Copyright 2005 Judy Thompson
If you are thinking about joining a network marketing company, also referred to as multi-level marketing, or MLM, one important item you will want to understand is its compensation plan. Otherwise, “How will I get paid?”
There are four basic kinds of MLM compensation plans that will be described in this article.. Each of these may have several variations. Some plans are better suited for people who really enjoy sales and may desire to retail a lot of products. Some plans are designed to attract especially “heavy hitter.” Some plans pay well for beginner and may or may not be attractive to big recruiter. Some plans make a serious effort to reward even little guy or gal who can only sponsor or recruit a few people, but also pay very well to top distributors.
These plans are called Unilevel, Stairstep Breakaway, Binary, and Matrix.
1.UNILEVEL. This is a simple, straightforward compensation plan. It allows for a distributor to have a first level of unlimited width. The levels company pays commission on generally range from 3 to 9 levels deep. The more volume generated by you and your organization, more you can earn. A disadvantage to this plan is that building wide means distributor may give less help to his personal enrollees.
2.STAIRSTEP BREAKAWAY. This is most common of all compensation plans. It is where most of really big money is made in MLM. This big money, however, is made by a very small percentage of people. Breakaway plans are geared for full-time effort. Attrition is highest with breakaway plans and it generally will cost more to build your business. This is a work program. It takes persistence, salesmanship, and requires ability for you to train your recruits. Companies which use breakaway plans tend to pay higher commissions. However, plan may be extremely difficult for most people to duplicate. 3.BINARY. This is a very complicated and hard-to-understand plan. It does, however, offer a simple system that is easy to duplicate. Otherwise, you recruit just two and help them do same.