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Understanding Compensation Plans for MLM

Distributors need to understand commission and compensation plans so that they can maximize earnings. One of the basic elements of compensation is the primary bonus type. Often companies refer to these as binary, unilevel, or stairstep breakaway. Other commission plan types include fast start bonuses and pool bonuses. Once a distributor understands how these basic types work, they can modify their behavior to maximize earnings.

  • October 12, 2015

    Problems The FTC Sees In “Pay To Play” Commission Plan

    The FTC's primary cause of action alleges that business practices constitute unfair and deceptive trade practices and are therefore a violation of Section 5 of the FTC Act. The FTC is ultimately seeking to prove that the program is a pyramid because all pyramids are inherently deceptive. The fundamental eleme... Read more ›

  • September 23, 2015

    Back to the Breakaway?

    One of the key arguments in the recent Vemma versus the FTC case was about the use of personal volume (PV) requirements for compensation qualification. The FTC contends that compensation must be paid on the sale of product and not on recruitment. But if a company requires PV for compensation, it is unclear if... Read more ›

  • September 3, 2015

    Binary Compensation Plan

    We sat down with Ray Rawlins, commission programmer of more than 40 years, to get his insights about binary plans. How do they work? What variations have been seen in the industry? What bonuses are they often supplemented with? How are they programmed? Let’s find out! Full T... Read more ›

  • September 1, 2015

    Binary Compensation Plan Basics

    Many companies use a binary commission as part of their overall payout plan. When the binary plan arrived on the scene, it proved to be a near opposite approach to commissions than that of the existing plans. Every other compensation plan up to that point had been built on the following two premises: (1) Comm... Read more ›

  • August 13, 2015

    Types of compensation plans (part 2)

    Monthly qualifiers, paid volume, and pay percentages

    Check out part 1 if you haven't read it yet. To continue our review of the three major compensation plan types, let’s look at the other areas in which each plan differs. Aside from the primary characteristics that make each plan unique, there are several other differentiating factors. Let’s take a look... Read more ›

  • August 13, 2015

    Types of compensation plans (part 1)

    The three common plan types and how they work

    In the MLM industry, there are three common plans types: breakaway, unilevel, and binary. With a unilevel plan, you can put a lot of people on your first level and you can build as many legs as you want. With a binary plan, you are limited to two legs. In a breakaway, rather than legs, you build a team of dis... Read more ›