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Understanding The Mathematics
Again, the concept is best understood by example. Since
the average wholesale to retail price mark-up of all businesses
is 100%, which equates to a 50% gross margin, we will use
this in our example. You should substitute your own gross
margin to determine your individual benefit. The exchange
is going to refer a new customer to you, a customer you would
most likely not have otherwise generated.
Lets say that they make a $100 purchase from your company.
Since your gross margin is 50%, you will have to take $50
cash out of your pocket to effect that sale. At this point
you have generated $100 in barter currency in your account,
but you are out $50 cash.
Now lets assume that you need to have some letterheads
printed and you know from experience that it will cost $100
to have this printed. Since you are now a member of an exchange,
you can have you letterheads printed without having to spend
your cash! You will pay for it with the barter currency you
just received.
Now lets re-evaluate your position. You made an incremental
sale, had your letterheads printed, and increased your cash
flow by $50 (the $100 you saved on the printing less the $50
you spent to effect the barter sale).
Essentially, you traded your $100 product (that only cost
you $50) for $100 worth of printing.
Granted the exchange is going to charge you a fee on the
transactions, but even after you deduct the fees, you will
still have more cash (and profit) in your pocket. One more
thing to consider: If your sales, cash flow, and profit increased,
bartering through an exchange would not be an added expense!
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