I think the best way of showing those who are not familiar with MLM Business Practices, is with an example, comparing it to more Traditional Jobs.
Here are a couple of examples of TRADITIONAL PAY\INCOME PLANS THAT YOU COULD FIND FOR A POSITION IN SALES:
BACKGROUND: ACME INDUSTRIES IS INTRODUCING A NEW LINE OF BIRD BATHS. HOW CAN THEY MARKET AND SELL IT TO THE CONSUMER?
ACME decides to increase its Sales Force, hiring new Employees who will sell Bird Baths Exclusively. As an Inducement to attract top Sales People, the pay structure is as follows:
TRADITIONAL SCENARIO #1.
- Pay is 100% COMMISSION. Each Unit sold will earn the Salesperson 40% of the Tag or Sales Price. The Birdbaths Retail for $1,000 Each, or $800.00 Wholesale. About 80% of Leads are Provided by Company, with a 20% Cold Calls Quota each Employee is Responsible For.
The Breakdown is as follows;
SOLD AT RETAIL = $1,000.00
SOLD AT WHOLESALE= $800.00
So, if a Salesperson averages 2 Retail and 2 Wholesale items sold a Week, the pay would be: 2 x $400.00= $800.00 + 2 x $320.00= $640.00.
TRADITIONAL SCENARIO #2.
- Pay is $200.00 PER WEEK SALARY. In addition, 20% COMMISSION on the Tag or Sales Price. If we use the same # of Items Sold per Week, it gives us:
SOLD AT RETAIL = 2 X $200.00= $400.00 COMMISSION.
SOLD AT WHOLESALE= 2 X $160.00= $320.00 COMMISSION.
TOTAL- $720.00\Week COMMISSION + $200.00\Week SALARY= $920.00\Week.
In the next part, we will look at the Pay Structure for a Typical MLM.