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What is the Best MLM Compensation Plan?

When you are contemplating on whether or not to start an MLM Business, it is important to know the difference between all the MLM compensation plans available. It is impossible to include all the types of compensation plans available and their slight differences. Only the most common plans will be covered here.

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.

A variant of the unilevel plan is the matrix pay plan. The only difference between a unilevel and a matrix pay plan is that you are limited to how mant people you may have on your first level. You may only be allowed to place 4 people on your 1st level, all other people you signup will be placed in the closest available position of your downline. This type of pay plan promotes teamwork......the very essence of what Multi Level Marketing should be.

A very effective compensation plan that allows the distributor to make huge chunks of money quickly is the 1up or 2up plan. This compensation plan works by passing UP the first sale or in the case of the 2up plan the first 2 sales. Let's say that the product cost is $150 of which $100 is paid out in commissions. If you just began your business, your first sale would result in a $100 commission to the next nearest QUALIFIED rep. The Qualified rep is the one who has already made their 1st or 2nd sale. This payplan can literally pay to infinity, and much larger chunks of money can be made upfront.

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.

I only mention Straightline Powerlines because this MLM compensation plan is gaining in popularity. It seems so attractive.......just one straight line down, each distributor on top of another. Wow......what teamwork! The problem is that the requirements to get paid are so outrageous, you make very little money. The author STRONGLY discourages you from participating in one.

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.

I know sometimes it is difficult to decipher different MLM compensation plans. Use the information here as a primer to make your very important decision.

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