There are number of different types of Compensation Plans within the network marketing industry. In fact, there are so many different plans that newcomers to the industry quickly become confused and chosing the best one is not easy.
Actually, looking for a “best” Compensation Plan is futile to begin with. There are no such thing as the best plan. A better approach is to find the comensation structure (and company) that is right for you!
Still, it helps to have an understanding of the 4 main types of compensation plans in existence today.
Here they are (not listed in order of importance): 1) The Stairstep Breakway 2) The Unilevel 3) The Binary 4) The Matrix
1) The Stairpstep Breakaway
The Stairstep is a simple plan. You start out at one level and then need to fullfil certain requirements to move “up the ladder”. The steps are usually based on volume usually and for each level you rise, so does your income. The “breakaway” part of the plans occurs when members in your downline reach a certain level. Then they “break out” and form a group of their own, but you usually keep earning a percentage of their volume. Provided you are qualified,of course, by maintaining a minimum volume within your personal group.
2) The Unilevel
The Unilevel is a simple “Number of levels” that the company will pay you. It is similar to the breakaway, except people don’t establish groups of their own and the volume requirements are usually lower.
3) The Binary.
The Binary plan was first used in the 1990s and has become a very popular plan, especially for startup companiers. The Binary derives its name from the fact that you are give a busines center with 2 “legs” and you have a volume requirement to get paid on each leg. There is what is called “balance” in the Binary, meaning you must balance the volume in each leg to make sure you get paid. In the newer binaries, you don’t need to balance the “legs” exactly, but can get away with 1/3 of the volume in 1 leg and 2/3 in the other and still get maximum bonuses.
5) The Matrix
The matrix plan has a fixed number of people in width and depth paying a percentage based on each spot. You can therefore get people placed “under you” by the people standing above you in the structure. Although, this sounds alluring, the fact is that this is usually more a result of luck than anything else. For a matrix plan to work, you still have to go out and build your business yourself.