General

Which company has the best pay plan?

The answer depends on one thing: Your focus.

1. Do you want to build a customer base or recruit?

If you want most to build a customer base (customers who are NOT also distributors), look for two things:

1) Do they pay you at least 10% on what the customer pays? I mean for your regular (preferred/autoship) front line customers? Oh, and to earn the most, you should not be forced to put the customers under a “builder.”

2) You should be able to earn tens of thousands a month with JUST customers, without ever recruiting a single soul. If the company pays $10/customer order of say $40, and if you have 1,000 customers, you should earn $10,000/mo for each month they order.

3. See if you have to purchase a monthly minimum to get paid.

If you want to recruit, see how much (percentage) they pay on initial orders; how deep they pay, whether bonuses roll up over inactive reps, and if they use generations versus levels to pay you.

ALSO see if you need a monthly personal purchase amount or other additional qualifications to get paid, and what’s required for how many levels of pay. Most of this stuff is buried and you don’t realize what you DO NOT get, until you ask.

Decide what you want to do. See who pays best for that. If you love your product but your company pays, really, only for recruiting, (e.g. they pay less than 10% for genuine customers or 10% only if the person is also a rep) stay on the product as a customer, and find a company to sell for that pays for customer gathering.

NOTE. Pulling the wool over inexperienced MLM eyes is standard fare in our industry. “Complex” is a term used a lot when you are getting lower-than-expected pay. If you’re not sure, ask your question here. Someone without an agenda will probably know and reply.

About the author

Kim Klaver

14 Comments

  • Kim,

    I totally agree with this post and your statement:

    “Decide what you want to do. See who pays best for that. If you love your product but your company pays, really, only for recruiting, (e.g. they pay less than 10% for genuine customers or 10% only if the person is also a rep) stay on the product as a customer, and find a company to sell for that pays for customer gathering.”

    There are a lot of people who are struggling because they are “in love with the product” but the company doesn’t pay them for selling it. Most network marketing companies have great products. I buy products from 3 or 4 network marketing companies that I would never consider building a business with.

    Find one that pays you great for both selling AND recruiting and you’ll be golden. The key is to look for a company that pays you on ALL of your volume, not just part of it.

    At some point you have to ask yourself the following question:

    Am I here to make money or am I here to buy great products?

    ~Roxanne~

  • Well, I’d have to say even though pay plans are important they are not the most important aspect. One thing I have found about pay plans is that the higher the pay plan the higher the price of the products.

    What’s important to me is, does the company have the right stuff? Are they ethical? Are the leaders beyond reproach? What values do they uphold?

    Those are just some of the things

    ~ Doug ~

  • The cool thing is when your company with great products has a pay plan that works whether you focus on customers or recruiting or both — and that also simplifies networking.

    Getting 1000 customers all by yourself is not easy. Referrals by satisfied customers help expand the business AND if those customers can have customers placed under them and get a bonus for that — so much the better. So I would look for that potential in a company as well.

    Last month a downline builder talked to a friend about a product and she purchased it. The friend shared that information with a coworker who bought the product and told two members of her family who also bought the product. My downline builder now had 3 customers she did not even know. She was able to move them under the person/s who referred them by calling the company and making the switch. Now they all understand the power and financial potential of recommending a product you love to a friend.

    I think they call that network marketing. 🙂

    Sue

  • Another very interesting point taken. My question would be, why do you have to choose between getting customers or building a group of business builders? If a company’s compensation plan doesn’t reward you for both then definetly look for another company.
    We’ve had other past posts that address this very issue. I’m always suprised at how many people don’t understand even the basics of their NWM company’s comp plan. Why is that?

    Rod Cook, aka MLM Watchdog, has a book on compensation plans. You can purchase it at
    http://www.mlmconsultant.com/mlm_products.htm

    Craig

  • Not always. The company I work with pays out somewhere between 10-11% but their prices are very low in comparison to the “old school” comp. plans and product prices.

    But for the most part it is normal that companies wholesale prices aren’t really that far off from their perceived retail prices.

    If you look around you may find some that have good discounts or wholesale prices for distributors.

    Example of pricing differences: I can easily make a 100% markup on my dealer prices if I were to sell directly to a customer from my “inventory” or if they prefer to save money, they can join and get wholesale price and then the company pays me based on their business volume.

  • I agree with all of the above statements and have something to add. How about a product that everybody will buy anyway and can be bought with you for the lowest possible price ? In other words….not trying to change anyone’s buying habits or get them to spend more money at all. People can buy through me and get exactly the same product at the same or better price . Plus I have no quotas or time frames to deal with. I am paid for every single transaction. That to me is the ultimate business model. On the recruiting side..our compensation, residual and bonus payout is incredible.

    Trying to get people to buy marked up products to make a profit is a losing battle IMO.

    Mike http://www.gobukutravel.com

  • The company that has the best pay plan is the one who has the simplest pay plan and easiest to understand.

    This will help you decide what you want to do and where to focus – customers or recruiting reps.

    I do not want to need math degree in order to understand how I’m being compensated.

    Paul Eilers
    http://www.PaulEilers.com

  • The best comp plan is one that maximizes the amount of money in your pocket.

    Some people say a comp plan with the highest payout is best. Well, a 75% payout is great, but if you can’t sell the product, it doesn’t matter what the payout is. I’d rather have a smaller payout for a product that I can actually sell.

    Some people say the best comp plan is one that requires the least amount of people to make a certain income. Again, I’d rather be in a plan where you have to recruit more people, but where it is easier to recruit those people.

    It’s great to get paid a lot on product sales, but that takes away money that can be used to pay redisual income. (And vise versa.)

    So, yeah, Kim is right on the mark . . . there are a number of things you need to consider.

    I’ve personally looked at a lot of comp plans. Here are my conclusions:

    1. There are no perfect comp plans

    2. There is no “best” comp plan

    3. There are only (a) fair comp plans, i.e., those that give distributors a decent chance of making money, and (b) unfair comp plans, i.e., those that really stack the odds against the distributor.

    Unfortunately, most comp plans are too complicated to understand. So, most distributors will get into the company before they really understand how they will get paid.

    Walter Reade (from Wisconsin)

  • I am happy to say that in my company I (you) get the best of both worlds – at least 15% and up to 60% on customers orders. The company also pays you 4 levels deep on the Builders you recruit, starting with 7% going down 4 levels to 3%. When the Golden Rule is your business philosophy you treat people right.
    Bobbie
    http://nomedsforme.networkmarketing central.com

  • I left the biggest MLM after 23 years, even though I was just 4 down from the biggest earner in MLM. Why? Due to the reasons mentioned in the above post.

    The system of tools and functions became more important than the actual products themselves, and the incomes everyone ran around talking about became the exclusive territory of the big pins, because they were making more from the system than they were from the products, but they failed to mention that.

    We finally put our money where our mouths were, and set out to right some of the wrongs we saw in MLM, by starting our own. We developed a plan that was simple and easy to understand, and, give the money to those that actually go out and do the work. That is, sell the product. We felt it important that most anyone could go out and make money by retailing the product, and, over a period of time, develop a downline sales force that could easily duplicate what they did, or, could simply sell the products and still make money. Funny thing. People actually appreciate the simplicity and the honesty, and we appreciate not having to talk out of both sides of our mouths. What a concept.

    Now we feel that we are providing a legitimate business, simple in concept, and providing people with a genuine opportunity to earn, not scam.

    Pay close attention to what Kim has to say. She has more common sense than most of the big pins combined. She tells the truth, and it is high time someone did.
    Mike

  • I have to agree with Walter. There isn’t a “Best” pay plan. At least not one for everyone.

    The best pay plan for me is the one that pays very well on customer orders, is easy to understand and pays on the total sales of my group.

    I agree with Paul also, it’s hard enough helping with my kid’s Math homework without needing to go back to school to figure out a pay plan.

    I don’t agree with the comment about the plans that pay really well making the product too expensive, that’s not the case with my product, but I do know it happens a lot.

    Robin
    http://www.Robin.UptownNaturals.com

  • Walter,

    I really like how you put it. With the first company I was with I had no clue how to read the comp plan but joined anyway because I had a love for the product.

    Only after learning how to read comp plans I realized how naive I was in thinking I was going to actually make money with this thing.

    The comp plan made you jump through so many hoops to reach the top position, and when you reached the top, you were only making about $30K/year.

    It is sad that people just say “It is complex, you will figure it out later.”

    But at the same time, how many people do you know who willingly will try to figure it out before joining…my guess is not very many.

    http//www.NetworkingEffectively.com

  • Thanks to all for your good comments.

    Every company has designed their pay plan to pay for the activities they want their reps to do.

    Most traditional companies put most of the money into the recruiting side. That’s where you hear, “All the money’s in the recruiting. There’s no money in customers.”

    They speak truth. They’re the traditional recruiting networking companies. You’re paid big on recruit orders, but less than 10% on customer orders. And often, unless the customer also signs up as a rep, or UNDER another rep, they don’t even pay you 10%. They want you to recruit and bring in recruiter orders.

    These companies are fixated on the “big hitters.” That’s who they put on stage. That’s who gets the bonuses and access to company management.

    If you want to recruit, and if you understand the very big odds you are up against, go for it.

    The focus on “just customers” is relatively recent – in the past few years. I mean JUST customers, not recruit drop-outs who are now just customers.

    Many women want to focus on getting customers. But if the plan pays like 5% on a regular customer order of $60, as one company does that I described recently, AND you need to purchase $65/mo yourself to qualify to get paid on those orders ($3/ea) you are in the red until you bring in 20 customers paying $60/mo. (!!!)

    Who would do that?

    Well new, naive folks do, but they don’t last long.

    Now that you’ve been in at least one deal, look for a company that has products you can get behind AND that pays you for what you want to do – recruit or get customers. They are not at all the same activity. Unless you count recruits as customers. How many of you have a TV? And how many of you SELL TVs? That’s the difference between a ‘just customer’ and a recruit who is also a customer (assuming the person selling TVs also owns one of the kind they sell.)

    Different activity, different focus.

    So pay plans are only as good as what they pay you for. And they’re different, depending on one thing: What the company management wants you do to. YOU CAN CHOOSE to stay where you are or change.

    There are hundreds more companies.

    Different strokes for different folks.

    Look. Ask.

    Commenters: please continue to stay focused on the ideas, not pitching a specific company.

  • One thing I have noticed about these comp plan discussions is that they really don’t apply to NM companies that sell services.

    Most of these service companies don’t have a recruiting package because how do you package an “intangible” or even a home?

    There usually is no retail/wholesale distinction. Everyone buys at the same price as everyone else.

    For most of these companies you can make a great living just selling the product or service, however if all someone wants to do is gather customers by selling a service, they would be better off *not* joining a NM company that markets a service.

    Why? Because with one notable exception, the service commission for a NM company is usually less than working for a non NM marketing company. Why? Because the product can’t be marked up sufficiently to account for the various pay levels. And with many of these services you simply cannot have a retail/wholesale distinction and stay competitive (and in some cases it is illegal).

    So if a person wants to market real estate, or insurance, or investments as a career path, they are usually better off comp wise finding a traditional company.

    Now mind you, compared to the typical NM product, it is still *huge* dollars, but somewhat less than what can be had in the “conventional” marketplace.

    The only notable exception is PrePaid Legal (no I am not a part of PrePaid Legal). Their comp plan is more lucrative than the standard legal services comp plan. Why? Because they charge a little more than the rest of the industry (still quite affordable however) and they pay out differently than the rest of the industry.

    They pay the way the traditional insurance and investment industry pays, by taking your first 12 months of commission, adding it up, and paying the entire first year upfront (yes I realize a recruit can choose to be paid differently).

    Otherwise there is really only one reason for a service salesperson to join a NM service company, to immediately begin building an organization where he/she can earn more money in a shorter period of time because of the efforts of others and not just their own efforts.

    In the insurance and investment industries, for example, they already have a residual coming to them when they sell their service. So residual income alone won’t get them to move over.

    And in the case of nearly all traditional service industries, to keep from training your competition. In a NM service company, when someone as motivated as you decides to become a broker or matches your level, you still get a cut of their volume for life. In the traditional service industry you simply lose your best people forever, when they move out and open their own office.

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