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A Look at Multi-level Marketing Compensation Plans

May 18, 2008
Multi-level marketing businesses are popular primarily because of their attractive compensation plans. There are different ways a multi-level marketing pays their members. Some pays them outright. Others pay bi-monthly and still others cash out all the member's benefits on a monthly basis. Actually, it really doesn't matter how seldom or how frequent a company pays their members. What's more important is that they pay on right on time at all.

The attractive compensation plans of multi-level marketing companies come from different streams. The first, and usually the most important stream is the downline stream. A lot of MLM's pay their members for every recruit that they generate. This is especially true if the MLM business requires for some sort of registration fee, setup fee, or sign up fee from the new members. For example, if new members need to pay $10 to join the program, their direct referrer will earn anywhere from $1 to $5 as per agreed upon. This means that the more people you recruit, the more commissions you get.

Another income stream would be through your direct sales. Most MLM opportunities revolve around the promotion of a certain service or product. And so whenever you successfully closed a sale out of your own sheer marketing efforts, then you will be paid a certain percentage of the total sales you managed to post. If you were able to send a total sales amount of $120 for the whole month of April and the MLM company pays you 30% of your sale, then you'll have $36 more in your next payout. This is paid to you on top of the commissions you gained from your recruits.

MLM companies also pay you for the activities of your downlines. If all of your downlines managed to make an aggregate sale amounting to $100 and the multi-level marketing compensation plan says that you are entitled of 10% commission for that, then you should have $10 out of their marketing efforts. This is a good compensation plan because this is what can give you residual income. For as long as your downlines are active and are doing their part, you should be able to collect income from the MLM company regardless if you work or not. Some programs even allow to downline sales commissions up to 3 levels deep.

These are the three major income streams of an online multi-level marketing business. There may be others still. The other compensation plans are usually implemented on a certain company alone and not across all MLM's. This is actually where MLM's become different. Other MLM opportunities would pay you just for the three basic income streams stated above. But there are others that would think of other creative ways to pay you so you'll be more enticed in joining their program.

One creative way to earn is through the mere promotion of the splash page. Although there are only a few MLM companies that actually pay a few dollars per thousands of impressions, this is still a convenient way to earn through this stream. If you stumble across an MLM company that pays you as you promote the main site, then you are actually paid for promoting your affiliate link, which directly benefits you as well.

MLM companies are getting more and more competitive these days as far as compensation plans are concerned. It is upon you to actually choose the one that would maximize your earning potential.
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