Amway mlm compensation plan
As early as the mid-1800’s, multi-level marketing was already taking shape in the US. Only, it wasn’t known or called “MLM” yet. From simply selling a product for someone, business owners eventually “passed on” their business to others who believed in that company and would like to earn a substantial profit as well. One of the first things people research about MLMs is the compensation plan. Amway, having built a fine reputation in the multi-level marketing world, is one of the biggest names today. Let’s take a quick look at their compensation plan. The Amway Compensation Plan With Amway’s MLM, you can profit in 2 ways:
- Your immediate income – this just means that you purchase Amway products at a discounted price and then sell them at the suggested retail price. The good thing about this is you get to decide how much you want to sell your products for. The profit you will get totally depends on you.
- Performance Bonus (PB) – For every sales you get, you receive a corresponding commission. Your Amway MLM starts growing with the PB, especially when you start forming your downlines.
To better understand how the Performance Bonus works, let’s first breakdown some of the terms they use: Point Value (PV) Each time you purchase Amway products – whether for your own use, or resale – you get a Point Value (PV). PVs are simply assigned points to each Amway product. Business Volume (BV) Business Volume is just the value in dollars assigned to each product. BV is determined by the number of orders you or your team makes. Performance Bonus Schedule (PBS) This is a table of your PVs with their corresponding percentages. The more points you have, the higher Performance Bonus you’ll get.
Performance Bonus Schedule
7500 or more PVs 25% PB (your commission)
6000- 7499 23%
Pass-up Volume (PUV) Pass-up Volume (PUV) is the BV of each of your frontline, meaning the sales made by the first people you recruited in your Amway team. This value is added to your own BV in calculating your Gross Performance Bonus. Performance Bonus (PB) One of the requirements in moving up your MLM business is having a good Performance Bonus. PB is the commission you get from your BV. To get your PB:
PB = BV x PBS
Simply put, if you have 2500 PVs, you get 18% PB basing on the PBS. That means a BV of $5000 gets you 18% commission, which is equivalent to $900. That’s not including your immediate income yet. I wish Amway’s compensation plan was as simple as that. However, remember that when you have a team, you also earn from their performance. Once you have downlines, their compensation plan has additional computations. Quoting from Amway’s Business Reference Guide:
To figure your gross Performance Bonus, you add the Pass-up Volume from your frontline IBOs (those you personally registered) – both PV and BV – to your personal PV and BV, then make your calculation according to the Performance Bonus Schedule. However, any Performance Bonuses earned by your IBOs, using the same Schedule, must be subtracted from the gross amount to arrive at your net Performance Bonus. In addition, you will at least be at the same percentage bracket as your downline.
Personally, although the computation may seem overwhelming, the compensation plan of Amway is not that complicated, but not very simple either. You sort of get the hang of it after a few reads. It’s not clear how much the start up cost is when you join Amway. From third party sources, the start up cost ranges from $175 to as much as $800. In addition, there are no official sources on how much a PV is. Some feedbacks say 100 PVs is about $200. According to Amway’s Business Reference Guide, there are about 66% active IBO’s and that active IBO’s monthly income averages at $155. By “active”, they mean “an IBO attempted to make a retail sale, or presented the Amway Global Independent Business Owner Compensation Plan, or received bonus money, or attended a company or IBO meeting in 2001”. If there is one thing you may appreciate about Amway, that is they have an available reference online. With the exception of how much the start up cost would be for those considering to be an IBO, you can already have substantial details from their Business Reference Guide, complete with Amway’s compensation plan, how to manage your business, and more. For a start, that is good enough.