It seems like a very simple question. How do I make some real money? How can I be successful? Well, let’s quantify what real money is first. For most people, earning $10,000 per month in residual income would mean that you’d never have to work again. It’s a nice round number, so let’s use that.
Now we have to figure out how much work we have to do in order to make a successful business and earn that kind of money. It’s actually pretty simple. Look at how much you make for each distributor and/or customer in your organization. If you make $5 for each person, then you need 2,000 people in your downline. If you make $10 each, then it’s 1,000 people, and if you make $2 per person, then you need 5,000 people in your downline to make $10,000 per month.
In a binary compensation plan, it’s a little different. If you make $10 per person on your weak side, then you need 1,000 people on your weak side. With a typical 1/3 and 2/3 balance, you will end up with 2,000 people on your strong side for a total of 3,000 people in your downline. Of course the numbers will vary a little, since it’s impossible to predict the exact ratio of weak leg vs. strong leg.
In a unilevel compensation plan, or a forced matrix compensation plan, keep in mind that over time, much of your downline will be too deep in your organization for you to be paid on. You might build a downline of 3,000 people, but you may only be paid on 1,000 of them. In this example, you might be paid $10 per person that falls into the pay plan, so you’ll get $10,000 per month, even though you really built a downline of 3,000 people.
Most compensation plans require between 2,000 and 3,000 people in your downline to earn $10,000 per month in residual income. Some require as many as 35,000 people, while others require as few as 400. Why is this number important? Let’s look at an example.
Distributor A joins company X. He needs 4,000 people in his downline to earn $10,000 per month, so it’s about $2.50 per person. He builds a downline of 500 people, and he earns a residual income check of $1,250 per month.
Distributor B joins company Y. He needs 1,000 people in his downline to earn $10,000 per month, so it’s about $10 per person. He builds the same size downline of 500 people, and he earns a residual income check of $5,000 per month.
Who has the better deal here? They both did the same amount of work, and built the same size downlines. Distributor B is earning 4 times as much as distributor A. Is that distributor A’s fault? No, of course not. It’s just the result of the different compensation plans.