There are thousands of old and new mlm companies and each one claims to have the most lucrative mlm compensation plans anywhere. In reality there are only a few basic plans.
What are the differences? Let's look.
Almost every network marketing opportunity out there has some sort of bonus plan to reward their distributors for recruiting however we are going to concentrate on the basic systems.
The basic mlm compensation plans we are going to explore are the matrix, the unilevel, the binary, and the stairstep breakaway.
The matrix plan limits the width you can sponsor on your first line. It is typical to limit these to three and sometimes two people before you are required to begin your second level. Now, if you have sponsored say 3 on your first line, each of those can sponsor 3, so on your second line you can have a total of 9 people. The third line would therefore have 27 people and so on.
Matrix mlm compensation plans also limit the depth that a person can build under them. You might see 5, 7 or most common 9 levels down. What happens once you reach the bottom level? Most companies then provide you with a re-entry. In other words, they allow you to re-enter somewhere in your downline and start all over again.
Something to watch out for with matrix plans is gaps. These occur when distributors quit. Make sure the plan you are considering has some sort of compression, where the next level down from the one who left moves up into the empty position so you are still paid for each level.
The one big advantage of matrix plans is the spill over from your upline as they fill up their various levels and you end up with free people spilling into your downline.
The unilevel plan does not limit how many you can put onto your front line; you could put a thousand there. These plans do limit the depth they will pay you down to, usually depending how many you have personally sponsored.
There is no natural spill over created as in the matrix plan. The nice thing is that as you build wide, your recruits will build down and you could have a very large organization without having to re-enter and start over. The payout occurs at each level, which pays you a certain percentage for the sales volume created from the distributors at that level. This feature is similar to the matrix plan.
The binary plan resembles the matrix compensation plan. In this scenario, you are limited to two on your front line, who can then get two each, who can get two each and so on.
Each frontline person becomes a leg and your downline is created under each one. They are often referred to as your left and right legs or business centers.
The payout happens when you have some sort of volume under each leg and they somehow match each other either exactly in volume or by some percentage. Each company has their own method of determining this.
At some point they may limit the depth or volume they will pay out under each leg and a re-entry is then used. This system again benefits from spill over from your upline.
The stairstep breakaway is the oldest mlm compensation plan in use. This is the plan still used by many of those companies who pioneered the industry and are still out there today.
In this system, you can build as wide as you want and as deep as you want but as each leg underneath you reach a certain level or volume, they then break away from you and deal directly with the company.
You are rewarded by earning a percentage based on volume for that leg forever. Of course, as you are building each leg, you are paid a percentage, again based on volume, usually on your entire organization.
Billions of dollars have been earned on the old stairstep breakaway.
Companies may try to sell you on their mlm pay plan alone. You must also take into account many other factors such as product, upline support, company reputation and marketing system before you make your choice of company. It pays to investigate well.
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http://EzineArticles.com/?MLM-Compensation-Plans---An-Overview&id=3546100] MLM Compensation Plans - An Overview
