What to say to a client who offers to pay you not in money, but in his products, services, or other benefits?
Should you work in exchange for clients’ products, services and favors (bartering)?
A redditor asked a similar question recently, which reminded me how common this practice is in our web development industry.
Exchanging goods and services for other goods and services, without using money as means of exchange, is the definition of barter. It’s a common practice and a good idea when value is exchanged for equal value and equal effort.
Let’s say that the client approaches you for your web development services and offers to barter the following with you:
- his own or third party physical products, i.e. office furniture
- his own or third party digital products, i.e. software
- his own or third party services, i.e. his consulting services
- advertising, exposure or some form of public visibility, i.e. an ad in a print newspaper
- something cool, like an iPad, a MacBook, an exotic vacation
- ownership in his (future) company or stocks
- alternate forms of payment, like coupons
What all these tempting offers have in common is this:
- You can find some use in your business.
- They seem very expensive to you, something you would never normally buy because “you can’t afford it”.
- The offer is usually cool in some way.
Four main reasons why barters are mostly a bad idea
Reason number one: what you’ll get is not what you really need, in 99% of the cases.
Sure, that vacation sounds awesome, and so does the expensive full-page ad in a popular newspaper, or a cool guitar.
But do you really need this, badly? Can you extract enough value from those offers to grow your business? Hopefully you’re not looking to satisfy the inner child in you.
And if you need this so badly, why can’t you afford it? People only “badly” need things they can really afford. For example, I currently cannot afford to buy a Tesla car (and by ‘I can’t afford it’ I mean I haven’t found a way to extract enough value from that car to make it worth my while and my money). BUT I badly need to get from point A to point B, so I bought a decent car I can afford. If someone offered to pay me with a Tesla car, I might be tempted to take that offer - but I do not really need it. I would end up working my butt off for something I don’t really need.
Reason number two: you’d probably be signing up for a ridiculously disproportionate effort.
You’d be investing dozens, maybe hundreds of hours of your time, spanning across weeks or months, sometimes even years. In exchange you might receive an off-the-shelf product that the client has worked zero hours to deliver it to you. Unless the barter is your idea and you have already made up your mind about the value of the ready-made product, do not ever exchange your time for products. I am not saying those products aren’t worth their asking price; I am saying that exchanging custom service and time for a ready-made stuff is not a good deal for you.
Let’s take a “website design service in exchange for advertising” example to illustrate why you should never, ever agree to something like this. You'd be investing countless hours of your life which you can never ever get back, and they'd be investing a virtual real estate in pixels on a digital screen or smudges of ink on a printed paper. The client would get a permanent value from you, and you’d get temporary exposure - that is not a fair exchange. He’ll get to use his website every day, and the advertising you get will have become trash the next day.
Reason number three: it badly affects your attitude.
When you barter and when it’s the client’s idea to barter, you’re telling your subconscious mind that you cannot have the offered product / service any other way. You don’t normally buy print ads because they’re too expensive and you’re afraid you’ll waste your money, right? You never hired a professional consultant because they’re too expensive, right?
A much better idea is to be paid in money so that you can buy the thing that you really need or want.
Reason number four: clients who cannot afford to pay you now are not the best client for an agency.
This type of client won’t be able to afford to continuously pay for support, maintenance and your business growth services. After a while you will want to get paid in money, but the client will probably refuse.
Can bartering be a good idea? Sure.
It’s a good idea when the offer to barter comes from you, not from your client. When it’s your idea, you’ve already made up your mind about which services or products you are willing to work and trade your time for.
Those products or services are probably something you truly need now to grow your business, and it’s probably not something you need for personal fun or entertainment. And since you’re bartering your time - the most valuable human asset in the known universe - you’ll probably make real use of the product / service / favor you get in return.
So, if a client comes along who offers exactly what you need right now, a barter is an excellent idea. Just make sure you make the exchange a part of your written contract!
Also, if you get an offer for a life-time opportunity which is usually not for sale (which has nothing to do with owning shares in someone’s future company), take it. For example, I’d barter for an opportunity to have dinner with Elon Musk, or to get undivided attention of people whom I wouldn’t normally have access to.
Advice on bartering from other peers
I would recommend bartering only when what is being offered has real value to you. Here are a few quick rules:
Know the people you are bartering with.
NEVER barter on your first or even second project with someone.
Know the value of your time. (I'm a husband with two children, so any time I use for side work is time away from my wife, children or sleep. I charge accordingly.)
Know the value of what you are getting. DO YOUR RESEARCH. If you don't know the value of what you're getting you'll never get a fair deal. And don't let anyone rush your research either.
Get a contract. This should be obvious, but many people believe that lack of money, means lack of oversight. Get it in writing. Make sure it's clear and get signatures.
What have you bartered for in the past? What would you be willing to barter for today?
Creative Commons image credit: barter by Irina Slutsky