The Amway Compensation Plan: A Review
Amway is a multilevel marketing company that sells various products using network marketing. This a globally competitive company, with branches located in over 80 countries and a fast increasing market in countries like China, Russia and India.
Amway’s line of products include home and personal care products, Nutrilite dietary supplements, jewelry, electronics, water and air purifiers, insurance and cosmetics. This company is ranked by Forbes Magazine as one of the largest private companies based in the United States.
The company provides income to would-be entrepreneurs by first making them register in the Independent Business Owners Association International (IBOAI). This advocacy organization was established for Independent Business Owners (IBOs) who are affiliated with Amway. Hand-in-hand, these IBOAI and Amway caters to the business needs of IBOs such as products and promotions or operations and business guidelines.
IBOs who become affiliates with Amway earn money using Amway’s compensation plan. This compensation plan is known to be one of the oldest plans developed in the business industry. Being one of the oldest plans to ever be developed, Amway’s compensation plan is not the easiest plan to understand. It also takes a little more patience before an affiliate receives a substantial income. Despite this, one must also consider that if the plan has existed this long, then chances are, it must be a good plan.
The Amway Compensation Plan allows Amway affiliates to earn either by selling Amway products to consumers, or by recruiting other people to become Amway affiliates as well.
If an affiliate chooses to earn money via retail sales, then he or she gets about 20% – 35% of the income if he or she sells products at Amway’s recommended rate. However, Amway affiliates may choose to increase or decrease the prices of the products they are selling, hence also affecting their income. To qualify for a bonus, affiliates must earn a total of $100/month or 50PVs. However, this amount of sales does not equate a huge profit. Hence Amway affiliates are still encouraged to produce more sales. Each Amway product sold by affiliates has its own point value or PV. PVs come into play when Amway affiliates want to earn bonuses from the people they have recruited.
Based on their sales, Amway affiliates are classified as Silver Producers, Gold Producers, or Platinum or Direct Producers. Silver producers are affiliates who gained their maximum bonus within a month. If an affiliate reaches his maximum level for 3 months, then he is called a Gold producer. If the same feat is achieved for 6 months, then the affiliate is called a Platinum or Direct Producer.
The Amway Compensation Plan offers another way of earning income, and that is through their recruits. Each Amway product has its own PV but it also has a BV or Business Volume. A BV is the wholesale cost of the product or service. An affiliate can earn between 3% – 25% depending on his BV.
To see how both PVs and BVs work, consider the following scenario: If within a month Sponsor A manages to sell about $375.00 and garnered 158 PV with $325 worth of BV, then your monthly bonus becomes equal to $11.25. This is because as mentioned above, if an affiliate has 100 PVs he is entitled to 3% of his BV. As Sponsor A’s sales increase, so would his PVs, and eventually, his pay outs.
In the Amway compensation plan, an affiliate becomes called a sponsor if he or she manages to recruit another person into the company. That recruited person becomes the first member of the affiliate’s downline. When a sponsor manages to recruit several people, the recruits become collectively known as a group. If the sponsor has a recruit, and that person also manages to recruit someone else, and so on and so forth, then that downline becomes known as a leg.
As stated in their compensation plan, Amway classifies its affiliates into levels, based on the sales of their respective legs. If an affiliate has at least three legs generating Silver Producer volume at least 6 mo/year, he becomes part of the Emerald group. Meanwhile, a Diamond affiliate is a member that has at least six legs generating Silver Producer volume also for 6mo/year.
Details of Amway’s compensation plan are best explained by Amway members themselves. However, one must understand that this compensation plan is not a get-rich-quick scheme. This means that even if Amway gives a person the power to be his own boss, want-to-be affiliates must still work hard to get to the top.