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Ultimately, the key to achieving your desired income depends on the compensation plan of the company you are involved in. Even though your income will get larger the more you refer and the larger your organization grows, the company just may be keeping most of it.
For example one distributor may be earning ten thousand per month with ten thousand members in their organization and another distributor could easily be making ten thousand per month with two thousand distributors in their organization. Now this is only an example, but as you can see the second distributor has five times less the size of organization and is making just as much. Yet another distributor may need even less…how is this possible? They are in different companies with different compensation plans. You would not know which one is you unless you know the compensation plan of your company.
All MLM companies are here to make money. The question is how much are they willing to reward the distributors for their hard work? Think of deciding which MLM company you will work hard for the same as looking for a job. Would you settle for ten dollars per hour instead of fifty dollars per hour? I think not!
Over your course of network marketing you will come across many companies. I can not go over each and every possible compensation plan but I can give you some tips of things to watch out for. Some companies are geared towards rewarding heavy hitters, those who will sponsor many, and that is at the expense of the part-time distributors. Other companies are simply looking out for themselves, and they simply won’t reward members much at all. Lastly, there are a few that have compiled very rewarding compensation plans because they know that if their members are successful then they will be too, and so they offer very generous pay plans.
Here are some things to consider:
1) Are there qualifications? If so, how hard are they to achieve?
If there are a lot of qualifications in order to earn income, or if these qualifications are hard to achieve then this is the type of plan that hurts new marketers or part-time distributors. It may be rewarding to heavy hitters, but the majority of the people simply won’t qualify for that type of income. Is their breakage or rollup that goes to the company if distributors don’t qualify? These types of rules only line the pockets of the company or heavy hitters. Look for a plan that has few qualifications that are easy for anyone who works the business to achieve.
2) What is their percentage of payout?
This may not be easy to figure out in some cases, but if you are able to get a good grip on the pay plan you can see the numbers and find the percentage of revenue that the company pays its distributors. Most will pay 40-50%. This is not bad, but I would not say it is good either. This type of percentage is fine for a side business that you have added to your portfolio to create multiple streams of income. For your primary business you want something that will be more rewarding. If your company pays out 60-70% that can help you make a decent income fast. If your company pays out more than 70% then you’ve found a very generous pay plan.
3) How big of an organization would it require to earn $10,000 per month?
This one you can easily figure out by looking over your compensation plan. This does not mean personal referrals, but your whole organization. How many people need to be in your organization in order to make 10,000 dollars each and every month? The lower the number is generally better because it could mean less work for more money. You can use this as a general rule when creating comparisons. However, you need to take a close look at your product and membership fee to see if this is true for your company.
4) How quickly and easily can someone start making money right away?
This will determine if your organization will be able to keep growing and prevent people from dropping out. Once people have a taste of money they are likely to get excited and work harder. If your compensation plan is able to reward new distributors for their accomplishments right away by getting them into profit quickly they will continue to build their organization. However, if they refer members and get only a small return they will not be encouraged.
Someone has made money in any pay plan. This is because money can be made in any pay plan if you know how to effectively build each one. This discussion is not about that, but the fact that not all pay plans are created equal. On your search for the right MLM company the pay plan is a crucial element to your success, because that is where your money comes from.
I want to highly encourage you to take a close look at your pay plan from an honest point of view. Is it fair? Is it rewarding? Or do you need to promote yourself to something better?
All the best,
Darren Olander
Network Marketing Consultant
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