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Income in Network MarketingThe income in Network Marketing is derived from retail profits and bonuses. However, the exact amounts paid are worked out on what is generally called a Compensation Plan. Now, many of these are pretty incomprehensible unless you have a degree in math! You need to talk this through with your prospective sponsor. Then give it much thought and go back with questions. I have found that the Compensation Plan becomes crystal clear once you are working within the chosen company. At this point it’s too late if you don’t like it so don’t rush in. Take your time to understand the whole financial set up even if you can’t get your head round the Compensation Plan. General types of Compensation Plan: Binary Your first level distributors will be limited to two producing two long legs which reach into infinity. Breakaway You may have an unlimited frontline with a restricted depth. Matrix This has a restricted width and depth. The first level will probably be between 2 – 7 and depth anywhere between 5 and say 50 levels. Unilevel You can have an unlimited number of first level distributors. Depth is normally limited to between 5 and 10 levels. There are also various mixes of the above and no two companies will have exactly the same plan. Be wary of companies which offer a payout of more than 60%. The products are probably very much overpriced unless the company is marketing a unique product or service. In most Network Marketing companies it is necessary to qualify each month by reaching set quotas in order to receive payment on bonus levels. Find out what this is and be sure you can meet it. Income must not come from recruiting others. In many countries this is illegal – and rightly so. You are not running a business – you are involved in a scam if payment comes from recruiting. So make sure that the company you are considering pays out on the movement of products only. Apart from straightforward personal retail profit you will be paid on volume of retail. People in your team will produce more volume on which you will get a percentage. High levels of income do not just fall into your lap. They are achievable but effort is required. This is a business where income reflects effort although not necessarily immediately. It often starts slowly and builds gradually and as you improve your skills it will gain momentum and that is when things start to get good. How can a Network Marketing company pay so much to its distributors? Well now the question should really be: How come conventional companies pay such low wages? Well this is what happens with the product in this case: The company supplying products > Advertising > Sales reps > Shops > Staff > Consumer All these parts of the chain have to be paid. Some parts are extremely expensive such as advertising. Now let’s come back to Network Marketing. This is much simpler: The company supplying products > The distributors in the network > Consumer I think you can see how a very high percentage can be paid out in bonuses and this is how the high income is achieved. In Network Marketing the company provides and delivers the product or service. Everything else is achieved by the distributors. Advertising of the product is non-existent. The distributors show and share both the products and the opportunity to friends, family and others they actively seek out.
What is Network Marketing?
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