When to Barter - The Difference from Negotiating

Bartering is a tactic, not negotiating. To barter is to effect trade by the exchange of commodities, assets or services on a par value. Negotiating is an endeavor designed to add value by the exchange of disproportionately valued commodities.

Barterers focus on the exchange of specific commodities based on their intrinsic value. Negotiators look at all of the aspects of a negotiation and seek to identify potential ancillary incentives or concessions that can be combined with the primary commodities to leverage perceived value and thereby create incremental value.

It is important to know when to barter and when to negotiate. Consider the differences.

By creating perceived value negotiators are able to motivate others to do what they otherwise would be reluctant to do. Introducing other incentives is also a viable negotiating tactic to counter a power play. Without ancillary issues to thwart a frontal attack there will be little reason for the party with the most power or strength to compromise, AKA negotiate.

Bartering exposes one to power plays. Everyone knows that he who has the gold makes the rules. The basic concept of negotiation is to expand the conversation from a direct exchange of two commodities, assets or services by offering something of modest value to you which may be perceived as very valuable to the other person. In return for obtaining this ancillary commodity or service the other person should devalue their position on the original item. In agreement, both parties come away with more value than expected thus creating incremental value.

Rule #1 of Negotiating: The objective of negotiating is NOT to win the negotiation. It is to achieve your goal or objective. Giving something of marginal value to achieve a important objective is prudent use of your assets.

Rule #1 of Bartering: The objective of bartering is NOT to win the exchange. It is to exchange your commodity, asset or service for something of comparable value with a minimum of effort and time. Getting a needed commodity or service without having to expend your time and effort is prudent management of your calendar.

In most negotiations we assume that the prime motivators are avarice and greed. It is the use of other, less obvious motivators that makes the difference between those who barter and those who negotiate. Negotiating has the potential of creating value from the process. It is like making 1+1=11 rather than 2. In your discussions you should always be on the lookout for what might be of value to the other person. This is best accomplished by taking the time to understand the needs and wants of the other party in addition to your own goals and objectives.

Simple bartering is appropriate in many situations where time and convenience trump the effort to try to negotiate a better price. At the grocery, for example, you simply exchange money for a can of asparagus. There is no negotiation because you are dealing with an intermediary who gains his or her benefit from very slim margins. They value you as a customer but only marginally. They hope to keep you as a customer by providing reasonable service, good products, competitive pricing and convenience. Your decision to purchase from them depends on how you rate the grocery compared to the competition; not based on how much you hope to negotiate off the price of a can of asparagus.