Last fall, a friend of mine traded a large empty tank that was designed for water storage. He was planning to complete a project with it that never got started and his wife said it had to go. He traded that tank to a local farmer for maple syrup this spring. The farmer needed it to collect the sap to make syrup.
The two men agreed on an amount of value, my friend dropped off the tank. A few weeks ago, he and the farmer met as agreed and now my friend is enjoying fresh maple syrup on his flapjacks.
Bartering can be a great way to get something you need and build up a community at the same time. For bartering to be successful, keep these simple guidelines in mind:
1. Know the value of your trade
No matter if you interested in trading a service or goods, you need to know the value of what you have and what you are asking for. If what you are offering is more or less than what the other person is offering, then you need to negotiate. You can negotiate more trade items or cash, but having an understanding of the worth of your offer is important. You can check online stores or catalogs to compare prices on new or like new items, or search Craigslist or eBay for pre-owned item listings.
Two artists I know exchanged goods – one who made wooden cutting boards, the other a potter – agreed to exchange goods based on the retail prices of their work. They both got nice gifts for their spouses and now pass customers back and forth as well.
2. Decide in advance what is being traded and what the time frame is for trade
Before you drive off with your new treasure or use a barter service, be sure you have worked out exactly what is due to both parties. If the exchange isn’t happening fully at the same time, be sure you know when and where the final exchange is to take place. Be clear so there is no chance anyone will be disappointed.
3. Keep it in writing
Email makes this easy. Write down what you are trading and when so that everyone is on the same page. This will help avoid confusion later on.
Stay honest with the IRS – the IRS still wants to record your trades over certain values, so check with your tax professional or seek information from the IRS. And even though bartering by definition involves the exchange of goods instead of money, the IRS expects their cut to be in cash.
5. Final thoughts
Don’t be afraid to offer to barter with someone. Many times people are rich in goods or services but not cash. If you have a skill that is valuable don’t be afraid to offer it to someone who makes or does something you need. If they say no, just remember your manners and say thanks anyway. They may change their mind later.