Types of MLM Compensation Plan

The compensation plan is usually the first thing you look into when researching a multi level marketing opportunity. With so many multi level marketing opportunities around today, it is important to understand that not all compensation plans are created equal. The first thing to look into with any MLM (Multi Level Marketing) compensation plan is, will it meet your needs and any desires you may wish to fulfill? The second thing to look at a compensation plan for is a realistic view. What will it take to be compensated at the level you wish to be? How long of a wait until you get to that level? How much time or energy are you willing to put into the project in the first place? Answering these questions will help you decide if the compensation plan for that specific MLM is worth it for you.

Compensation plans very greatly. Some of the different types of compensation plans are as follows:

Binary- This is also known as the “leg” system. Basically, those under you who generate sales counts towards your compensation.

Unilevel- Unilevel is probably one of the easiest to understand compensation plans. With a set number of levels that have unlimited width it is a great plan for those less knowledgeable in the world of multi level marketing.

Matrix- There are various forms of the matrix compensation plan. Some like this system and some simply don’t want to have anything to do with it. The advantage lies in the spill over effect since only a certain number can be on the top levels, people can easily have compensation from those who they had no part in bringing to the company.  The matrix can actually be a great compensation plan if you are familiar with how it works and what form you are working with in your particular MLM opportunity.

Stairstep - Last but certainly not least in any way, this compensation plan is the most common in the MLM industry. This compensation plan accounts for most of the bigger profits in MLM companies. This form which is a breakaway form is pretty basic. When you reach the level that gives you the opportunity to break away and become at the top of your own stair steps, you may bring those who are on the steps below you with you. In some cases the person you break away from can keep someone from your chain as compensation for you breaking away.

Whichever compensation plan you work with it stands to reason that there are pros and cons to all of them. You can make any of them work for you with a little knowledge and the willingness to work towards your goals.

By Richard Quek