The network-marketing industry loves to inflate numbers. Companies attract representatives with promises of high commissions. They claim, “Nobody pays more than we do.” Often, the numbers tell a different story.
I have never encountered a single company or conference that didn’t inflate its numbers to some degree, and many of them take numbers that are already outstanding and double or triple them. Nowhere is this inflation more prevalent than with commissions.
If you’re considering signing on with a network marketing company, what type of earnings can you actually expect?
The Money Needs to Come From Somewhere
Occasionally, the high commissions companies promise are real. However, even when that’s the case, it should be a warning sign. A company’s balance sheet needs to add up. All the costs related to product creation, shipping, warehousing, recruitment, bonuses, and commission must add up to less than the product’s price. As a result, any commission above 45 to 50 percent is probably being paid out by the company’s investors and partners.
For example, on a twenty-dollar bottle of vitamin C, a commission of fourteen dollars simply isn’t sustainable. You can’t run a company on the remaining six dollars per bottle. If anything, the high commission is evidence that the product is inferior, or the company is fraudulent.
It’s only possible to offer high commissions if the product costs very little money to produce, which is another reason for the popularity of cryptocurrencies among scammers. Since cryptocurrencies have no costs to recoup, massive commissions cost nothing. A scammer can sell a hundred-dollar token, pay a seventy-dollar commission, and still make thirty dollars in profit. In this case, high commission is nothing to brag about.
The highest commission rate I’ve ever seen was a claim of 76 percent from Entertainment Express, a Scandinavian company that, for some reason, sold DVDs in the internet era. They even managed to pay the commission—for about eleven months. Eventually, the government found that they weren’t producing anything. Entertainment Express was a stereotypical Ponzi scheme where established buyers were paid with money collected from new buyers. It’s a money-making scheme that will always fail sooner or later, so the goal of company leaders is to make as much as possible as fast as possible before the pyramid collapses.
“We Are the Only Ones”
Another common claim usually sounds something like this: “We’re the only company offering this kind of commission plan with this specific benefit.” For example, “We’re the only company offering the chance to earn a free car.”
Any time they are called on this lie, they simply add to it. “Sure, other companies might offer you the chance to earn a free car, but we offer the widest variety of makes and models.”
In reality, almost every commission plan is duplicated numerous times by companies throughout the industry, and like most lies, this can be easily verified online. Sometimes the promised benefit is almost impossible to obtain—more theoretical possibility than reality.
The more outlandish the benefit, the more suspect the claim. Companies love to invent catalogs of awesome rewards that partners can earn, and link them to a goal that’s impossible to reach. A few companies offer private islands in exchange for $500 million in team sales, or a private jet and villa if you hit $100 million in sales a month. Frankly, if the benefit is not in reach, it’s a lie.
Even if you do manage to reach a crazy sales goal, the company might simply add additional hurdles. If you reach half a billion in sales, they might come back and say, “At least 40 percent of the sales have to come from a single organization.” They will find a way to keep from giving you that private island.
A Realistic, Better Approach to Compensation
Ignore any outlandishly high commission offers and instead look for a plan that relies on performance. A wide but realistic range might be between 15 to 50 percent of your sales. There’s no such thing as easy money, but you can find excellent opportunities to make good money if you’re willing to work harder to earn more.
Fortunately, some network marketing companies have started using an honest approach. I’ve heard numerous ethical pitches that reveal average income based on a partner’s stage on the career ladder. I like this approach because it gives people realistic sales targets for beginners. Providing average earnings for each rung of the career ladder, along with the average amount of time it takes to climb each rung, all of it backed up with data the FTC requires of companies in this industry, creates the clearest and easiest picture of potential earnings.
Find companies that offer commission plans that make sense for both you and the business, and you’ll be on the path to a good-faith, long-lasting, financially rewarding relationship.
For more advice on network marketing, you can find Manipulated on Amazon.