When Should a Freelancer Barter?
Every once in a while, I have a prospective client ask me if I’d be willing to accept payment in barter, rather than in money. Most of the time, my response is ‘no.’ My landlord doesn’t accept payment in barter — I checked — so, I have to bring in cash in order to pay my own bills. But there are some barter deals I have taken, and they’ve really paid off for me. I get a fair amount of my design work done by bartering with another freelancer: I trade writing for his site in exchange for him designing my site. There are certain situations where barter can really pay off for a freelancer.
Bartering For What You Want
There’s a good rule of thumb when it comes to deciding whether a deal is good for you: if you aren’t planning to pay cash for something in the near future, it isn’t worth bartering for. I’ve received some pretty weird offers for barter over the years. It’s pretty easy to refuse the obviously strange offers, but it can be harder to decide whether reasonable offers are actually worth your time. A deal where you swap a few hours of graphic design work for having your business cards printed can seem like a good deal, for instance. But what if you’ve just recently printed new cards? If you aren’t planning to print new cards any time soon, that deal won’t work out so well for you — in the worst case scenario, you won’t be able to use up all of your cards before you have to change some of the information and have them reprinted.
It’s very easy, unfortunately, to find barter offers that actually won’t help you out in the long run. Avoiding such deals is important because you still need to earn a living, whether you’re paying for it barter or in cash.
If you do have something in mind that you really need, it may be worth checking if any of the companies that can provide you with that service or product need your skills. There’s no guarantee that you’ll get a yes, of course — other companies turn down barter opportunities for the same reasons you do — but it’s worth making an offer.
Bartering For Other Reasons
There are a few occasions, when it’s worth considering a barter situation which you might otherwise turn down. Maybe an existing client has come to you a budget problem with a project: accepting part of your payment in barter may be a way to keep the client without giving him the idea that you can offer a discount on every project. Maybe you know that a prospective client needs your skills, but just doesn’t have the money on hand for the project.
There are more than few situations in which you or a client could suggest bartering as an option. It’s worth considering the situations you’d be willing to take on a barter agreement ahead of time. Having a good idea of your own policies on the situation can make it easier to both accept those opportunities that are beneficial and turn down the ones that won’t do anything for you.
Some Freelancers Never Barter
Bartering can be a hassle: figuring out what services or products are equivalent to each other, making sure you get your full ‘payment’ and other situations can take more time to resolve when you aren’t dealing with cash. That fact has lead many freelancers to entirely avoid projects that involve barter. Such a decision can be very reasonable: if you’ve already got plenty of work on your hands, it makes sense to stick with what brings in money, rather than trying to figure out bartering options.
Refusing to barter can also simplify your bookkeeping: in countries, such as the U.S, you’re expected to report any products or services you receive through barter on your taxes as income. The paperwork necessary to do so adds more work to preparing your taxes.
No matter what your concerns with bartering are, it’s up to you to decide whether you’re willing to barter, as well as just what you might want to barter for.
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I bartered few times before – and believe me when I say – it’s OK if the fee is small, and you get some goods in exchange for your work – but if we’re talking big money, and the client is insisting to give you goods instead of paying – I’d say that something is fishy there, and I would back-off, and refuse to work on that project. (I speak only from my personal experience, of course)
Thanks for good article,
dootzky
completely agreed…
to add to that, should things turn into them implying they’ll be doing you favours for ‘letting’ you doing work for them, in terms of giving some percentage of profits to you, or worse yet “we’ll tell people you did the work for us and get you leads” run…. run far away
Recently I bartered a gym membership for a monthly email newsletter. My fee for the newsletter and the membership were about the same (the membership was actually a bit pricier counting their processing fee), so we did an even trade. The neat thing was, they immediately approached me about doing a printed version of their newsletter. I went to them with the original barter proposition and they came back with more business. I also bartered a membership in a CSA program which has fed me nicely all summer. As a new freelancer, barter has certainly led me to some business I otherwise wouldn’t have gotten and allowed me to build a portfolio.
Thanks for the article! My experiences with bartering are more then positive so far. I offer design in exchange of photography or administrative assistance. If you are looking for an online barter site, the best site I found so far is http://www.barterquest.com.
Interesting topic, I think I bartered once or twice when I first started working just to build my portfolio but now I don’t see that happening. Especially with paying rent and bills and other expenses.
I will say that bartering can be a great way to get more business through a new-found partnership. I’m building an extensive website for a photographer in exchange for event photography – stuff that would be quite expensive for both of us out-of-pocket. As we’ve been working together over the last several months we’ve actually found that it’s quite a beneficial because we can drive prospective clients to each other. Likewise, we’re working on setting up a more formal business relationship where we work more on the same team, towards a common goal, rather than just going back and forth.
My only advice is to have that conversation at the beginning of the project to decide what amount of work you both think is *fair* if there isn’t an actual dollar equivalent worked-out. Leave it open for further discussion if it ever feels like one person is putting more into the barter than originally agreed on – just as you would if a project you’re working on for a paying client started to experience scope creep or begin going over (projected) budgets. And just like with any other contract – decide what “finished” looks like, or at what point money needs to become involved to finish the work. Set the plan and stick to it.
Direct trade bartering is tough since you often don’t need what the other person has to offer you.
Barter can be done through a barter banking company as well. The catch often is that there is a substantial fee to pay to ‘join’ and monthly fees, sometimes even an annual fee, and always a transaction fee (10-14%).
Many are regional (just your city/area) and some have multiple offices, using a directory of clients bartering.
There is another option which blends regional barter with corporate trade (large companies) which is offered through some of the members of the International Reciprocal Trade Association (IRTA).
I work with a one of these IRTA member barter banking companies called TransMedia Trading Company. It’s streamlined, no fee to open an account, no monthly/annual/maintenance/renewal fees. Only a simple 5% fee on all transactions. We then work to get goods and services for you that you want, either in your area or beyond.
There are many good barter companies out there, and some that are not as beneficial for freelancers due to limited services offered.
I hope this helps give another perspective on barter for freelancers.
Perhaps the best barter is the one you initiate yourself. I am approaching a local business right now with a trade offer – because I REALLY want to do some major shopping there, and I might as well pay it off with labor (that I really enjoy doing) than out of pocket.
I am interested to know what kind of paperwork is involved regarding US income tax reporting.
I was actually thinking about this yesterday. There is something I could really use, but might not actually spend money on (because it’s not in my budget). I toyed with the idea of offering barter to the service provider, so I could basically get the service “free.”
For now, I’ve decided to just take on an extra paying client and make the money. However, if someone approached me with a barter idea, I needed or wanted what they offered, and I had a hole in my schedule, I’d seriously consider it.
For me, the key deciding point this time was, I have the time to take on an extra project. Should I offer barter, or should I just take on a project & pay?
I might make a completely different decision if I were the one approached with barter. But in general, I think I wouldn’t. Unless I really wanted to work with that person and barter was the only option, I think I’d rather work for money and pay for what I need.
I bartered at the beginning of my freelance career to get some projects to build my portfolio. I think it works out really well if you’re proactive from the very beginning and barter services for services.
I’d consider it again if there were an arrangement that would benefit both sides. If it’s something we’d both be paying for anyway, why not just swap services for it?
Bartering can be a hassle so you may consider joining a bartering organization like Premier Barter. The fees are relatively low and people have had success. I met the owners of Premier Barter and they’re really nice. They deal with bartering organizations in the USA. Just a thought…
I’ve done it a couple of times, when the client budget was not enough to cover payment. Nice article. Thanks.
I have always wanted to barter but quite honestly I have not found anything/anyone worth bartering with.
I have never bartered myself. If it was a large purchase I was considering spending real money on, such as a motorcycle, I would probably do it though as long as the dollar values for the services and the item were pretty much equal.
Actually, bartering was a lifesaver for me this year.
I recently lost my husband to a heart attack. I was not physically or mentally ready to go back to my full time job, design websites at night, and shovel my driveway or mow my lawn, depending on the season.
Everyone told me, hire someone to maintain the house for you…well…that would be the perfect answer, except I simply could not afford it.
I found someone to plow my driveway last winter and this coming winter, and he also mowed my lawn all spring and summer, and I did a website for him. Worked out perfect. Gave me time to work on web design after coming home from the day job, and not have to worry about maintaining the outside of the house as well.
Don’t know how I will report this on the taxes, I really never thought of it…guess I shall have to do some investigating and see now.
Bartering can work if the need exists, and I highly recommend it!
Man, very strong of you to pull yourself out of that, especially bartering to handle some of the stress.
I’ve had some interesting barter deals that I’ve come across. One man who was a locksmith wanted me to build him a website for his business in exchange for changing the locks on my door. Ha! It’s all about making it work both ways
. I’d like to say I have a safer apartment now, but unfortunately some services just aren’t worth bartering, especially for web design.
I’m a fan of barter, but only through an organized barter organization—never a direct trade with a client. I’ve been a member of two trade exchanges for years, ever since I owned an interior landscape company. The trade exchange arranges the trades, keeps records, and reports the income to the IRS on a 1099.
Yes, the exchanges charge fees for their services, but I consider it a reasonable advertising cost. The member controls how much trade they are willing to do, so when I’m busy, I don’t accept trade business.
The trade exchange referred a client to me, and I did some work for trade—all the trade dollars he had in his account. Then we reverted to cash, and I have billed him tens of thousands of dollars in cash. He would not be my client, and I would not have made that cash if I hadn’t belonged to the trade exchange.
I’ve written a series of posts about bartering this way; the first post in the series is http://lillieammann.com/2008/08/21/barter-part-1-what-is-it/
Awesome post. I have never bartered before but I am off to live in Thailand in a few days and I hear it is pretty big over there so many I’ll pick up some tips. :p
Thanks for the interesting read.
A freelancer should only barter when the object being offered is directly related or useful to his business. E.g. Hosting Services, CMS solutions, Printing Services vouchers. This helps to keep things simpler and allow you to use bartering to improve or expand your services.
For every bartering session, he should put an exact monetary value on his offering based on his normal rates. And he should then be getting an equivalent amount of monetary value back (e.g. a $500 hosting package). Too often I have seen a barter go sour when the offerings are keep vague and one party ended up feeling cheated.
When I started my business, I bartered quite a bit to build a portfolio. I was not formalized about my bartering process and ended up losing work and not getting enough from the client – so I stopped bartering – for along time. Since the economy tanked, I’ve taken up bartering again, but only for items that I really want or need and everything is documented and billed to ensure that my client and I are meeting each others expectations. I also will not barter for something that I don’t need. I also blogged on this topic recently and included my formalized process – http://bit.ly/Jw86p. So far, so good!
I always prefer payment in cash. If want something from the client, I would buy it separately. It’s always safer.
At the agency I work for during the day we’ve taken on a handful of web projects for barter clients and in almost every case the project takes much longer than a comparable project paid in cash. I’m not sure what it is about the mentality of business owners that tend to barter, but somehow they just don’t seem to place as much value on what they’re getting in return. As a result, they don’t participate in the site development process or even come through on their basic deliverables like content and design feedback. As a result, the projects always take forever, the clients generally end up being unpleasant (when they realize the project has been going on for a year and they still don’t have a website, despite the fact that we’re waiting on them,) and on multiple occasions we’ve ended up not launching the site at all and sometimes there’s a legal battle. Fortunately I’m just a developer in the company so I don’t have to deal with the accounting, but suffice to say I don’t recommend doing projects for barter.
At the agency I work for during the day we’ve taken on a handful of web projects for barter clients and in almost every case the project takes much longer than a comparable project paid in cash. I’m not sure what it is about the mentality of business owners that tend to barter, but somehow they just don’t seem to place as much value on what they’re getting in return. As a result, they don’t participate in the site development process or even come through on their basic deliverables like content and design feedback. As a result, the projects always take forever, the clients generally end up being unpleasant (when they realize the project has been going on for a year and they still don’t have a website, despite the fact that we’re waiting on them,) and on multiple occasions we’ve ended up not launching the site at all and sometimes there’s a legal battle. Fortunately I’m just a developer in the company so I don’t have to deal with the accounting, but suffice to say I don’t recommend doing projects for barter.
ITEX is an option that I have used for some time now. I actually just bought a sweet boat with money I collected through that barter service. The key is that doing work for people doesn’t limit you to trading for their specific service. Just a thought.
I for one don’t barter for my services. I guess it could work out in some instances, such as if you’re badly in need of a specific service.
I prefer to just pay for whatever services I need, whether it’s getting my WordPress blogs updated, or having an ecover/header or whatever else designed.
It may sound harsh, but I want to acknowledge good work in the same way I would like my own work to be appreciated – with money.
I would really like to see some concrete evidence on this statement about having to report your bartering in U.S. taxes. I don’t even know how one would go about doing that. I mean, if you’re not making actual cash off the services rendered, it can’t be considered a sale, and nobody would expect you to report money you didn’t earn. If you do someone a favor and they respond by giving you a gift, you don’t have to report that, do you?
Alternately, I would assume you could get around having to report it by saying you wrote copy for their website for $200, and they created a design for your website for $200 (or whatever you bartered in exchange for), which shows you broke even. Then you could even write it off as an expense when you got it for free!
From the IRS Web site:
“Income from bartering is taxable in the year it is performed. The rules for reporting barter transactions may vary depending on which form of bartering takes place. Refer to Tax Responsibilities of Bartering Participants for more information about reporting income and staying in compliance.”
at this URL: http://www.irs.ustreas.gov/businesses/small/article/0,,id=187904,00.html
I think barter can be fantastic although often you find yourself thinking you want something when you really don’t.
I barter for my so called “luxury” services such as the beautician and personal trainer so I don’t feel guilty spending cash on them.
Bartering opens up a whole new way of transacting with each other, without some of the baggage that cash brings…
I’ve recently developed a whole website dedicated to barter in the UK (http://www.favabank.co.uk) where people can make exchanges using an online currency to keep account of everything. I’m sure we’ll see much more bartering as economies continue to decline and technology allows bartering to become so much more sophisticated…
Honestly if you are looking for a great place to make a cashless exchange, Turrency.com is the only truly free bartering and trading site that I know of and trust.
A simple way to exchange services and favors for free is http://www.favorthinking.com
People from all over the world do favors in exchange for FavorPoints which can be used to receive favors from anyone else.