I was say start off with your idea first and as things get up and moving and demand increases I'd increase the price but still not at the rate he insisted upon.
Breaking into that kind of market is very difficult, there are lots of classified sites out there already (I do realise that your site isn't exactly a classified site) and it is difficult to get advertisers to pay for ads before you are established. When your site is first set up it will not have much activity, so why would someone pay for a barter listing if not many people are going to see it?
Have you considered offering the first say 500 listings free of charge?
I like Fergal's idea of offering say the first 100 free. If people see you charging and you are an empty site, they will run away faster than you know. No one wants to barter with just them selves. You have to show that it is a busy site. One great way to do that is give out some for free. It will make you more money in the long run.
Ebay is something like $0.30 a listing for the cheapest option so I can't see $10 working. Yours is closer, but you need the promotions to get it running. It's unreasonable to expect anyone to spend a cent if there's no activity, even 5 auctions won't spark interest, and 500 really wouldnt take long to go, week or so once you start?
