Network marketing
MLM compensation plans

Compensation plans in network marketing / MLM vary from one company to the next. They are at best difficult to understand for both you and the person introducing them to you.

It is up to you to ask questions when evaluating any company’s pay plan. Some are front end loaded or they maybe back end loaded.

There are some plans out there that payout more then 100% fortunately these companies don’t last long but do end up hurting individuals and give the network marketing industry as a whole a bad name.

As a general rule of thumb anytime you see a payout of more then 60% be suspect. It generally indicates that:

  • The products are grossly overpriced, unless it is a unique
    product or a exclusive patented product.
  • Qualification/Quotas most well established companies will
    have some volume or monthly quota that each individual representative
    must maintain.
  • Breakage/Break away several of the most popular programs
    out there use this one. Imagine after all your hard work you
    miss your quota for the month only to have all your hard work
    building an organization disappear.

Most compensation plans fall into binary, breakaway, matrix, stair-step or uni-level plan but there are other plans out there as well.

Network Marketing Binary Plan:

First level is limited to two with infinite depth.

Network Marketing Breakaway Plan:

Unlimited first level width, usually with a finite depth 10 to ?
levels deep.

Network Marketing Matrix Plan:

First level width 2 to 7 usually 5 to 50 levels deep.

Network Marketing Unilevel Plan:

Unlimited first-level width with a depth of usually 5 to 10 levels.