Multi Level Marketing Pay

To understand how multi level marketing works and how you are compensated let’s look at the various options for earning a multi level marketing living.

There are various compensation packages with multi level marketing firms. Here are some of the most common.

The first is called the stair stepping breakaway plan. It may also be referred to as a unilevel compensation plan. It’s the oldest MLM payment plan and seems to be the most popular with the contractors themselves. There are two distributor types in this plan. They are non-managers and managers. There are also three ways of getting paid. The first way is through base shop overrides. These are manager overrides that come from their subordinates, the non-managers. All together these overrides are referred to as the base shop. Any other sales structure, even those that aren’t multi-level marketing plans, pay this way.

Then there are generational overrides. These are the overrides managers earn from the base shop of other managers that had previously been their subordinates. Most of the multi level marketing programs have three or more generations of these managers.

The third part of this unilevel plan is executive bonuses. These are strictly commission-based, for managers who have exceeded their sales quotas. If, for instance, 2 percent of the total sales revenue for the whole company is designated to the executive bonus pool, and managers have a sales quota of $10,000, then all those managers whose revenue is $10,000 or more share equally in that two percent.

Matrix multi level marketing compensation plans put a limit on how wide each level can be in each distributor’s group, which forces the strong distributors to spill their recruits over the people who didn’t even sponsor them.

In binary MLM compensation plans the width of each distributor’s level is limited to only two legs. The distributors’ commissions are based on pay cycles, and the distributors are paid a predetermined amount whenever the two legs both reach a quota of sales units. Commissions are paid in increments when each leg’s sales volume matches.

Matrix compensation plans are sometimes known as elevator multi level marketing payments. These have a list or a game board on which each contractor must pay in at least one product unit to participate. When a predetermined number of units are paid, the structure is then split and the earliest participants get the consideration.

The United States Federal Trade Commission (FTC) has advised the a multi-level marketing firm whose incentives are greater for recruiting others than for the sales of the products should be viewed by potential contractors with skepticism.

In April of 2006, the FTC proposed legislation called the Business Opportunity Rule, which would require anyone selling a business opportunity, where multi level marketing or not, to document enough information that prospective buyers could make informed decisions about the likelihood that they would make money with the MLM. This is not signed into law as yet, and generally any FTC trade regulation bill takes up to three years, and at least 1.5 years to be signed into law.

Which Type of Payment Plan Works Best For Your Multi-Level Marketing Program?

Anyone who has ever worked with multi-level marketing companies will tell you how hard it is to understand their payment plans and how overwhelming all the information can become. It becomes difficult to digest all the fine print and go beyond all the jargon in the legalese to understand what is really going on.

In this article I am going to discuss on five major types of payment plans that are used by any multi-level marketing company.

There are about five major types of payment plans that are used by any multi-level marketing company. There are various pros and cons to these plans and the most commonly used plan is the Stairstep Breakaway plan.

We will take a look at all these multi-level marketing payment plans here and discuss their pros and cons.

1. Unilevel multi-level marketing plan: This is the simplest type of payment plan and is used by companies who want a simple multi-level marketing plan. In this type of plan the recruit will never be able to advance beyond the level on which he was recruited. The payment will be made according to the multi-level marketing payment plan’s tier and percentage of sales that has been predetermined. Like other plans, this plan may or may not have a fixed sales target that needs to be achieved before the commissions can be paid out. Most multi-level marketing companies start off with this plan as this is really simple to administer and explain to further recruits. However it doesn’t have the flexibility to make it a very popular plan. The primary drawback of this plan is that it doesn’t incentivize hard work beyond a certain level in the hierarchy. By not being able to rise up the ladder, the plan lacks a certain motivation level that the other more popular plans offer. Usually after a multi-level marketing company has got a good number of subscribers, they move to a plan that appears to be fairer such as the Stairstep Breakaway plan.

2. Stairstep Breakaway multi-level marketing plan: This is the most popular type of multi-level marketing payment plan. As probably evident by the name, it lets a members step up the stairs and breakaway from their original hierarchy. At the beginning the member will start from a recruited hierarchy and will receive commissions based on the step in the hierarchy and the multi-level marketing company’s percentage criteria. However, there will be target sales and other parameter based on which a member has the chance to get “promoted”. By meeting the pre-defined criteria of sales and consistency, a member will break away from the hierarchy and move up the link. The member who originally recruited this member will either get a fixed sum or a percentage defined in some other manner when someone under him gets promoted. This is to maintain fairness, as the member who recruited such a star performer will no longer be getting the percentage from this person’s sales after he is promoted.

This is a commonly accepted plan and has been well received by regulatory authorities as well. The prime benefit of this plan is that it provides a strong motivator to every member of the multi-level marketing company.

You could think of this plan as an extension of the simple Unilevel plan, but with the provision of getting up the hierarchy and therefore being a fairer and more reasonable plan.

3. Matrix multi-level marketing plan: The matrix plan is one that is not really popular with multi-level marketing companies and is considered to be a jazzy plan with very little benefit over and above the other plans. The way it works is that the multi-level marketing company will have a matrix or a grid defined, say a 3 by 5 grid and then this grid will determine the limit on the number of recruits at each level. In our example at each level up to level 5 there can only be a maximum of 3 downward recruits. If the limit is exceeded then in that case the fourth recruit will be placed under a new distributor who did not directly recruit this person. This method makes sure that nobody has a considerably bigger pie than the other distributors. However this is not a very popular multi-level marketing plan and has come under attack by regulators also. As you can well imagine, top performers and motivated sales people have a tendency to stay away from this kind of plan. Despite its drawbacks there are still some big companies that use this plan.

4. Binary multi-level marketing plan: This is not a very popular multi-level marketing plan and is even slightly lesser popular than the Matrix multi-level marketing plan. Under this plan one distributor can have only two top line distributors under him. If there are more than two distributors then the additional distributors are placed under the top line distributor of the person who originally recruited the new member. This is a common multi-level marketing plan for a company that is looking to attract new multi-level marketing recruits. It is easier to attract new members to this plan because they are attracted by the spillover effect. They are attracted to the idea of getting commissions from members who they don’t even know! However the flip side is that it is difficult to keep people motivated under such a plan. That is the primary reason why this plan is not so popular.

5. Hybrid multi-level marketing plan: This is the multi-level marketing plan that is a hybrid of one or more of any of the plans that we talked about earlier. It is not uncommon to see them. But the biggest trouble with hybrid plans is that it is difficult to explain it to new multi-level marketing recruits. Typically when a new recruit hears about such a plan, they will ask their friends about such a thing. If their friends say they have never heard of such a thing (which happens often) the new potential recruit completely loses interest in the multi-level marketing plan and moves on.

Multi Level Marketing, The Basics

Multi level marketing has been around for decades and has been used in some of the most successful companies around the world. In this article I will outline how multi level marketing works and what sort of business and products you should look for when thinking about starting your own multi level marketing business.

The basics behind multi level marketing are to be able to build a large business and reap the rewards from other people’s work that are in your team. Let’s break it down on how your business works into two categories; you join a company and usually pay a fee to have the right to sell their products for commissions. For the sake of this article we will call the commissions from your direct customer’s level 1 commission. You recruit people to become distributers in your business that also sell products; you also receive commissions on these products but at a reduced rate (level 2 commissions).

So the two aspects of the business are selling the companies’ products and recruiting people to sell the companies’ products. It is dependent on the company to how many levels they pay out; the good ones pay out until infinity. The basic idea as mentioned above is to benefit from other peoples work you can see that once you have built a network of distributers underneath you, you can simply live off the products that they sell.

In order to benefit from a MLM business you should look for a business that offers support and training regarding its products and how to sell them. A payment structure that gives continued incentives for your up line (the person that recruited you) to keep helping.

The product that you are selling must have a large market requirement and be re-usable. What I mean by re-usable is a product that has to be updated regularly or replaced. It would not be beneficial for you to sell rechargeable batteries but it would to sell normal batteries. You should look for a company that does not require you to buy stock as this is usually a bad business model and can lead into expensive costs.