Using Trade Deals In A Bad Economy

Posted on April 15, 2009 by - Also by this author

TRADING SERVICE, PRODUCT AND ADVERTISING: 
Obviously there is no longer a lot of cash floating around in the industry. I have asked where all the cash is right here on this blog but no one seems to know.
 
Since the show must go on, I have found myself doing more trade than normal. Because vehicle maintenance is such a high cost of operations, I am grateful that my mechanic loves to ride in limousines. Let’s take a hard look at dollar to dollar.
He charges me $36.80 for the typical lube, oil, and filter. I charge him $517.50 for five hours out in a limousine. That ride provides a total of 14 oil changes for our fleet. The last run we did cost us $131.15 for wages, taxes, workers comp premium, and fuel. If we take that $131.15 and divide that between fourteen oil changes it now translates to a fixed cost of $9.37 per oil change or a savings of $27.43 per oil change.
 
If you think about it, we have a service/product that everyone wants. Who doesn’t love a limo ride except for us in the business? I have a policy that I don’t pay for any advertising except yellow pages and Internet listings. All advertising is done in trade. Because it is not always an equitable trade, I ask people to give me an exchange rate of 3:1. That is, for every dollar I give them, they give me three. Here is why. Radio ads in my market are about $35 a spot. If I gave a ride for $517.50, I only get 15 commercials. That’s enough to cover two days and effectively make an impression. Two days is not a good campaign. So, if I ask the radio station to give me three times the value, I get $1552.50 in trade dollars and can run 44 commercials.
 
If you think about it, you can trade almost anything if you find the right person that wants to trade. Anyone else finding trade is a viable way to survive?
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