MLM Compensation Example

How Multi Levels Work

MLM compensation example.

Let’s examine how you get paid for the orders in your organization.

We will use the matrix provided on the How You Get Paid in MLM page as our MLM compensation example.



Keep in mind, this is only an example, with a totally fictitious product and payout.

The point is not to tell you this is what you will earn in Network Marketing, but more to show you how Multi-Level Marketing works, and what is possible.

Your results will vary completely based on what company you choose, how they are structured, and how much work you put in.

Ok, here we go.

Lets say your main product costs $40. Each month, every distributor pays $40 to receive their product. Of that $40, let’s make $20 the commission.

The commission breaks down as follows:

Level 1: 50% or $10
Level 2: 5% or $1
Level 3: 5% or $1
Level 4: 5% or $1
Level 5: 5% or $1
Level 6: 5% or $1
Level 7: 25% or $5 bonus level (because this should be the largest level of your downline)

So you would make half of the commission on the item, each month, by those on your first level.



But wait! I hear you.

You are thinking to yourself "Why should I give up half of my commission! I did all the work!"

Using the same example of recruiting three people personally, if you were to get 100% of the commission, you would earn $60 each month.

But, breaking the commission into 7 levels, assuming that each of the three people you enrolled enrolled three people of their own, who in turn enrolled three people, all the way through your 7 levels, you would earn the following:

-You-
Level 1: 3 people, $10 each = $30
Level 2: 9 people, $1 each = $9
Level 3: 27 people, $1 each = $27
Level 4: 81 people, $1 each = $81
Level 5: 243 people, $1 each = $243
Level 6: 729 people, $1 each = $729
Level 7: 2,187 people, $5 each = $10,935
Total in organization: 3,279, Total monthly income = $12,054

Now that’s a far cry from $60!

Ready to Choose Your MLM Company?

Again, keep in mind that this compensation example is purely fictitious, with a made up compensation plan.

Each company and product will vary.

But this compensation example is the general idea behind Network Marketing.

Also, realize that the MLM compensation example above is a "Perfect-World Example", that is, it will never happen.


You will sponsor many people who will claim they want to make money, and build a business, but will expect it to happen to them, instead of them making it happen.


Some of these people will blame the company, or even you, for their MLM failure.

The truth is, they were not motivated to make a change in their lives at this time.

But some people will go out and sponsor dozens, or even hundreds of others!

And some of those they sponsor will do the same.

Do you know the 80/20 rule?

80% of the results are accomplished with 20% of the effort.

This applies to Multilevel Marketing too. 80% of your organization will be built by 20% of your downline.

I hope this MLM Compensation example goes a long way towards furthering your understanding of Network Marketing.

My MLM Companies

Choose Your MLM Company

Leave MLM Compensation Page and Return to MLM Page