Binary compensation plans are attractive because they offer commissions on unlimited depths, and ‘spillover’ as your upline builds one of your legs. But beware …
We recently looked at a binary plan with the following features:
- Each rep purchases 100 points ($150) per month on autoship.
- Each rep ‘activates’ his/her position by personally sponsoring one person on the left and one person on the right, making him/her eligible for commissions.
- A ‘cycle’ is achieved with a balanced total of 900 points, 300 in one leg, and 600 in the other.
- Each time you ‘cycle’, the company sends you a check of $54.
When analyzing any pay plan you are offered, be sure to ask your sponsor or upline the question “What do I have to do to earn a check?”
Let’s follow each step as you build your new business …
- You send the company $150 each month for 100 points in product. No check yet.
- You activate by sponsoring Alice and Bill who each send the company $150. Total revenue $450. No check yet.
- Alice activates her position with Carol and Dave who send the company $150 each every month. Total revenue $750. No check yet.
- You now have 300 points in your left leg (Alice, Carol, and Dave) so let’s start building your right leg.
- Bill activates by sponsoring Ethel and Fred who each send the company $150 per month. Total revenue $1050. 300 points in your right leg. No check yet.
- Ed activates with Gail and Henry who send $150 each to the company. Total revenue $1350. 500 points in your right leg. No check yet.
- Finally, Fred sponsors Irene, who sends $150 to the company. Total revenue $1500. 600 points in your right leg. A cycle!
- The company sends you a check for $54 and you’re on your way!
Let’s take a look at what has happened here.
You are responsible for bringing the company $1500 in revenue and have earned a commission of $54. That’s 54/1500 or 3.6%! On the total points of 900, that’s 54/900 or 6% commissions.
For some reason, most people think that online is different from downtown, but ask yourself if you would work in, say, a furniture store where you would be paid $54 for selling a $1500 sofa?
Or would you accept 6% commissions when there are MLM companies where you start at 20% and quickly move to 40%?
Also remember that to sell the sofa, you did not have to involve anyone else. In this case, you have brought Alice and Bill and Carol and Dave and Ethel and Fred and Gail and Henry and Irene into business with you and so far in our scenario, none of them has earned a check!
To learn more about how to evaluate any opportunity, read this free report.
If you would like some help figuring out how hard you and your team will have to work to earn a dime, just let us know! We look forward to helping you any way we can!
Bob and Anna Bassett