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MLM Pay Plans

MLM Compensation Plans Explained

Commonly Used Terms

Independent Marketing Consultant (IMC / Distributor)

RANK: The title or classification an IMC achieves in accordance with the Compensation Plan, based on his/her PV, GV and downline structure.

ACTIVE: ‘Active’ is defined as being qualified at any IMC Rank, based on his/her PV, GBV and downline structure. The minimum active rank is ___________. Only Active IMC’s are eligible to receive commissions and bonuses.

COMMISSION CHECKS: are commissions earned by a distributor. NOTE - If the amount is less than $25, no commission check will be issued for the current month and the amount will be carried over to the next month.

DOWNLINE: All IMC’s emanating from and below any particular IMC.

UPLINE: The single line of sponsors above a Distributor and between the Distributor and the Company.

LEG: A first-level (or personally sponsored) line of IMC’s; restated, each one of the individuals sponsored immediately underneath a IMC, along with their respective downlines, represents one "leg."

AUTOSHIP: An optional program in which IMC’s and Customers agree to purchase at least one Commissionable Product per month. AutoShip orders are processed on or about the day you specify each month, and usually arrive within a few days of being processed.

SPONSOR: is a distributor of any rank who is the immediate upline in an Organization from a new or existing Independent Marketing Consultant, and is generally responsible for the day-to-day coaching, encouragement and assistance of the Independent Marketing Consultants immediately below them.
NOTE: The sponsor is the first person in the upline of the concerning IMC.

ENROLLER: is an existing distributor of any rank that first explains the business opportunity to a potential new Independent Marketing Consultant, and subsequently helps them to enroll as an Independent Marketing Consultant. NOTE: The enroller can be anywhere in the IMC's upline, it does not have to be the first person in the IMC's upline. The sponsor and the enroller can be the same person, but this is not necessary.

VOLUME: PV is Personal Volume (personal purchases) and GV is Group Volume (purchases in your organization). Volume refers to the points assigned to products. For example, a case of Product X has 100 points of volume. Commissions are earned on based PV/GV points.

Personal Volume (PV):All Business Volume created by purchases made by the distributor himself/herself.

Total Group Volume (TGV): All Business Volume created downline in the IMC's team to unlimited depth, excluding Personal Volume.

COMMISSIONABLE VALUE (CV): The assigned value of each purchased product on which commissions are paid. It is generally in the currency of the country in which the order was placed (though the eventual commission check may be issued in yet a different currency). Sales aids usually have no Commissionable Value. Commissionable products have a Commissionable Value which does not have to equal the price paid for the product.

DYNAMIC COMPRESSION: In principle this ensures that maximum commissions are paid on every level, usually reserved for the higher levels or ranks.

ACTIVE: To earn commissions you must be Active. You become and remain active by purchasing a minimum of XXX PV during a specified time period. For example, purchasing one case of Product X every four weeks will keep you active.

QUALIFIED: You must also be qualified to earn commissions.This often means you must have at least one personally sponsored and active distributor within your Organization, Leg etc. but it varies frpm one MLM Company to another.

ORGANIZATION: When we refer to your organization, we are referring to all distributors in your downline. Other terms used for this are “tree” and “genealogy.”

BUSINESS CENTER: Your business center is where you are personally placed within the MLM organization. We may also refer to your business center as a position in the organization.In some case, given certain requirements and restrictions multiple Business centers may be made available to the same IMC.

LINE OF SPONSORSHIP (L.O.S) ENROLLER: This refers to those you have personally sponsored, those they have personally sponsored, and so forth.

AUTOSHIP: This optional program allows you to establish a standing monthly order with the MLM Company, often it is used to Qualify your Business Center.
Your product will be delivered to you on a regular basis at the wholesale price.You can put on hold, change, or cancel your AutoShip at any time.

DYNAMIC COMPRESSION: A method under the compensation plan wherein payment of compensation (or a percentage of compensation) is pushed up to the next Distributor at a particular qualified rank.

DIRECT SALES/RETAILS SALES COMMISSION
Retail sales allow you to earn income by purchasing products at wholesale and then selling them at the retail price. Distributors receive the difference between the wholesale price and the preferred customer price as a retail sales commission.

LEADERSHIP POOLS or BONUS POOLS
MLM Companies will often predetermine and set a side a percentage of total sales by rank designation or gross then establish a formula for dividing the Pool amongst Elite Qualified Distributors.

FAST START
This commission pays out ____% on number of levels and is earned by Active IMC’s of any rank and is based on the sales volume of the first order made within 30 days by new customers or IMC’s. It is generally paid weekly.

MATCHING BONUS
Meaning whatever your personal sponsor earns you can earn the same amount usually applied to Fast start Commissions.

GENERATION BONUS
Sometimes referred to as an in "Infinity Bonus" although it' not infinite. Once you advance in rank (Example) > "Silver", you immediately become a generation. You earn an additional X% on all of the CV in your organization down to, but not including, the next "Silver" or above. This is called the Generation Bonus. As distributors in your organization advance to the rank of Silver, new generations are created. You are paid a Generation Bonus of X % on these Silver generations and perhaps on higher ranks as you advance.

Binary Plan See Graphic
All Binary pay plans are fixed width in nature, limited to no more than two frontline individuals for any income center. One of the two frontline is referred to as the head of the “Left Team” and the other the head of the “Right Team”.

Sales volume is then accumulated between each team to unlimited depth. While the methods of qualifying to accumulate volume can vary slightly from pay plan to pay plan, most Binary compensation plans will pay on accumulated volume in one of the three following fashions:

1/3 – 2/3 Plan; this plan type calls for a prescribed number of sales to be present in total between both teams, with a minimum of 1/3 of the required volume present in one of the teams. E.g. 9 total sales with a minimum of 3 in one team pays a $50 commission.
50 – 50 Plan; this plan type also calls for a prescribed number of sales to be present in total between both teams, however it looks for an equal number of sales between teams. E.g. 10 total sales with a minimum of 5 in each team pays a $50 commission.
Weak Leg %; this variation of the Binary pays commissions on a percentage of the sales in the weak leg when a prescribed number of total sales are present between both teams. E.g. have 10 total sales between both teams and you will receive 10% of the sales in your weakest leg (Note: weakest leg being the one with the fewest sales present).

Many Binaries also break payment of commissions down into what are referred to as “Steps” and “Cycles”. The term Cycle refers to the payout of a full commission amount. The term Step refers to increments of Cycle payout intended to get money into a distributor’s hands as quickly as possible. As an example, a company may have a $300 Cycle that pays in three Steps. When 1/3 of the necessary sales havebeen gathered a $100 payout is issued. When 2/3 of the necessary sales have been gathered a second $100 payout is generated and the final $100 is paid when the remaining 1/3 of the required sales is collected.Once sales are paid upon, a Cycle has been completed and those sales are removed from a distributor’s Left and Right team counts.

Unilevel Plan See Graphic

Unilevel mechanics are exceedingly easy to summarize – Unilevel pay plans allow an individual to have an unlimited number of income centers frontline. Beyond that, a Unilevel is essentially rule free. That is, the plan designer is free to add any other qualifications, commissions, bonuses, etc. that he or she wishes to the basic unlimited frontline structure.

Binary/Unilevel Hybrid plans bring two dynamic compensation plans together in one package. The Binary represents the “front end” of the system. Each distributor that joins the company receives a position in the Binary and can choose to qualify it for commissions (or not) at their discretion. The Binary genealogy is built off placement sponsorship and takes spilling into account. For additional information on Binary pay plans and spilling, click on the “Binary” tab in this area.

Binary plans make a great compensation front end due to the excitement and quick, yet substantial, commission checks that they can produce.

While the Binary represents the front end of the compensation plan, the Unilevel represents the back end. As with the Binary, each distributor receives a Unilevel position by default and is automatically eligible to earn retail commissions on the retail sale of product/service to customers. The Unilevel genealogy is built off enrolling sponsorship with no spilling taking place. Unilevel plans are a solid compensation back end due to their ability to build stability in the form of long term recurring commissions.

Matrix Plan See Graphic

A Matrix is very similar to a Unilevel but it limits the amount of people each person can have in their first Level. A Very Popular Kind of forced Matrix is a 3x9 Forced Matrix. With a 3x9 Matrix the most people you can have on Level 1 is 3. Now the most people each of those 3 can have on there level 1 is 3 which leaves you 9 people on your 2nd Level and so on until your Organization reaches a depth of 9 Levels.

   1. 3
   2. 9
   3. 27
   4. 81
   5. 243
   6. 729
   7. 2.187
   8. 6,561
   9. 19,683

* Total - 29,523