Understanding MLM Compensation Plans

by Tyronne

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MLM Compensation Plans

Have you thought about getting into the network marketing industry?

Many are because it’s a fantastic opportunity to have your own home based business and make some extra cash on the side. So let’s talk about different ways you can get paid in MLM (compensation plans).

Consumer beware : Not all MLM compensation plans are designed the same. Here are a few things to consider.

I’m hoping you’ve done some homework about the different network marketing companies you might consider joining. You should’ve spent plenty of time online trying to find any information you can about those companies. You might find that a few of the reviews you come across are actually from bitter reps, most of the time it’s because they thought MLM was a get rich quick scheme that didn’t require any work! People have to work hard at their jobs to be successful so what makes the home business industry any different?  You know that, and you also know a good amount of people you can sell your products to or sponsor into your downline.

One thing you’ve might of not been taught about was the compensation plan.

Did you even bother asking? And if you did was the answer so complicated that you continued to have questions about how it worked?

Hear me out. Although many MLM compensation plans have fancy names they aren’t too hard to understand if you write them down on paper. You should be taking copious notes anyhow, but not just about the compensation plan, you should also have written down your goals and a sound business plan as well.

Don’t get all hot and bothered about what these compensation plans are called. The difference between an Australian Two Up comp plan and a matrix or a binary comp plan isn’t really that important. It’s not what matters. The question is, are other people in this business making the sort of money that you wish to make yourself? If they are then obviously the compensation plan is working for them so you have the perfect chance to get in and build your own business.

One thing to have a look at is what the company pays and if there’s a sign up bonus.

Say for example it costs $200 to join, are you likely to get a signup bonus of perhaps $20? That’s good, it’s a bonus but perhaps there is  another company that will offer you a $50 bonus on a $200 sign up.

It’s a fact that without marketing you and your team are eventually going to run right out of people to approach with your opportunity, so being able to market and promote your business is crucial. Advertising isn’t free. So the higher the bonuses the more money you can put away for advertising.

But if you don’t make enough upfront cashflow sponsoring people, how will you afford to continue to advertise your business?

So the commissions you earn for staying in personal production could make or break your business.

You’ve probably heard about a few of the heavy hitters in this industry, these are the men and woman that join a business, are extremely successful, and build their businesses really fast. Are you going to be paid for their efforts as well , or are you going to balance the legs of your binary plan by finding an equally hard hitter?

Bottom line: Find two or three network marketing companies you might want to join and compare their mlm compensation plans side by side. Write everything down on paper and then decide which comp plan best matches the income levels you would like to achieve.

If you found this post useful don’t forget to share it with your following on Facebook,Twitter, or Google+


To Your Continued Success,

Tyronne Ratcliff





P.S.You’re probably wondering how I learned all this online marketing stuff. All I did was follow a system, it’s really not hard if you have a system, get the system I use here



{ 2 comments… read them below or add one }

Akos Fintor December 3, 2012 at 2:49 am

Hey Tyronne,

Absolutely. Comp plans are important, so is understanding them.
However I must absolutely love a company’s product as well.
I couldn’t recommend something that I don’t believe in.


Tyronne December 3, 2012 at 3:04 pm

You’re right Akos, one thing I learned is that the best way to learn your company’s compensation plan is by simply building the business.

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