Freelancers – Should you use Barter for your skills during hard times?
September 7th, 2010
Have you ever thought about what money is? If I look on a note in my wallet (it’s a British £10 note), it says “The Bank of England promises to pay the bearer on demand the sum of £10”. USA, Canadian, and the Euro notes say something very similar. So money, the cash we use is really an “I Owe you”. It’s an IOU from somebody you do work for, and you give it to somebody else for the product or work that they do. We are just passing IOU notes around. And IOU’s are just a projection of the barter system.
Barter is the original form of trade – from the dark old stone or bronze ages. Barter worked when one person said “You look after my sheep, and in return I will catch you some fish”. Barter was a trade of skills. The money came from this, allowing people to exchange the IOU work notes – and a way to put value against things that they exchanges.
Projecting this forward to today, and the question is, should Freelancers, Contractors and other Small Business Owners barter and trade skills instead of payments? If cash is short, it may be tempting to do some technical work for say another freelancer who can provide marketing copy if you can in return, give them some web site coding (or visa-versa).
There are Pro’s and Con’s for the barter system in business:
Pro’s
- No money changes hands, therefore no taxes to pay
- If you have free time, it’s a handy way to get outside skills into your set-up without having to hit the bottom line
- It generates working relationships which can then be extended into other work by creating working partnerships
- Exchange of work can lead to additional publicity (additions to portfolio, web sites posted, credits etc)
- When work is hard to find, a skill exchange keeps you busy, active and in work mode
Con’s
- Money is not involved, and if you need money, it may not help your business
- There is a lot of trust that both parties will carry out the agreed work
- There may be some discussion of the relative values of different work and skills (is 1 page of copy text worth an hour of coding or page of web site design?)
- The barter system is deemed out of date by some freelancers.
What do you think? Are there other freelancers you can barter or do a work exchange with?
Posted in 
Be very, very careful if you’re registered for VAT and you do barter goods and services.
VAT is chargeable on all supplies of goods and services you make not just the ones paid for with actual money. http://www.hmrc.gov.uk/vat/managing/special-situations/samples.htm
Barter transactions will also have to be included in turnover to determine if you have to register for VAT.
Don’t forget that as part of the Barter you would have to somehow evaluate the services worth or implied value. For instance in a barter such as; “I’ll update your website if you clean my windows?” – how does the information worker trading his or her skills evaluate how much effort to spend in trade, given that the window clean may only take five minutes?
Doing off-the-record favours for one another is part of professional life and can be useful to build your network. However I cannot see how this system would work without one party feeling like they’ve done well out of the deal and the other feeling undervalued.
I have had both good and bad experiences with this one…
The bad can be a huge waste of time, as they don’t really understand that this is your time. Before I went fulltime freelance, the person was a masseuse, didn’t like any of the logo concepts I had done for her, and after at least 15 hours of time, was told, “I just wasn’t getting it.” Obviously I didn’t want a massage from this person at this point and I told her to just forget about it. I was happy to walk away. (I looked at her site a few months later, and, of course, it didn’t reflect any of the feedback she had gave me!). If she was a real client, I would have taken my downpayment and walked away.
Jaffa i agree with you on the “Pro’s” points. Barter system can really help in services and skills industry.
No one need to pay cash but they can use skill or service to pay each other.
I have just taken a look at your “Quick Haggle” web site. An interesting concept along the lines I was discussing – I wish you well with your service exchange venture.