter partner and if you can’t work it out take it to your barter exchange (if you used one).  Your last resort is court, but I have to tell you that my experience has been that even when you win in court you lose when you consider your time and the chance that you won’t even collect what was awarded.  It’s much better to be a little flexible and get most of what you want than to fight tooth and nail for every scrap you deserve and ruin a relationship forever.


Barter Reciprocity

As many of you know, there can be times when you consistently earn more barter credits than you spend and you need to take a break from earning more.  In those times I continue to service my existing barter clients, but stop taking on new ones.

That being  said, even when I’m not looking to pick up new barter clients, I make an exception for folks that I’m already purchasing from on barter.  For example,  I have been avoiding taking on new barter clients lately in a particular exchange, however, when the drycleaner that I use (from that exchange) asked me about working for him on trade, I took him on as a new client.  It just wouldn’t be right to spend barter credits with a vendor, but not accept them as payment from the same party.

Conversely, if I work for you on barter, even if you are not taking barter from other members, I fully expect that you should accept it from me.

Review: Smarter Companies Barter

Hopefully this is the first of many books to come that I will review on the topic of barter.  I heard about this book through a fellow barter fanatic who recommended it to me.  It was written by Bill Meacham of BancMarc who is a 30 year veteran in the industry.  I traded some emails and phone calls with Bill and he proved to be a wealth of information about all things barter and generously offered to send me a copy of his book for review.

Smarter Companies Barter is an 80 page self published book that is a quick read even for speed-challenged readers like myself.  What it lacks in polish it more than makes up for in passion.  The book explains the value of a modern barter exchange to the uninitiated, really hammers on the importance of ethics for all parties involved in barter and does a good job reminding folks that run barter exchanges of how to run a tight ship.  A recurring theme in the book is the importance of member education.  One potential use for the book is for exchanges to give it to new members as part of an educational program.

I have to admit that the book did lead me to question one of my own trading practices (more on that later).  It’s an unusual book that motivates me to make changes in my own life so I have to give this book my recommendation.

If you want to buy a copy of Smarter Companies Barter it is available at www.smartercompaniesbarter.com.  Ironically it is not available on barter at the time of my publishing this article.  I would also like to note that the author has mentioned the idea of sponsoring this blog.  That possibility has not influenced my review in any way, but I’m afraid you’ll need to take my word for it.

Tithing on barter

After bartering for a while it occurred to me that my trade profit was significant and that I really should be tithing at church on the profit that I’m earning on trade.  For a couple months I started tracking my trade profit and tithing cash for it.  It didn’t take long for me to realize that I hadn’t come up with a good solution.  I simply couldn’t afford to keep paying out cash tithes on barter profits.  I’ve spoken with a couple people and have come up with two potential solutions:

The easy solution is simply to set your church up with a barter exchange account and tithe in barter credits on the barter portion of your profit.  The problem I have with that solution though is that it puts the burden of managing the account and figuring out what to use it for on your church.  I don’t know about other churches, but the staff at my church already have plenty on their plate and really didn’t need another job added.

My solution is more work for me, but I think it’s the best way to go.  I contacted my Pastor, and let him know the situation.  I explained to him that I wanted to tithe on my barter profit, but I simply couldn’t do it in cash.  We agreed that we would both watch for things that the church needed that could be purchased on barter and that I would then take care of those needs based on records I was keeping with regard to what I needed to tithe in barter.  This way it doesn’t put any new work on church staff and at the same time, I don’t need to tithe cash on barter profits.

Barter for Psychotherapy?

From time to time I’ve had folks tell me that bartering within a particular industry is “not allowed.”  Usually the person I’m talking to will vaguely refer to the IRS, the SEC or some other regulatory agency without any specifics.  Not satisfied with this, I’m trying to track down some hard facts and here’s the first area that I’ve nailed down.

Based on my research it appears that bartering for psychotherapy services is NOT in and of itself illegal, however it does raise some serious ethical issues and could quite possibly be against the ethical code for some professional organizations in the industry.  The concern here is that a patient/therapist financial relationship needs to be extremely strait-forward so as not to allow for the possibility of the patient to be taken advantage of due to the therapeutic relationship.

In California (where I am) the primary concern of the Calif. Bd of Behavioral Sciences and the Calif. Assn of Marriage and Family Therapists (CAMFT) is the issue of “dual relationships”.

1.2 DUAL RELATIONSHIPS-DEFINITION: Marriage and family therapists are aware of their influential position with respect to patients, and they avoid exploiting the trust and dependency of such persons.

Marriage and family therapists therefore avoid dual relationships with patients that are reasonably likely to impair professional judgment or lead to exploitation. A dual relationship occurs when a therapist and his/her patient engage in a separate and distinct relationship either simultaneously with the therapeutic relationship, or during a reasonable period of time following the termination of the therapeutic relationship.
Not all dual relationships are unethical, and some dual relationships cannot be avoided. When a concurrent or subsequent dual relationship occurs, marriage and family therapists take appropriate professional precautions to ensure that judgment is not impaired and that no exploitation occurs.
1.2.1 UNETHICAL DUAL RELATIONSHIPS: Other acts that would result in unethical dual relationships include, but are not limited to, borrowing money from a patient, hiring a patient, engaging in a business venture with a patient, or engaging in a close personal relationship with a patient. Such acts with a patient’s spouse, partner or family member may also be considered unethical dual relationships.

The former legal analyst for CAMFT, Richard Leslie,  adds to this in a recent article:

Do not permit the patient to pay for therapy by rendering personal services to you (e.g., fixing your car, landscaping, cleaning your house, editing a book, giving a massage, cutting your hair). Do not permit the patient to barter for therapy with items of subjective value (paintings, sculptures, hackies, collectibles).

Even barter of items with an objective value (cord of wood, bag of horse oats) may present difficulties. While the barter has a fixed value, the trade of it may entail meetings outside of session or meetings at the patient’s or therapist’s residence.

Ultimately it appears that it is up to the individual therapist to determine if they feel that bartering for services constitutes an unethical dual relationship.  I can see both sides of the issue on this one.  From the one point of view, if the specifics of a barter are determined before the therapeutic relationship starts and the terms of the arrangement are as strait-forward as a cash relationship (as they should be if the barter was conducted through an exchange) then I really don’t see a problem here.  That being said, my friend who is a therapist and helped me with this research did not feel that barter has a place in his business.  He feels that patient/therapist relationships must be so squeaky clean that all possible grey areas are to be avoided.

Added 9/27/10
Here’s an article on the topic that appears to be very well thought-out:  http://www.zurinstitute.com/bartertherapy.html

Why do barter exchanges have such bad security?

Does this open vault remind you of your barter exchange account?  Is it just me or does it seem totally insane the way barter exchanges handle (or should I say DON’T handle) security?  As of right now I belong to two exchanges.  Both have the same general idea about security.  Anyone with an account that has my ID number can charge my account without my permission through the exchange’s website.  OK.  That’s wierd enough, but the real punch line is that I need the other party’s permission (or my broker’s blessing) to remove a charge from my account.  I can’t do that through the exchange website on my own without approval.  That totally blows my mind.   This is like saying that anyone can write a check out of my bank account on their signature (not mine) and I have to beg “pretty please” if someone charges me incorrectly.

Shouldn’t it work exactly the opposite of that?  Shouldn’t someone have to request my permission to charge my account (including my broker) and shouldn’t I be able to remove an erronious charge without outside approval?  When I’ve asked my brokers about this I’ve gotten two responses:

  1. This is a left over vestige from when all barter transactions were processed manually.  That may very well be true, but it in no way satisfies my desire for security.
  2. This is the way we always do and it is extremely rare for there to be any problems because of it.  Well, I have to admit that I’ve never had a problem either so maybe I’m worried about nothing.  That being said the whole premise of vendor being able to charge my account without my specific permission doesn’t sit well with me.

I should probably point out that as strange as this system might sound to someone outside the “barter community” this is a TOTALLY NORMAL and accepted practice for barter exchanges.  It’s not just my two barter exchanges that do this.  As far as I can tell this lack of security is a common thread across the majority of barter exchanges.

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.