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What is the Best MLM Compensation Plan?

By: joe cotroneo

Before anyone starts an MLM business, one should consider the various compensation plans available from the 1000's of MLM Companies. It is important to know when, how much, and how often one would get paid. There are numerous compensation plans available, however only the most important will be covered in this article.

A popular compensation plan is called the Uni-level compensation plan. It is popular because it is the simplest to understand. You may have unlimited amount of distributors on your 1st level and probably 5 to 6 levels below you, with a percentage of sales paid to you on each level.

Teamwork is the key to any successful MLM venture. The very nature of the MLM business model demands it. The matrix compensation plan accomplishes this very important componenet. It limits the amount of people you can have on your 1st level. This forces everyone to help their downline.

A popular MLM compensation of late is the 1up or 2up payplan. The 1st sales of any distributor in this plan is passed up to the next qualified rep. You begin to make this commission when you qualify by making your 1st 1or 2 sales. This allows you to make larger commissions since the payment is not spread out over multiple levels and you can in fact be paid to unlimited levels in depth. You can make a quick huge income with this plan. A drawback is you must continue to make sales, there is generally no monthly requirement to order product

A recent innovation is the binary pay plan The reasoning is that since statistics show that the average MLMer only sponsors 2 people, why not design a plan that takes this into account. Basically you have 2 legs and you stack one person on top of the other one. This sounds great in theory, but in practice, what actually happens is that the new distributor has no problem building their 1st leg because of help from the reps above them, but finds it difficult to build the 2nd leg on their own. Since they can't "balance" 2 legs they don't make any money.

A new variant of the binary is the one leg straightline Powerline. While it is easy to build one straightline powerline, the payouts are often small compared to the effort required to make any meaningful income.The author once sponsored 30 people personally into a reputable Powerline Company, and still did not make enough money to cover product cost. Stay away from Powerlines!

Some time ago, the largest MLM companies used the stairstep breakaway plan. This type of MLM compensation plan produced some of the largest incomes in the MLM Industry. Checks of 2-300,000 dollars monthly and larger were being paid out. Somehow this type of MLM compensation plan was relegated to the scrap heap. This is my favorite type of MLM compensation because it simply pays the most over time. You make an escalating percentage on your group and personal volume sales, sometimes as high as 40%; and you make breakaway money on those who have gotten to the highest point in the payplan based on their group volumes thru more descending levels.

This has just been a starting point for you to understand MLM compensation plans. You are going to have to make a decision on which MLM compensation plan to utilize based on your own circumstances.

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