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7 Different MLM Compensation Types Explained
With major Authors like Robert Kiyosaki Endorsing MLM Home based businesses it is no wonder these Network Marketing plans are growing daily. As the Number of Network Marketing Programs proliferate the Number of Network Marketing Payment Types increase as well. Here are 7 Major MLM payment plans explained. These 7 types of plans along with the hybrids they produce by combining 2 or more of these plans represent a broad cross section of the compensation plans available to the aspiring Network Marketers.
1 - Uni-Level MATRIX PLANS
This is often referred to by the un-informed as the Dreaded "Pyramid". A Unilevel Plan is popular because it allows you to grow your organization wth infinite Width and Infinite Depth. Simply Point let's say that you are personally responsible for signing up 10 team members. You will earn a commission on all sales generated by your 10 Team Members. (You could in fact sign up 100 or 1,000 or even 1,000,000 or more people on your first level). Now lets Say each of your 10 Team members Sign up 10. Since 10x10 is 100 You will now have 100 People on your 2nd Level. You would also earn commissions on all Sales Generated by your 2nd level. A Typical Uni-Level will pay down 5 or More Levels. Lets see what the Power of 10 can do for you, if each person were to continue to get 10 this would leave 1,000 people on your 3rd Level, 10,000 People on your 4th level and 100,000 People on your 5th level. While very promising this scenario is extremely unlikely.
2 - FORCED MATRIX Pay Plans
A Forced Matrix is Similar to a Unilevel Matrix but it limits the amount of people each person can have in their first Level. A 3x9 forced Matrix pay plan seems to be very popular among the forced matrix pay plans.
With a 3x9 Forced Matrix The Most People you can have on Level 1 is 3. Now the most people each of those 3 can have on there level 1 is 3 which leaves you 9 people on your 2nd Level, A 3x9 Matrix By the Levels
Level 1 would have 3 People, Level 2 would have 9 People Level 3 Would have . 27 People .... .... Level 9 Would have 19,683 People
* Total - 29,523
One Advantage of a Forced Matrix is Spillover. Spillover occurs when you sponsor more people then can fit on your first level. So if we use the Unilevel Example above and Assume Everyone Sponsors 10 You Would not only completely fill your 3x9 Matrix but you would actually have enough people left over to fill a 10th level of 59,049 and partially fill an 11th level of over 170,000.
3 - Fast Start Bonus
A Fast Start Bonus is Seldom the only part of the compensation plan. More often then not it is used as an extra incentive to sponsor more people. The Fast Start Bonus is Typically a Lump sum payment of up to 100% of the First Months Membership for anyone you sponsor
4 - Sponsor Bonus
A Sponsor Bonus is often used with a Forced Matrix. It is usually a Monthly Recurring Bonus and is paid each month on everyone you personally Sponsor.
5 - BREAKAWAYS
Breakaways are used with Matrix Pay Plans. When a Team member reaches certain qualification they break away from your team and you no longer receive the Matrix Pay out on that team member or anyone in that part of the Matrix (the Break Away). You do however receive a Lump Sum Monthly Commission of the entire Volume of the Break Away Unit.
6 - INFINITY BONUSES
Are often Used with matrix Pay plans. They allow you to earn down an Infinite number of Levels if you meet the Qualification. You could be blocked by someone on a lower level who also qualifies.
7 - BINARY PLANS
A Binary Plan is like a 2xInfinity Forced Matrix with a Twist. In a Binary you would have 2 Legs. You would typically earn a commission on the Entire Volume of your weakest Leg. Many binary's have systems in place that may allow you to earn Commissions at a later (via a Carryover) on your Strongest leg.
While the pay plan is important. It clearly is only one small part of the MLM you choose to join. You should look at the whole package, Pay Plan, Product, Automated Tools. Market Size, Start-Up Costs etc.
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