Finally, Question seven from my June 11th post, 7 Questions To Know About Your MLM Compensation Plan.
Question Seven: How does that infinity bonus work?
Or, Why do they call it an infinity bonus if there is no such thing as a bonus that pays to infinity?
That’s right. There never has been an infinity bonus and never will.
If the infinity bonus existed, then the company would be doomed to fail.
Here we go with Question Six from my June 11th post, 7 Questions To Know About Your MLM Compensation Plan.
Question Six: How much do you really get paid on retail sales?
People get confused on this one all the time. What is this biggest problem in MLM? The product are usually so overpriced that no one can retail anything. In fact we hate to sell to people because even at our cost, the product is too expensive.
Some companies have tried to overcome this by selling products that are so exotic that no one knows about them and distributors are working to create a market but at least there is no established value in the market.
Let’s talk about Question Five from my June 11th post, 7 Questions To Know About Your MLM Compensation Plan.
Question Five: What are the requirements to get paid on all of your potential pay line?
Understanding what I am talking about on this question is a little more difficult. But when you analyze a lot of compensation plans, after a while you begin to see how compensation plans are often put together so that most people can not be successful beyond a certain point. The requirements are too much for them.
If you are the company, this can be a good thing, because they may have things all worked out where they will never have to pay out all that money that they claim to be paying out to distributors. We call this breakage.
Your MLM Compensation Plan – Question Four
On June 11th, my post was, 7 Questions To Know About Your MLM Compensation Plan.
It’s time to look at the answer to Question Four.
Question 4: What are the requirements to get paid?
For starters, you want there to be requirements to get paid. While lots of failing network marketers are scrambling to be first in the latest free to join, no requirement to get paid program, I’m telling you to avoid those.
If no product or service volume is created then there is nothing to pay out. That’s a serious problem.
7 Questions To Know About Your MLM Compensation Plan
We asked the 7 Questions in one post. Then answered the first two questions in two other posts.
Time to answer question 3 now.
Question Three: Which team members do you get paid on, your “pay line”?
Great question and one that most people don’t understand. People just seem to think they get paid on their entire downline.
Let’s look at an example. In a unilevel plan you can build as wide as you want. There are no restrictions on width but they do have a restriction on depth, usually around five levels or so. For this example let’s just assume that there are no additional ways to earn recurring income. Of course in todays compensation plans there are many ways to earn which tends to confuse things even more. But in this simple plan you get paid on everyone in your first five levels. That is your payline. You make nothing on anyone in your downline beyond the fifth level, levels 6 to infinity.
Two days ago on, 06/11/2008, I did a post called, “7 Questions To Know About Your MLM Compensation Plan”. On 06/12/2008, I answered question one.
Now we are ready to tackle question #2 and it is another big one.
Question Two: How many active people do you need on your team to break even after all expenses just from your recurring income?
I have found the most common break even requirements to be between 20 and 60 active distributors.
Think about all the people you have ever sponsored or even came close to sponsoring. How many of those people have ever built a team of more than 20 people?
The first reason you need to know the answer to this question is because the more active distributors that are needed for someone to reach break even, the fewer people will get there to become successful. The higher the number goes, the higher the turn over rate is.
From question one we learned that the average MLM compensation plan will require 2000 distributors to make you $10,000 per month. If everyone who joins your team is successful, then you need 2000 active distributors to earn $10,000 per month. But what if only one half or successful. You still need 2000 active distributors but you had to have 4000 people join to find those 2000.
Yesterday, June, 11th, I did a post on the 7 Questions To Know About Your MLM Compensation Plan.
Question #1 was:
How many active people do you need on your team to earn $10,000 per month in recurring income?
The average number of active team members a distributor needs in the industry seems to be around 2,000.
Can you imagine, you don’t know how many people you need, then one day you find out that you are in that company that needs 40,000 active distributors.
