Bartering 101

Bartering is downright hip right now. Last February I wrote an article about a traditional Belgian waffle house, where the owners have accepted acupuncture, massage, plumbing, a trumpet, art, and yard rakes in lieu of cash. They also erected a giant bulletin board next to their counter, where customers can make exchanges with each other. Then just the other day, I interviewed a doctor who accepts produce, baked goods, house-cleaning, and handcrafted items from cash-strapped patients.

I love the idea of bartering, which is basically just the direct exchange of goods. These are lean times, and so many people these days have untapped skills, goods, time, and potential – but no cash to spend.

There’s just one problem. Bartering also sort of terrifies me. I don’t think I’m not alone. The owners of the waffle shop and the doctor I interviewed say that even though they’re happy to make trades, most of their customers pay cash. Why? Maybe it’s because most of us simply don’t come from a culture of bartering.

But lately I’ve been dabbling with bartering and seeking out tips on how to do it better. Maybe they can help you make some savvy swaps as well.

1. Assess what you have to offer

Since my son was born, I’ve done lots of bartering in baby-sitting. And recently I realized I have lots of other things to trade. My garden’s overflowing with cucumbers, zucchini, oregano, and thyme right now. We often have extra eggs. I make tote bags and bake loaves of whole wheat bread. I can write copy and edit. And I have all sorts of unused contraptions gathering dust in my garage.

I bet you also have things to exchange. Maybe you have plumbing or carpentry skills, make crafts, or take photos?

2. Determine your needs

Identify what you want. Would you like yoga classes, massages, or house-cleaning? Maybe you need some apples, hazelnuts, or fresh eggs?

3. Find a trading partner and pop the question

Look for someone who performs one of the services or provides one of the goods you want – who might also be interested in something you’re offering.

Potential barter-partners are everywhere. Friends, neighbors, and the vendors at your local farmer’s market might be good people to start with. Or if you’re too timid to approach someone in person, the Internet can make this step easier. More and more sites help people find partners for swaps. Here’s a sampling:

• Craigslist
• Share Some Sugar
• ThredUP
• Freecycle
• U-Exchange
• Web Swappers
• Trade A Favor
• Barter Bucks
• NuBarter
• Hyperlocavore
• PaperBack Swap

3. Determine values

Make sure you and your trading partner are specific about what you’re offering. Don’t just say you’ll baby sit. Say you’ll watch two children for three hours. Don’t offer yard work. State that you’ll rake a quarter-acre lawn.

Then assess the worth of what you’re giving and getting, and make sure they’re equal. If you would normally charge $10.00 an hour to babysit, and you’re offering three hours, make sure whatever you’re getting in return is worth $30 to you.

4. Consider documenting the swap

Obviously, if you’re trading a waffle for a few eggs, you probably don’t have to write out a receipt. But if you’re making a bigger trade or trading with someone on a continual basis, it’s wise to document it. For instance, a friend hosts my website in exchange for copywriting. That kind of trade works best when both parties keep track of what they’re owed.

5. Don’t forget Uncle Sam.

Does bartering sounds like a great way to avoid taxes? Think again. The IRS stipulates that “The fair market value of goods and services received in exchange for goods or services you provide must be included in income in the year received.”

Janelle Orsi, an attorney who specializes in collaboration, writes that “The IRS doesn’t seem to concern itself with one-time, casual, non-commercial exchanges of goods or property.” But “unfortunately, it’s hard to say at what point a barter arrangement has become sufficiently formal, commercial, or regular to be something that you should report.” Confused? She explains the legal and taxation issues involved in bartering here.

I still get weak-kneed at the thought of bartering with someone. But I’m learning to take a deep breath and ask.

Do you barter? Do you have any tips to share?