MLM Compensation Plans – Which One Makes More Sense?

Compensation plans in network marketing vary from one company to the next. They can be difficult to understand especially if you have never come across network marketing before.

Here are the 4 main Compensation plans network marketing companies will utilise:

Binary Plans:

Companies will emphasise the ’spill over’ concept with this type of plan. This means that should you have a strong up-line, you and a portion of your down-lines organizations will benefit from the enrolment of new people. This can potentially mean you only have to concentrate on one leg. A possible drawback, however is that a majority of companies using this type of plan will only reward commissions on the weaker of your 2 legs so you will need to plan and monitor your organization growth carefully.

Matrix Plans:

The typical matrix is limited in width on the first level to usually 2 positions although with some companies it can go much wider. And it usually has a predefined depth level of 5 to 12 with linear commissions. The problem is maybe the two you initially get will not actually do anything. This compensation plan is present less and less and being replaced by Binary and Unilevel commission structures.

Unilevel Pay Plan:

This type of compensation plan only allows you to personally build one level in your organization. There are no width limitations to this plan and commissions are normally paid out on a limited depth, usually 5 and 7 levels deep. Therefore, the common goal of this plan is to recruit a large number of frontline distributors and then encourage them to do the same. With this type of pay plan, only a small level of personal sales volume is needed. This makes it easier to make an income if only doing it part-time.

One of the main disadvantages of the plan is that every distributor you sponsor effectively becomes cross-line to all of your other frontline distributors and therefore must work in competition with the others.

Stair Step Breakaway Pay Plans:

The Stair Step Breakaway plan is the most familiarised comp plans. Once distributors in your team get to a specific level, they effectively breakaway and form their own organizational unit within the company.

At first glance to the sponsor, this looks pretty scary, yet in most cases you are still paid to a certain extent on those new organizations.

The plan rewards the few who can consistently sponsor new distributors and build multiple breakaway legs.

If you are still not sure how a compensation plan works when you come across one, be sure to ask your sponsor or someone more experienced person to explain it to you so you fully understand it. Only then can you be assured it suits you. It does not matter how good a compensation plan appears as you still need to take everything into account regarding the company. – Do you like their products or service? Does it take a lot of sales to make the comissions you want? etc.

Every MLM Compensation Plan has its advantages and disadvantages. Providing you get your marketing strategy right you can make any of them work for you and profit from it nicely. If you would like to learn the EXACT system to market and build any MLM or home based business successfully on the internet by generating huge traffic, unlimited leads, and income all on autopilot visit Online MLM Domination now!

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