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I am putting together a proposal for a local store with both a brick-n-mortar and web presence. It's an upscale shop that also happens to be one of my wife's favorites. I am considering offering the option of barter for part of the payment. I have two questions in this regard:

What would be a reasonable “exchange rate” for such a transaction? That is, in lieu of $1000 cash money, I should ask for about how much in store credit?

In your own experience, has using barter introduced any complications into the client relationship? Are there particular pitfalls to be concerned about?

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closed as not constructive by MichaelT, Glenn Nelson, World Engineer, Martijn Pieters, gnat Feb 24 '13 at 21:04

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"in lieu of $1000 cash money, I should ask for about how much in store credit?": maybe... $1000? Or a bit more, if you want to earn some interest for late payment? – Giorgio Feb 24 '13 at 18:35
up vote 3 down vote accepted

In my experience, it was worth it, but it depends on how you think about it.

I did some light web work for a friend of a friend who owned an electronics store. Instead of paying me the ~$200 cash I'd have charged, he got me a monitor. Like I said, I feel we both came out ahead, but it depends on how you break it down; I know that I'd have paid well over $200 for what I got out of the deal. On the other hand, he's getting supplier pricing so he probably paid a lot less than $200 for the same.

That's pretty much the only time I've gone in for a barter, and I don't regret it. I'm still using the monitor.

Not sure how the equation would have changed if he wanted to effectively pay me in gift cards. I certainly wouldn't have taken a 1:1 on dollars to store credit. Probably would have pushed into the 1:1.2 - 1:1.4 range. It still needs to be worth it for both parties.

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I'm thinking 1:1.3 myself. I base this on the premise that the best online price I can get is around 30% under what I'm seeing this retailer sell for. Thanks for the insight. I'd +1 but don't have the points yet. – Bob Kaufman Nov 14 '10 at 5:52

I'd stay away from "store credit" or anything out of the store's inventory because you don't really know what the true value of it is.

Let's say you do $1000 of work and accept $1000 of store credit. The goods you buy with that $1000 may have cost only $500 wholesale. Plus, you owe sales tax and income tax on that $1000 while the owner gets to write the whole thing off. You get the short end of the stick.

If you want tangible goods, get them to buy it at the same price you would pay or figure out what the actual wholesale price is.

Otherwise, trade like-for-like. If you do services for someone, have them to do a service for you.

I usually insist on cash. It keeps everyone honest.

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Store credit's tricky. It's certainly worse than cash because you can only spend it at one store, but I'm not aware of any canonical formula to find out how much worse. As for goods, it seems like the value of the item to you is more or less independent from its price. You should probably be thinking "Is this [x] worth the work I'm putting in?" as opposed to "Is [regular price of x] - [their cost for x] very close to 0?" In the end, the second question is irrelevant to the benefit you get out of it. – Inaimathi Nov 16 '10 at 14:32

Factors to consider:

1) Store mark ups are considerable - generally at least 50%, sometimes 100%. Essentially paying in store credit could represent a discount of 50% for him.

2) Store credit is only worth something to you if there are things in that store you would genuinely spend money on.

3) The deal has to be good for both of you.

Generally I'd be looking for 3:2 IF the store sold things I wanted / needed. If it didn't then it would be cash only.

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If I could get a Nikon D7000 and a fast prime lens for doing a relatively simple project in my spare time, I'd definitely go for it. I've done a lot of bartering in the past and I've always been pleased with the result.

What you have to do is be very clear on what you will deliver for the agreed trade. In my example, they would be happy adding products to their store while I am out happily shooting around with my new camera. Support is something they would have to pay for in cash, because it involves an indeterminate amount of time on my end. Bug fixes would be prompt and free, of course.

I've bartered for:

  • Hardware (memory, monitors, drives, etc ..) in exchange for a shopping cart
  • Office space in exchange for a cabling job
  • Graphics in exchange for writing a custom PHP extension

Just be clear that you will be providing top notch goods and services in exchange for top notch goods and services. In the case of the office, I required that the lease be in writing, and offered the other party a written warranty on the cabling job.

If your wife gets something from the store, and it breaks under warranty, they should be receptive to replacing it for her, even if it means additional cost for them.

If what you receive is (to you) equal or grater in value than what you provide, why not?

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