Barter conserves your cash when buying and opens up new markets when selling. However, not every item you pay cash for is available at a given time and some items will never be available. It is up to you to determine those business items that are potentially "barterable."

Barter pricing revolves around the principles of gross margin and availability. Items on barter are generally sold at a profit margin of approximately 50 percent or two times wholesale. As a given market becomes more competitive, however, the margin of profit to the seller may drop to draw sales, as it does in the "cash world."

Merchandise Pricing

Sellers with low gross margin (under 40%) should use manufacturers' suggested list prices, not their current cash prices, in order to obtain a sufficient trade advantage. Buyers with higher margins will have no problem paying list prices if they consider the lower cost of their own trade dollars. If list price is near double the cash selling price, it should not be used. As an alternative, the seller should simply charge two times his wholesale cost.

Retailers with a sufficient gross margin should charge the same prices they would charge their regular cash customers. At the same time, they must understand why those clients with low margins must sell to them at manufacturer's suggested list prices or at two times wholesale.

Wholesalers should establish a price between wholesale and retail that, likewise, is about equal to two times the cost. This practice will give both them and the buyer a sufficient trade advantage. Retailers should not mind this increase when they take their own gross margin into consideration.

Time, Space, or Excess Capacity

Those trading time, space, or excess capacity such as professionals, advertising vehicles, hotels, restaurants, and other service providers should also charge the same prices they charge to their regular cash customers. Those traders must remember that they have minimal out-of-pocket costs and should be anxious to use barter to fill in any unused time, space, or excess capacity. When barter interferes with their cash business, however, they should not trade at all.

With the exception of contractors, the above guidelines assume that products and services are being sold for 100% trade. When faced with what appears to be an overpriced item, do not jump to conclusions. First attempt to understand the seller's product or service along with his pricing structure. After such an inquiry, if the item is overpriced within the context of the above guidelines, do not buy it. Everyone must get his barter advantage. One person's advantage, however, should not mean a disadvantage to another trader.