Is it good to exchange services?

From time to time it can be tempting to consider the exchange of business services, but are such contra arrangements a good idea?

When cash flow is tight, the tit-for-tat exchange of business services can come up as the perfect win/win solution to get what you need or want without actually paying for it in hard cash.

“If you design my business cards, I’ll set up your filing system” sort of thing.

But caveat emptor – be on the lookout for these 'contras' where the deal will fall short of a win for you.

With goods it's fairly straightforward. There is a tangible exchange at an agreed value, e.g. your old laser printer for my spare PC. All cut, dried and agreed.

But when it comes to exchanging your business service for another service, such as marketing, PR, graphic design, massage and so on, it’s a different ball game.

These tips and questions will help you decide whether or not the contra option is one to say yes to.

Is the person offering the exchange, someone whose services you would consider using and paying for?

If not, you may be dissatisfied with your end of the deal and end up going somewhere else where you have to pay for it anyway.

Is the $ per hour charged for service being exchanged pretty equal?

Discuss this up front or it can can lead to one of the contra party being expected to give far more time and effort than the other with resulting misunderstanding and resentment. Be clear whether you are going to swap session for session; x number of sessions for a specific service, or hour for hour. For instance one hour of consulting time at $300 could be considered worth three hour-long massages at $100 each.

When you are offering a service as a contra deal, make sure the person really wants that service, understands what it is and what commitment may be required of them to take it up.

If they are half-hearted, it may not work and you both will end up feeling frustrated and cheated.

Be clear about what the contra does and does not include.

For instance there may be time and materials involved. Is the contra time only or does it cover all expenses?

Have a firm agreement

Put it in writing, including a dollar value and time limit for each of you to honour the exchange. This is essential if the contra deal is not simultaneous and you are the one providing goods and/or service first!

Wendy Buckingham is a writer, speaker, coach and author of the Ready Set Goal Series. She is also co-owner of Class One Productions, a leading Australian producer of audio/video programs for business education.

3 comments | Add your own

Hi Wendy
Good article. For those who want to contra on a regular basis, I've used Bartercard as a more structured method of "contra-ing" and have found it gets over some of the drawbacks that you mention. Peter Griffin from Sydney, Australia
Hello fellow soloists,
One of the biggest challenges of the contra deal is working out the real and true value of what you are offering - it's often much higher than what is expected by the other party and it's often hard to stand your ground.
As a supplier of marketing services, I often work with business that are cash strapped and who think that a quick hour or two is all that is needed. I even had one occasion when I was told that 'someone with your skills shouldn't take too long' to do the job!
Contra can help a business get started and also put some 'brownie points' in the piggy bank - just keep an eye out for that rainy day when you might need to spend. Nick Flude from Sydney, Australia
I recently did a contra deal with another service business, and set it up exactly as I would a "cash" deal. I sent through a proposal and my terms of trade (which include contra). That way everyone knows exactly what's what. So far, so good! Diane from Adelaide SA

3 comments | Add your own

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