Now we’ll get into 2 important things to look for when evaluating a network marketing compensation plan. The first question is, “What do I have to do to break even on my autoship order?”
Network marketing is simply recommending and promoting things that you like, but first you have to use something before you can like it. So, most companies have a monthly minimum that you must purchase. In a product company, this is usually your autoship order. In a service company, you might use a service every month. In either case, you are incurring expenses every month in order to run your business. How much work do you have to do before you can break even every month?
To start, we have to look at how much commission you are qualified to make as a beginner. Pay no attention to that superstar triple-eagle 10% matching bonus on level 8 because most beginners won’t earn that. Look at how much you get for every person in your organization – distributors and customers. If you earn $5 per person, and your monthly autoship is $150, then you need 30 people in your organization in order to break even every month.
This is a very important number, because it affects how likely a new distributor is to stay involved. If a new distributor can be part of the business without spending money every month, they can stay in for as long as they want. Some companies you might need 50 or 100 people, while in others it might be 5 or even 3. Many newcomers think to themselves, “It doesn’t really matter to me, because I’m going to be up at the top.” Well, you can’t have a top without a bottom, and if your bottom keeps dropping out then it is extremely difficult to stay at the top.
Distributor A joins company X. The autoship is $150, and he earns $4 per person. He builds a downline of 20 people. Now every month he is minus $70.
Distributor B joins company Y. The autoship is $150, and he earns $8 per person. He builds the same downline of 20 people. Now every month he is plus $10.
Is one of these distributors more likely to drop out than the other? Of course. Distributor B is in for free now, but distributor A is still spending money on his business every month. It is very important to know what you need to do in order to break even. If it is hard for a new person to break even, you will have a lot of fallout, and will have to keep rebuilding your downline. If it is easy to break even, people are much more likely to stay in the company, and you won’t need to keep replacing them.
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