In the past six months, I have been approached by a few different companies who were interested in a barter agreement.  You know, trading something for something as opposed to money for services, money for time, etc.  Here is one of the requests I received:

The request went on to suggest a barter agreement.  Since I have been receiving more and more of these requests, I wanted to open up the discussion around bartering.

For me, I decline all barter agreements and barter requests.  Why?  I personally think that in a barter agreement, one person is never quite getting the same value as the other person is. Generally speaking, one person is approaching someone else.  That someone else has a service or a product that the first person is after which makes that product or service really valuable for the barter requester.  However, the person being asked now has to gauge the value of the other person and their goods and services.  The barter requester may not have anything that is of the same value or they may place a price on their items that is well above the true value which makes the barter arrangement unfair.

For example: Joe the Landscaper has a broken toilet.  He calls up Sam the Plumber and asks Sam, “Hey, will you fix my toilet for me?  I don’t have any cash at the moment but what if I do some landscaping for you?”  Now, Joe is obviously the one with the higher need.  Sam wasn’t seeking a landscape artist and therefore, doesn’t have a need for that particular service.  If Joe’s landscaping fees are higher than Sam’s plumbing fees, he may not get much landscaping done and at the end of the day, he’ll feel cheated because he got very little of something he didn’t want in the first place.

If you are the person who needs the barter because you are lacking funds, think about how you can TRULY add value to the person you ask.  Approaching them blindly and offering them something that they may not want or need won’t work because they weren’t looking for it.  Instead, see if you can figure out what they do want and if you can, offer that to them.  Or, offer even more value than what they feel they are giving to you.

One of the most interesting barters I have ever been offered went like this: ”We need you to help us get more traffic and visibility to our website.  It’s not getting much traffic right now and is therefore not producing revenue like we’d like.  In exchange, we’d like to offer you a free ad spot on our website.  You can benefit from the visibility and hopefully get business referrals from it.”

Yes, I am serious and yes, you read that correctly.  The company wanted me to work for free to help them increase traffic to their site so that I could get more visibility on said site.  Why would I expend my time and energy working for free on a site only then to get visibility?  I might as well pour that time and energy into my own sites!

So, my own opinion on bartering is that it’s not a way to conduct business.  If you want to barter in your personal life, it might make more sense but watch for perceived value vs. true value.

I’d love to hear from you too – what is your take on bartering and do you do it?

I get asked this question ALL of the time: “Are packages better than billing by the hour?”

Some people say that packages are better since you can buffer in extra dollars and time.  You can also combine it with other items, such as an info-product, to really increase the perceived value of the package.

Some people say that hourly is better because then you are truly being compensated for what you are worth and the client will be more aware of the amount of changes they are making and they’ll be quicker to act.

I sit on both sides of the fence.

I love packaged services because it’s easier for me to explain what they get and it’s easy to tack on a price for the entire enchilada.  However, with packaged services, you run the risk of getting an “and this” client.  What’s an “and this” client?  It’s someone who continues to add more and more stuff to their package or someone who requests change after change because they aren’t paying for each individual time entry.  These people can wreak havoc on your packaged pricing.

I love hourly services because of the reasons mentioned previously – it gets clients to act quicker and be more resourceful on their own.  It forces them to be engaged delegators as opposed to just passively throwing everything at their team and it also helps them to get clearer on deadlines.  However, hourly rates also have a bit of a detriment.  If you are fast at providing the service, you will end up de-valuing your work.  You shouldn’t be penalized and made to charge a lower rate because you’re good at what you do and you’re fast but it happens with hourly services.

So, what does work for businesses?

I’d like to think that a combination of the two does but there is still no clear cut answer.  We have some clients who make us appreciate the packaged pricing and we have other clients who make us appreciate the hourly services.  It’s really split right down the middle for us.

Instead, I ask you.  How do you prefer to bill in your business and why?  What have you found to work successfully and what has not?