Bartering Basics for Freelancers

Bartering is the process of swapping your goods/services for the goods/services of someone else without exchanging money. While bartering takes many different forms, it can be a way for freelancers to expand their businesses and collaborate with others. Here are some of the basics about bartering as a freelancer.

The Benefits of Bartering

Bartering allows you to fulfill a need without incurring a monetary cost. If you’re a designer working on a project and need assistance with developing a database, you may consider bartering with a developer who needs design assistance. This could potentially develop into future work and collaboration opportunities. Bartering with non-industry colleagues gives you a chance to network and create relationships with people who you may not otherwise work with.

Bartering also increases your work experience, expands your portfolio and adds another valuable reference to your list, assuming it goes well.

How to Start a Barter Arrangement

The most traditional way to start a barter relationship is by approaching someone individually. Many barters are formed by simply meeting someone who happens to know how to do something that you need done. More deliberately, you can solicit a barter arrangement, much like you would solicit new business. Once you determine if the other party has an interest, a good place to start is by providing a proposal, a breakdown of how the value of the services compare, and an explanation of why it would be a beneficial arrangement for both parties.

There are a number of barter groups or clubs that provide a meeting place for people looking to barter services. Some are more formal than others, and you will turn up a slew of them by Googling the term, “barter club.” Basically, barter clubs provide a gateway to finding someone who is a good fit for a barter relationship with you. The main features to look for in a barter club are other people bartering services comparable to yours and people offering services that you need.

There is also something called a barter exchange. An exchange is a third-party that facilitates barter arrangements for its members. Unlike clubs, you don’t locate another member and create a bartering relationship one-on-one. Through a barter exchange, you offer your services, and instead of trading directly to another person, you receive credit for the value of the service you gave. That credit then applies to a service provided by another member of the exchange for a service you need. This can be useful when you may need a service from someone who doesn’t have a need for what you’re offering, and that it allows you to delay “cashing in” your service until you find an acceptable provider.

When Not to Barter

Bartering isn’t always a good idea. If you’re creating an individual arrangement with someone, you want to make sure that the relative value of the services provided by both parties is aligned. This is fairly easy when bartering with someone in your industry, but if you’re bartering web design for lawn care, it can be a little trickier. You want to make sure you can reach an agreeable arrangement before beginning.

I would be hesitant to enter a barter relationship that has no documentation outlining exactly what services each party is providing. You should draw up a contract as if this were a paid job for the purposes of making sure both parties are on the same page and that both fulfill their responsibilities of the contract. Documentation is also very good to have in terms of your books. The IRS, for example, considers bartered services taxable, and they should be included on your income statement.

Before entering a barter arrangement, you also want to make sure that the other party is qualified to provide the services they are bartering and that they have adequate experience. Bartering shouldn’t mean cheap or less professional, and it’s a good idea to verify the experience of the other person as if you were hiring them. A bartering relationship should be like any other business relationship you would enter into, with the only difference being the lack of monetary exchange.

Personally, trading services with family and friends are the only barter-ish relationships I’ve been involved in. What’s your experience with bartering? Is it something you do regularly or would you not even consider it?