MLM Compensation Plans

By: Doug Firebaugh

Show Me the MLM Money!

What should you look for in an MLM Network Marketing Compensation Plan?

Simple answer:


That is what drives the MLM industry: The quest for a better life, a better future, and a better income.

Why did you join your Network Marketing company?

For something to do?

Yeah, right.

That is why 99% of all folks who enroll in MLM companies join for a better lifestyle, and the hope of making more money is what drives the industry.

Every company has a way they pay their distributors, known as a “Compensation Plan", or “Comp Plan". Every company has one and that is how you are paid by the volume you have created by the Compensation Plan.

You go out, and create Volume of sales, and you get a certain percentage of the sales. Most plans focus on the sale, or movement of products and services to the marketplace, and that is what drives the wealth vehicle.

There are different types of Comp Plans to know about and consider, and there are many more Hybrid forms. But generally there are 5 different types, and you need to really understand the Plan that your company has.

There are 5 Types of MLM Compensation Plans, and the 5 Basic Kinds of Compensation Plans are:

1) The Stairstep
2) The Unilevel
3) The Binary
4) The Breakaway
5) The Matrix

Here is a very simple and brief explanation of each:

1) The Stairpstep

The Stairstep is a simple plan that has requirements that you must meet to get up the “Stairs of Success". Each stairstep is a promotion based on Volume usually, and each promotion you make more money. Usually you must qualify each month for the rank you obtain to get paid at that rank. And the stairstep usually has a number of levels or generations  it pays down to.

2) The Unilevel

The MLM compensation plan called Unilevel is a simple “Number of levels" that the company will pay you, and usually there is no promotion or rank. You make money by getting a certain override off of the volume, and usually there is a requirement of volume to qualify for a check.

3) The Binary.

The Network marketing compenation plan called Binary is an interesting design for a Comp Plan.

It usually has 2 “legs" that you can have “Business centers" in, and you have a volume requirement to get paid on each leg. There is what is called “balance" in the Binary. You must balance the volume from each leg to make sure you don’t have a runaway leg. If one leg explodes, while the other one sits idle, you must balance the two with certain volume requirements for each center, and you usually can override the same volume a number of times with different business centers.

4) The Breakaway.

This MLM comp plan has been said to have become somewhat unpopular in the industry, as you could lose the business you build, once it gets to a certain level of success, and it “breaks away" to no longer be a part of what you get paid on. It usually is a stairstep type of Plan, but I have seen it in others as well. I disagree. It is a good plan for those who work it.

5) The Matrix

The matrix is a computer driven plan that people are put into your group by computer, and they go in the next available slot. Usually this plan is combined with some form of a Binary, and it does work well if there are a lot of people that are recruited. When you recruit someone, the computer searches down for the next open slot, and positions them there. There are some plans that allow you to override the computer’s selection if you want them to go a particular place in your downline.

Ok. So now you must choose what kind of plan you feel you want.

Once you join a company, see your upline if you have any questions at all, and get familiar with the plan you have and how it works.


DO NOT get too complicated about Compensation plans. Keep it simple and make sure you understand that you CAN MAKE MONEY with it, as that should be a great concern.

The 4 General Areas of a Network Marketing Compensation Plan.

Generally, when you consider an MLM Compensation Plan, you will want to know about 4 general areas about it that many people will want to know about:

1) The First area is Retail Profit.

You must show the prospect that they can earn a retail profit with your products and services. Usually it about 40-50%.

2) The Second Area is Team Overrides.

This is where, just like a Real Estate broker, or Insurance Broker, you can develop a team of Reps and help them become successful, and get paid a certain % of override off of them, just like the Real Estate and Insurance Brokers do. You are sort of a “Master Broker" for your company, and help others do the same thing. This is where most people have trouble with MLM. They don’t understand that what we do is just like a Real Estate or Insurance Broker, only better.

3) The Third Area is Leadership Bonuses.

This is where you help develop Successful leaders in your group, and you get an additional bonus or override from your group. You get rewarded by helping others develop their Leadership, which is the most fair compensation in the world.

4) The Fourth Area are Rewards -- like trips and cars.

This area is a favorite among Network Marketers. Once you have reached a level of success, many companies will give you an additional car payment money, and also take you on trips that you can qualify for which is a great incentive to work!

Be sure you understand the components of the Network Marketing Comp Plan you choose. Tis was just a VERY General Overview, and that is all.

Again…..KEEP THE COMP PLAN SIMPLE. Show me the money should be your battle cry!

The More Simple you keep itArticle Submission, the more powerful it becomes in MLM and Network Marketing.


doug Firebaugh 

 PassionFire International

copyright 2005/ all rights reserved

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