Understanding
Compensation Plans

 
Make no mistake about it, ultimately, it's why we start a home business: To Make $$.

Sometimes in networking, when a product exhibits the potential to have such a dramatic impact on lives, sadly the company's owners don't believe that they have to fairly compensate their distributors. Foolishly and selfishly, these owners assume that the strength of their product will be enough to attract and keep distributors. As history has shown time and time again - THEY'RE WRONG!

It's important to understand the type of compensation plan of the company you've chosen. The harder and smarter you work, the more you'll earn.

While there are many different types of compensation plans in the industry today, let's take a look at a few of the most popular compensation methods that are used.

Referral/Affiliate Programs: Typically a one or two level compensation plan where you are paid for your individual sales and in some cases, you are also paid for direct sales made by those you have sponsored.

Binary Plans: The binary method of compensation can best be explained by asking a very simple question...  "Do you know 2 people who would be interested in this product or program, that know 2 people that would also be interested.... etc.?" Well, that's basically what a binary plan does. You sign up 2, who sign up 2, etc. You get paid an average of your group's product volume. While some plans are 50/50, many binaries are a 1/3 - 2/3 plan (example: 4 sales on your left leg, 2 sales on your right = $$ to you). Since this type of plan is volume based, there usually are no limitations to the depth of where your volume comes from. But do look closely to see if there is a cap on how much volume you will be paid for. This keeps the company from going "belly up" because they've paid out too much in commissions.

Forced Matrix Plans: These are the 2x6's, the 3x9's the 5x7's, etc. They come in all shapes and sizes. Unfortunately, typically they tend to promote "massive amounts of spillover"... let's face it, rarely does this happen! If it happens for you, GREAT! Just don't plan on that and you won't be disappointed. How many people have you ever heard of that got wealthy without doing anything, unless they win the lottery, and in network marketing, you have about as much of a chance of receiving "massive spillover" as you do of winning the lottery. They are often "one-time-out-of-pocket" programs that are easy on the budget and rarely have a monthly qualifier. You can join a program that has a one-time out-of-pocket qualifier, work it when you want to, and earn extra income without the pressure of trying to cover your monthly purchase amount. They can be a lot of fun! Just don't fall for the "spillover" routine!

UniLevel Plans: These plans are normally not limited in width, but they are in depth. In other words, you can personally sponsor as many people as you want to, but as they sponsor others who sponsor others, you will only earn through so many levels deep. They also come in all sizes and pay many different percentages through the levels. Look for companies that offer realistic recruitment qualifiers. They are designed with the average networker in mind.
 
You can take any compensation plan and make it work for you if you like the products or services, so don't get caught in the trap of only working one particular plan. Just be sure to study the plan and understand it so that you'll know how to maximize your efforts!

 

Additional Information That You Will Want To Read
The Financial Facts of Life | Seven Basic Reasons Why People Succeed
Understanding Compensation Plans | Tax Advantages
Network Marketing FAQ
| Network Marketing or Pyramid Scheme

 

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