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5 Different Ways You Get Compensated in Network Marketing

If you're interested in trying out network marketing,

the first thing you should learn about is the different

ways a company can compensate your efforts. Take the

time to understand how each compensation method works

before making your choice.

Binary Plans

Network marketing companies using a binary compensation

plan often have two types of product lines or businesses

to offer. The general aim of binary plans is to ensure

that each leg achieves the minimum quota for sales. If

only one of the leg reaches the minimum quota, youll

actually lose money because of it.

In most cases, one branch is referred to as the power

leg while the other one is called the profit leg. In

power legs, there's an automated system that determines

where new members get placed. In profit legs, however,

the person responsible for having the new members

enrolled reserve the right to determine where they get

placed.

Stair Step and Breakaway Plans

Although these are two different plans, they are usually

combined by today's network marketing companies. With

the stair step structure, new members start off as

distributors and get to climb up the networking ladder

according to how much they're able to sell. Naturally,

every promotion offers more benefits. With breakaway

plans, a member that reaches a certain level can break

away from his current network and start one of his own.

Labels used for various ranks in this type of

compensation plan differ from one company to another.

Stair step and breakaway plans are driven by performance

and volume rather than the sheer number of recruits you

have. Tupperware and Amway are just a few of many

established network marketing companies making use of

this plan.

Matrix Plans

People have varying opinions about what matrix

compensation plans are. For some, this is a compensation

plan in which a computer program is utilized for

deciding a new members placement and position. This

decision may, however, be overruled.

For others, matrix plans are those that restrict the

width of every level in a distributor's tree, similar to

how things in binary plans work. Lastly, some people

consider matrix plans and matrix schemes to be one and

the same. Also known as escalator, elevator, and ladder

schemes and matrix sites, a matrix scheme is where

products may be exchanged for money together with a side

bonus of being waitlisted for better products. This last

definition is considered unsustainable by the UK's

Office of Fair Trading.

Uni-Level Plans

Unlike binary or matrix plans, there are no promotions

to work for and there are no limits to the width of the

levels that make up your group. On the other hand, you

can only expect a fixed percentage for each level,

regardless of whether you went past or met the minimum

sales quota.

Differential Pay Scales

In this type of compensation plan, you can expect to get

higher commissions or overrides if, for instance, you

have a higher pay level compared to those occupying legs

above you.

Last but not the least, network marketing companies also

hand out bonuses to distributors or managers with

exceptional performances. People who display impressive

leadership qualities and those who able to successfully

train members of their group are usually given cash and

non-cash incentives. What do you think then? Have you

chosen which network marketing compensation plan is

ideal for you?

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