I recently did an “X Deal.” It’s not my first time either, I’ve actually done a number of X Deals over the years. I had never done an X Deal until I moved to the Philippines, though. I never realized that Filipinos do so many X Deals, but they really do.
What is an “X Deal?”
Is it “X Rated?”
Is my wife OK about it if I do an “X Deal?”
Well, an X Deal is certainly not X Rated. An X Deal is short for an “Exchange Deal.” Basically, it is like bartering. It is really a very popular way to do business in the Philippines.
I am not going to go into the details of the X Deal that I recently completed, I mean that is a business matter that is private between me and the other businessman that I had dealings with. But, let’s look at some examples of what is involved.
As an example, let’s say that I wanted to do an X Deal with the Coca-Cola Company. I have a website that is very popular. The topic of my website is about soft drinks. It’s a natural place for Coca-Cola to put advertising since my tens of thousands of readers are interested in Coke products.
So, I approach Coca-Cola and tell them about my website and that I am interested in negotiating an X Deal with them. I offer to them that I will put certain types of Coke advertising on my site, and in exchange, I want them to give me 50 cases of Coke per month. If they see value in that, they might go for it. Probably they will come back and say something like:
You know, we really would like to do that, but we think that such an ad only is worth 30 cases of Coke per month.
So, of course, there is negotiation on just exactly “how much” each side will receive, and how much they will give. This, of course, is the nature of the business. But, if both sides are expressing an interest, eventually a deal will probably be struck.
Now, why would a company prefer to do an X Deal when they can just outright purchase what they want? Well, a number of reasons:
- Tax reasons. In the USA, if you barter (which is essentially what an X Deal is), you must still pay income tax on the value of the products involved. In the Philippines, though, I am not certain what the law is. I would be very surprised if anybody is really paying taxes on the value of X Deals, though.
- Costs. For example, let’s say that in the example I used, the value of 30 cases of Coke is $150, for the sake of argument. But, it might cost Coke only $40 to actually manufacture that product. So, in essence, they are getting $150 worth of advertising for a cash outlay of just $40. For the website guy, he is giving away something which basically costs him nothing, or very little, for an amount of coke that would cost him $150 to buy in the store.
The X-Deal – It’s a win-win.
So, remember, when you want to make a business deal with somebody and they (or you) may be short on funds, barter, or the “X Deal” may be a path you want to explore. I know that it has worked for me!