Red Flags to Look For in Comp Plans

How do you know which plans are legitimate ways how you can be rich, and which ones are network marketing scams? Which ones are sustainable for the long run and which ones won’t last? Well, all of the plans previously described have proven track records and can be sustainable. There is one type of plan that I recommend you avoid like the plague.

The Australian 2up, or Aussie 2up, or simply 2up, is a very clever plan, but usually revolves around large recruiting bonuses and a very small or non-existent back end. It’s unclear why it is referred to as Australian, since it has nothing to do with different laws in Australia. In any event, here’s how the plan works:

In an Australian 2up, there is typically a significant cost to join – let’s say $1,000 in this example. The product or service is usually something like educational software, or maybe a fantastic website, or something of exaggerated value. You sell this product and earn a commission of $800 on every sale. But here’s the catch: You earn no commission on your first 2 sales. They are passed up to your sponsor. This is where the 2up part gets its name. It’s like giving away your first 2 recruits – which may very well be your 2 best recruits. Once you’ve gotten past the 2up part, you can now make some serious money. And don’t forget that everyone you sponsor from now on must give YOU their first 2 sales bonuses.

There are also some standard red flags to look for in any company, and we’ll take a look at 3 of them here. And what a surprise – all 3 usually exist in an Australian 2up compensation plan!

First, if the product or service will only sell because there is a money-making opportunity attached, stay away! Some companies have grossly inflated prices for their products. Some have products that retail customers wouldn’t want even if they were free. If the product sells at an 80% discount on ebay, this is a sign that it may be overpriced.

Second, ask yourself where do you make most of your money – is it the front end from recruiting, or the back end from recurring product sales? If 95% of your paycheck comes from recruiting new distributors, stay away! If the money stops when the recruiting stops, your downline will fall apart right before your eyes.

Lastly, if you pay your sponsor to enroll, and not the company, stay away! You should always pay the company directly – and you should be able to use a credit card. If you can’t use a credit card, there must be a reason, and it’s probably not a good one. Also, if it costs $1,000 to join, and you pay your sponsor, and then your sponsor sends $200 in to the company and keeps the other $800 as their bonus, run the other way! The company is trying to distance itself from the actual business model. Bad sign!

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