5 Questions To Ask When Evaluating An MLM Compensation Plan A common question asked by people considering an MLM home based business is "How much money will I make?" It is a fair question to ask. Ultimately people are investing their money and time to get started and grow an MLM home business. Who wants to invest energy and resources if they are not going to make any money? This is why it is important to have a basic understanding of an MLM company's compensation plan before getting your home business started. It is easy to become confused when researching MLM compensation plans because of the terms used-Binary, Unilevel, Stairstep Breakaway, Forced Matrix. These are just names of the different types of compensation plans MLM companies use. (If you want an in depth understanding of each different type of plan, there are numerous resources available to assist you.) Basically what you need to know about an MLM compensation plan is how much money you will make and what you need to do to make X amount of money. You can then decide if the compensation is fair for the amount of work you will have to do. The following are five questions to help you evaluate an MLM compensation plan: 1. Does the compensation plan pay distributors fairly? Find out the percentage you would earn from a sale. You can do this by asking the company directly or by comparing the wholesale cost verses retail cost for a product. A company that pays too small a percentage will not allow you to make enough money but a company that pays too much may be setting itself up for financial distress. 2. Are the product volume requirements within a reasonable range? Network marketing companies require that distributors maintain a certain level of monthly product volume to be considered active in an organization. Distributors who are inactive do not qualify for commission checks and bonus money. Typically, distributors need to spend at least $50 per month for products or services that they either sell to retail customers or use for personal consumption. Many companies offer an auto-ship program that allows you to receive a shipment of product automatically month after month. Find out what the monthly requirements are and decide if this is a reasonable range for your business needs. 3. How fast can a new distributor earn money? Is there a product that can be retailed from day one that will allow you to earn money immediately? Earning $300-$500 dollars in the first 90 days will allow people to make lifestyle changes. Once these lifestyle changes are made, people usually do not quit. This is important to consider if you plan to build a team of business partners. You want to make sure that there is potential for not only you to make money but also for the distributors you introduce to the company. 4. Is the compensation plan rewarding for part-time distributors? The majority of people involved in network marketing are part-time. Some have a full-time job already and are looking for a little extra income to make ends meet or save for something special like a family vacation. Make sure the compensation plan rewards the efforts of those distributors who only want to work their business part-time.
5. Is the compensation plan lucrative for full-time network marketers? Many people start their MLM home business working part-time but may eventually make it a full-time career. A full-time network marketer does not have as much time to recruit because they are busy training a downline. This is why it is important for the compensation plan to pay 5 to 8 percent residual income six or seven levels deep and include bonus opportunities such as a promotion bonus, car bonus, travel bonus, company bonus, etc. A good compensation plan rewards both full-time and part-time network marketers. I often see advertisements stating "the best MLM compensation plan available!" Yes, this is enticing especially to those who are desperately searching to make money, but take some time and learn what makes it the best compensation plan and compare it to what other companies have to offer. What makes it the best compensation plan for one individual may not be the best for another. You do not have to become intimate with an MLM company's compensation plan, but you should have a basic understanding of how you will earn money. If you have questions about a compensation plan, be sure to get them answered before starting your MLM home business either by contacting a distributor within a company or contacting a company directly. Expect Success! >> Click Here to Get Your Free Automated Lead Generation System for Your Home Based Business