When you are contemplating on whether or not to start an MLM Business, it is important to know the difference between all the MLM compensation plans available. It is impossible to include all the types of compensation plans available and their slight differences. Only the most common plans will be covered here.

A popular compensation plan is called the Uni-level compensation plan. It is popular because it is the simplest to understand. You may have unlimited amount of distributors on your 1st level and probably 5 to 6 levels below you, with a percentage of sales paid to you on each level.

A variant of the unilevel plan is the matrix pay plan. The only difference between a unilevel and a matrix pay plan is that you are limited to how mant people you may have on your first level. You may only be allowed to place 4 people on your 1st level, all other people you signup will be placed in the closest available position of your downline. This type of pay plan promotes teamwork......the very essence of what Multi Level Marketing should be.

More and More recently the 1up and 2up MLM compensation has been used to create quick and large profits. A distributor can make ALL the commision on the product sold. There is no commission paid on levels which allows this. Once a person has qualified by making their 1st or 2nd sale and passing all that commission up to the next qualified person, they now make the whole commission for themselves on any subsequent personal sales and those unqualified beneath them. It is possible to be paid on infinite levels, however since there is no monthly requirement to order product, the system is reliant on bringingnew sales or distributors in.

A Binary is another type of compensation plan. Generally, all a person has to do is build 2 legs or in otherwords 2 lines of distributors. This sounds great on the surface, but the balancing act one must perform between the 2 legs is difficult. Often you only get paid with let's say 6 paid distributors on 1 leg and 3 A recent innovation is the paid distributors in another leg. Most people can get 1 leg going with a strong upline, but find it difficult to get the 2nd leg started.

I only mention Straightline Powerlines because this MLM compensation plan is gaining in popularity. It seems so attractive.......just one straight line down, each distributor on top of another. Wow......what teamwork! The problem is that the requirements to get paid are so outrageous, you make very little money. The author STRONGLY discourages you from participating in one.

The dinosaur of compensation plans is the stairstep breakaway plan. While most of the MLM Community shuns these type of plans, they have the potential for the largest payouts. Some people involved in these type of plans can literally make 100's of thousands of dollars monthly. You make a certain percentage of money based on your group volume......generally up to 25%, and then get paid in depth multiple levels deep based on your breakaway downliners ENTIRE group volumes. Some of these plans can pay breakaway or infinity bonuses 20, 30 or more levels in depth! This is where the security and big money comes from. I consider this the best MLM compensation plan.

This has just been a starting point for you to understand MLM compensation plans. You are going to have to make a decision on which MLM compensation plan to utilize based on your own circumstances.

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