When Barters Go Bad

Say you’re a photographer and a hair salon approaches you about taking before and after photos in exchange for free haircuts or styling. Or you’re a web designer who’s offered free tacos in exchange for setting up the taqueria’s new website.

Sounds like a great deal, right?

Not so fast!

Lots of stories extoll the virtues of bartering and the sharing economy, but not every barter goes smoothly (take it from someone whose learned this the hard way). These arrangements tend to be looser than a traditional contract with a paying client or customer, so often, one party winds up feeling stiffed when the other person doesn’t live up to their end of the bargain. Plus, the IRS expects you to report the fair market value of goods or services received through bartering, so it may not be the great deal you expected.

If you decide to forge ahead with a barter arrangement, here’s what you should consider before and during a barter to avoid getting the short end of the figurative stick.

Before the barter

  • Scope out the goods or services. If the hair salon offers mostly edgy, asymmetrical cuts and you prefer more conservative hair styles, then is a free haircut really useful to you? If you move in a few months or the taqueria goes bust, will you be able to enjoy the hundreds of tacos promised? Before you agree to a barter, read reviews, visit the business and make sure you actually value the product or service being offered. After all, you can’t pay your credit card bill with chicken tacos or broken promises.
  • Discuss timelines and other expectations. Even if you know the other business owner well, don’t assume that you’re on the same page about what you’re offering and when. Is photographing the salon’s customers a one-time deal or do they expect you to come back multiple times? What if you’re not available on the date they want to do the photo shoot? Does the taqueria owner want a basic HTML website or are they expecting videos, animation and full integration with an online ordering system? The latter will take you a lot longer than the former, so set clear boundaries on what you’re willing to do as part of the barter agreement. Also discuss timelines, because business owners will often prioritize paying clients over barter clients, and it’s not fair to make one person wait indefinitely.
  • Agree to details in writing. Start with a defined period of time and a clearly defined project (hopefully of comparable value) so that if it’s not working out, you don’t feel obligated to continue. Then get it in writing. With a handshake-only agreement and no clearly defined statement of work, it’s hard to untangle disagreements that might pop up later because people can remember things differently. If the other person balks, you can reassure them that a written agreement will protect both of you. And if the person still isn’t agreeable, ask yourself if you feel comfortable doing business together.

During the barter

  • Stay in communication. Ideally, you wouldn’t deliver the entire project in full before the other person delivers something in return. Perhaps you can create milestones where you get a certain number of tacos after delivering a mock-up of the site’s homepage or when you photograph an event. Exchange regular updates so that the other person stays in the loop on web design, photos, or other projects and you know where your project stands.
  • Address discrepancies. If you notice that the person isn’t holding up their end of the bargain, cease work on your end and voice your concerns immediately! Working in a vacuum and ignoring the fact that your tacos or haircuts haven’t materialized will only make you resentful. And the longer you let things continue, the more frustrated you’ll be when you finally discuss it. Refer back to your agreement to find out why they’re not following through. The book “Crucial Accountability: Tools for Resolving Violated Expectations, Broken Commitments, and Bad Behavior” offers more strategies for broaching these issues and getting the relationship back on track.

Barters can work when both people follow through on their end of the agreement, but it’s a good to tread carefully and set expectations to avoid frustration.

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