Which Compensation Plans Are The Best?

With hundreds of network marketing companies in the world and every company having its own unique plan, it’s sometimes hard to work out which plan is the best. From stair steps, to unilevels, to matrix, to binary plans and forced matrix plans, sometimes choosing a suitable plan for you to work with can be confusing. Each type of plan has its advantages and disadvantages.

Let’s have a look at the two basic components of compensation plans: binary systems and unilevel plans.

Binary compensation plans are plans in which the payout is based on two “legs”. The reason why lots of starting marketers feel attracted to the binary compensation plan is mostly because it’s easy to understand. The amount of money paid out is often based on the volume of product that you sell. In many network marketing companies people take it for granted that the upline builds one of the two legs for his downline and that’s mostly where the problems start. If a newbie is told by the one who sponsored him that the upline will build him or her at least one successful “leg”, then in reality the newbie only needs to work one leg him- or herself. If the upline doesn’t even succeed in that one leg, how can you expect that a newbie succeeds in his’ or hers’?
The things mentioned above aren’t the only worries… In this sort of compensation plans you get paid out based on the volume of your least profitable leg. What happens to the revenue generated by your most successful leg? Well, all that money goes to the company or bonuses for the top levels. Maybe some of the revenue will be paid out for bonuses, but the problem here is that if you’re not successful enough you will never see any of that money returning to you.

How about the unilevel plans? In theory, most unilevel plans seem interesting. However, there are a few pitfalls. In unilevel plans you get the chance to build as many legs as you want. Great, isn’t it? You can build your organisation as wide as you want and in most cases you get paid out until 8 or 9 levels deep. Because of building your organisation widely this generates a very large amount of potential income. When you enrol a new rep, you can choose to place him wherever you want in your organization.  The danger here is that some distributors can get lazy and think that they will achieve success because they have a wide organization.
In most unilevel plans you need to qualify for a certain rank, so that you can get a paid out on all the levels you created. In most cases, this is not the main worry as most people aren’t building deeper than they have the ability to qualify for. Successful distributors will make sure that they are building their organization wide enough so that their access to potential payout is assured. When achieved a certain rank, they will even cash in extra bonuses, next to their unilevel payout of course.

Compensation Plans: Conclusion

When thinking about joining a certain business it’s very important to weigh the pros and cons of the compensation plan. What all plans have in common is that you need to have depth in your business. If you have depth, everyone in your organization will profit. What you need is a plan that pays you on every bit of volume that is within your business and encourages you to build deep.

With Unilevel compensation plans you can build as wide as possible and in that way you will be sure that you are building a firm and trustworthy organization. With Binary systems your income depends on whether you’re able to balance your two “legs” or not. Your income will be calculated on your lowest “leg”. In many businesses with a binary system the upline is silently expected to build one “leg” for his or her downline. In these compensation plans, when there’s one leg that’s not doing well, you will be losing a lot of money.

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