For instance, you have 10 downlines and everyone, including you, bought a product worth RM100 each. This means that your group sales volume is RM100 x 11 = RM1,100. Your team made 1,100 BV and the PV is 280. Based on the performance bonuses table you’ll get 3% from your BV, which is 3% x RM1,100 = RM33.
As for your downlines, they won’t be getting anything because each of them has low PV so they’re not entitled to the bonuses.
Bear in mind that this structure is only effective if you can get a decent number of people under you and ensure that they're making sales - the idea is the more downlines you have, the more money you make.
Imagine these 10 people are doing what you’re doing - each downline recruits another 10 distributors under them, then you’ll have 111 people in total. Your BV is 100 x 111 people = 11,100. So your PV then would be 2,806. If we look back at the performance bonus table, your team will receive a 9% bonus from BV 11,100 which is RM990.
BUT, you have to give 3% to each of your direct downlines because it’s also part of their team effort. This is because each of your direct downlines is entitled to a bonus. So, in the end, you’ll get RM990 – (RM33x10 people) = RM660. Basically, you just need everyone to spend RM100 a month to make that extra cash.
On top of this, you’ll also be awarded growth incentives for reaching key business-building milestones, such as one-time cash awards and business trips.
Yes, you can make money with Amway or any legitimate MLM companies because the formula is somewhat the same. After all, there are some untapped markets and you might find your own unique sales angle. But, is it a reliable income? NO - yeah, they give a few structures for you to make money but the chances of being successful are pretty slim.
Based on Amway’s 2017 Business Reference Guide, it stated that the average gross monthly income for active distributors in 2016 was just US$207 a month (and only around 48% of distributors were considered active).
Uhuh, you read that right - US$207 a month. Okay, having that extra cash monthly might sound nice, but it's a far cry from being able to make you rich, people.
And not to mention, it’s not going to be instant and will take a lot of hard work. It’s an uphill battle - and by that, we mean VERY STEEP uphill; almost like Hunger Games level.
Just take the example we gave earlier. You need 100 people (10 generations) in your team to spend RM100 each to make an extra RM660 and we haven’t deducted your operating expenses yet. If you want more money, you need your downlines to spend more.
First of all, let’s talk about recruitment. It’s not easy to find people who will not be discouraged when prospecting. Persuading your friends, family or total strangers can be awkward AF because you also have to overcome the immense hurdle of MLM’s not-so-good reputation.
Yeah, your up-line may give some you motivational meth pep talk and believe that you can succeed in this MLM business, but in reality, they just need your money coming into the system in order for themselves to succeed.
That’s what makes it iffy - it doesn’t matter whether your downlines are making profit or loss, the money they spend will feed the system. Below is an example of a graph to give you a good idea of what we’re talking about.
Second, we feel that the sales you’re making AREN’T SUSTAINABLE. This is because they’re not market-driven. Most of the products ordered are by the members for personal use or to achieve volume targets. Which makes sense, right? If very little money is coming from outside the network, then the only way for you to profit is at the expense of people in your own down line (if your downline is a boleh-pakai type lah).
Which explains why 44% of MLM participants worked at it for less than 1 year. People quickly drop out because they’re either not making enough money or are spending too much on business expenses. So, they are unable to turn a profit. The same study also shared that ONLY 25% of participants made money from MLM.
To add, in a book called MULTI-LEVEL MARKETING UNMASKED, the writer shared that about 99% of people who join MLM companies lose money.
Okay, by theory, the MLM mode of operation is simply more cost-efficient and easier to run, but NOT in reality lah k. Plus, a lot of people have formulated an opinion on it already- they’ve probably known someone that started this before and failed, or have been annoyed by family/friends about it.
Having said that, it’s up to you whether or not you should join MLM (adults already what…). Some people learn by words of wisdom, while some need to be knocked hard by life first, kan? In any case, DO take the necessary considerations and decide wisely before making the plunge.
Some of the things that you’ll need to consider if you don’t want to lose money:
Check if they’re registered with DSAM (here) and SSM (here).
Does the company offer a good compensation plan?
The products offered are good enough or not to be sold on their own without your downlines incentive?
That aside, if you ever spot an illegal MLM or scam, or maybe after reading this article, you realised the MLM you joined isn’t legit, don’t be shy to report it!
A pyramid scheme is an illegal financial scam masquerading as a legitimate business. Pyramid schemes are similar to Ponzi schemes and multi-level marketing (MLM) companies, but there are important distinctions among these three structures.
What are the telltale signs of a pyramid scheme? Here’s a look at how pyramid schemes work, and how to tell them apart from an MLM or a Ponzi scheme.
What Is a Pyramid Scheme?
https://www.paymentsecret.comA pyramid scheme is a scam where a so-called marketing company promises to help you earn big profits in exchange for recruiting new participants into the scheme.
On the surface, a pyramid scheme appears to be a legitimate company selling products or services, but the core goal is always to grow the number of participants in the scheme rather than grow product sales. New participants are typically referred to as investors, salespeople, agents or distributors, or some variation on these titles.
In a legitimate business or an MLM, salespeople are compensated for selling products or services. The compensation structure tends to reward participants for recruiting an ever-growing number of new participants—not for growing product sales.
Typically, pyramid scheme participants are charged membership fees and commissions, and must buy set amounts of product inventory every month in order to remain in the company. Little attention is paid to actually marketing and selling products.
A pyramid scheme begins with one person or a small team recruiting participants to join a new business venture. The recruits are required to invest money into the venture, pay membership fees or purchase a certain amount of product each month.
The founders receive fees and sales commissions from the other participants, plus revenue from the sale of inventory. From that point on, successful pyramid schemes rely almost entirely on the continued acquisition and growing investments by an ever growing base of new participants.
The “pyramid” in the name comes from the structure of the scam, where one participant recruits several additional participants to work for them. These members then recruit more new participants beneath them … and so on.
The small number of participants at the top of the pyramid scheme make large amounts of money by harvesting commissions and fees from the layers of salespeople and distributors recruited to work below them.
“At the top of the pyramid, the founder or founders are essentially receiving fees from every participant below them,” said Jonathan Perlman, an attorney with the Miami law firm Genovese Joblove & Battista.
Multi-level marketing companies and pyramid schemes share similar business models. However, MLM companies may operate as legitimate businesses, whereas pyramid schemes are always illegal.
There are certain similarities between a legitimate MLM and an illegitimate pyramid scheme. Here are points where these two models resemble each other:
Participants do not earn a regular salary, and are expected to purchase a certain amount of product per month in order to remain as part of the company.
Participants may receive compensation or commissions for recruiting new salespeople to the business.
Participants work as independent contractors who earn money by selling products and/or by earning commissions based on what their recruits sell.
Participants are usually charged membership fees. They sell products or services through person-to-person sales, and pay commissions sales commissions up the chain.
Here are some key distinctions between a pyramid scheme and a MLM:
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