The stairstep breakaway is the only compensation plan we’ve ever heard described as “brutal.”  It holds out more hope than the nasty Aussie 2-up in the early stages, but delivers more crushing disappointment in the long run.

Here’s a comp plan chart from a huge, well-known, long-standing international company that keeps attracting new distributors despite its terrifying pay plan.

Here’s how it works …

You start your career as a New Distributor and as soon as you have 2 people in your business (reps or customers), you are generating enough volume to be called an Assistant Supervisor.  You can now earn 5% commissions on your downline volume.

When you have built your team to about 25 people, you are promoted to Supervisor and can now earn 8% commissions on your downline volume.

Stop for a moment and imagine the work required to build a team of 25 people, and imagine spending all that time and effort at a commission rate of just 5%.  Now stop imagining, as the company does not want you to be thinking such things.

So now you are a Supervisor with a new pin on your company jacket, and proudly earning 8% commissions.  While you are building, you are also helping your team to promote.

Let’s say you sponsor Alice and in the very early days, you are earning 8% commissions to help her build.  With your help, she promotes to Assistant Supervisor, and your commissions drop from 8% to 3%.  That’s your 8% minus her 5%.

Okay, that’s still 3%, so let’s help Alice some more as we want our team to succeed, don’t we?  With your help and guidance, Alice promotes to the same level as you, Supervisor, and you are ever so proud of your team’s accomplishments! 

Or are you?  Wait a minute!  When Alice promotes to Supervisor, she earns 8% commissions, and you earn … let’s see … 8% minus 8% = 0% COMMISSIONS!

Look at the chart above.  Where is that zero?  Now look at the company policies and procedures and comp plan pdf’s and online video presentations and all the flip charts you’ve seen at the hotel meetings.  Do you see any zeros? 

Not likely, as the company does not want you to know that as soon as someone promotes to the same level as you, you lose commissions for all the volume below them.  If you don’t believe this happens, call your rep support and ask them flat out as we did.  It’s true and it will be a nasty surprise that your upline did not warn you about.

Let’s go to the top of the chart to the Manager Position:

  • You earn 18% on your own volume and any volume above those who have become Assistant Supervisors.  18% is a very small commission for someone who has reached the top of the pay plan, and think realistically about what fraction of your team will be generating that.  It’s not tough to become Assistant Supervisor, so most of your commissions will be 13% or less.
  • You earn 13% on the volume below your Assistant Supervisors who are collecting 5%.  18% – 5% = 13%.
  • You earn 10% on the volume below your Supervisors who are collecting 8%.  18% – 8% = 10%
  • You earn 5% on the volume below your Assistant Managers who are collecting 13%.  18% – 13% = 5%
  • And here’s one of the three missing zeros:  You earn 0% on the volume below your Managers!  18% – 18% = 0%!

To ease the pain of losing all those commissions in the first part of the plan, this company will now allow you to earn a whopping 6%, 3%, and 2% on three generations of managers.  That’s an average of about 4% on the volume that YOU brought to the company – 4% instead of the original commissions that looked like they were going to be 18%.

No wonder that people grimly joke, “To keep your check in a stairstep breakaway, you have to keep your downline down.”  This is not a plan for those who like working with their team in a ‘people helping people’ business.  It’s more appealing to the sponsor monsters who can sign and split.

And speaking of splitting …

Al and Bill were asleep in their tent on a camping trip in the mountains.  They were awakened by the sound of a bear rummaging through their gear outside, looking for food.  Al quietly reached for his boots and started putting them on. 

Bill whispered, “Al!  You’ll never outrun a bear!

Al whispered back, “I don’t have to outrun the bear.  I just have to outrun you!”

If you’re afraid of bears and tired of outrunning your downline, you’ll want to read Big MLM Lies.