Understanding MLM Compensation Plans

Are you thinking about getting into the Network Marketing business? Not all MLM compensation plans are designed the same.

MLM is a wonderful opportunity to have your own home based business and earn a residual income. Here are a few things to think about when researching the compensation plan for your network marketing company.

Understanding MLM Compensation Plans

Ideally you could have done a lot of homework about the companies you are considering joining. You should’ve spent lots of time online trying to find any information you can about those companies.

You might find that all that negative stuff usually comes from failed distributors.

I find that many people believe that MLM was a get rich quick scheme and they didn’t have to do any work! It takes hard work to succeed at anything and MLM is no different.

But did you ever get a straight answer about the MLM compensation plans the company was offering?

Did you even ask? Or, were you too caught up in the excitement?

Even if you did ask, you may still be confused about it. What the heck are they talking about?

Here’s the thing. Most MLM compensation plans aren’t tough to work out if you go over it a few times and essentially pretend, on paper, you are creating a business.

In reality this is often a healthy exercise to do so that you can outline a plan of action and one or two goals over the next 30 to 60 days.

Common Types of MLM Compensation Plans

Although there are a variety of MLM compensation plans, here the most common:

  • MLM Binary Plan: Distributor can have two distributors on the first level. They can build to unlimited depth.
  • MLM Breakaway Plan: The breakaway plan has unlimited first level growth. If a distributor achieves a certain team and personal volume, they can move up a step. When they reach a certain step they can break away from the sponsor’s group.
  • MLM Matrix Plan: Includes a limited first level of 2 to 7 with depths of 5 to 50.
  • MLM Unilevel Plan: Unlimited first-level width with depths of 5 to 15, depending on the MLM compensation plans.

Regardless of which compensation plan you choose, you need to understand how exactly you will make money.

One more thing to consider when comparing MLM ompensation plans is what happens when you sponsor a big hitter – somebody who get in, gets busy and builds a very huge business fast.

Are you going to get paid fairly for their efforts or, as in several binary programs, do you need to get a second big hitter to balance the effort to get paid?

This is the deal, it’s best to select 2 corporations and have a good look at their MLM compensation plans comparing one to the other. It’s down to you to figure out which plan will help you achieve your own business goals.

No matter what network marketing company you choose, you will need to find and talk to lots of people in order to build your business.

Regardless of the type of MLM compensation plans,  you’ll need a solid plan to find people. CLICK HERE to learn about a 5-Step Profit System that all the top leaders use to generate leads.

Check these out!


  1. Lynda Kenny says:

    Thanks for sharing this Lisa. Most people find compensation plans either difficult to understand and some are not bothered about finding out more until they join.
    Lynda Kenny recently posted…The Trick Of Being Ordinary When Marketing OnlineMy Profile

  2. Thanks Lisa for breaking down all the mlm compensation plans!! These are so important to understand if you want success in your online business :) Great post!!
    Joan Harrington recently posted…How To Use Facts And Emotion To Nudge Your Readers To BuyMy Profile

  3. sheena says:

    i only know binary since i have been in a company that had that compensation plan but thanks for explaining the other ones
    sheena recently posted…5 Email Marketing Tips To Increase Open RatesMy Profile

  4. Ron Deering says:

    What an excellent post and description of the different compensation plans … great post Lisa…. Thanks for sharing.
    Ron Deering recently posted…Comment on [MLM Success Tip] Consistency Creates Longevity by Lynda KennyMy Profile

  5. Thank you for the post! I’ve only used one way but it’s good to learn the others! Appreciate the education :)
    Jeremy Wright recently posted…How To Beat The Joy ThiefMy Profile

  6. Steve Krivda says:

    Love the breakdown of the 4 comp plans :-)
    Steve Krivda recently posted…Avoid Business Failure – Advice From A FishMy Profile

  7. Great post today! Really insightful to how they work. So many get bogged down with this detail and never get going. This is sure to help those work them out.
    Matt Remorino recently posted…How To Create YOUR Posture For SuccessMy Profile

  8. sonia says:

    Thnk you for this information. Compensation Plans are so important, and hard to understand many times. Thank you!

  9. Gary Bledsoe says:

    Thanks so much for sharing the differences in some of the common MLM comp plans; I still learning some of them. In addition, you are so right, to build a big business you have to talk to a lot of people. GREAT POST!!
    Gary Bledsoe recently posted…I HATE STRUGGLING TO SUCCEEDMy Profile

  10. Wow thanks so much for sharing these tips Lisa I didn’t realize I had been part of 3 of them thanks for sharing the differences!
    Lynette Bledsoe recently posted…7 Tips On How To Balance A Full Time Job And Your Network Marketing BusinessMy Profile

  11. Very informative post about mlm compensation plans Lisa! Thanks!
    Dereco Cherry recently posted…Beginners Guide To Cold Market ProspectingMy Profile

  12. Nancy Loehr says:

    Thank you for explaining the compensation plans. I know it’s important to learn this and I was not clear on it before. Good information !
    Nancy Loehr recently posted…What To Do If You Are Suffering From Decision FatigueMy Profile

  13. Vitaliy says:

    Hey Lisa, thanks for sharing, great post about compensation plans!
    Vitaliy recently posted…6 Tips That Will Help You Position Yourself As The Leader And Authority In The IndustryMy Profile

  14. Dustin Grant says:

    Hey Lisa thanks for sharing these compensation plans. Some comp plans can be complected!
    Dustin Grant recently posted…Free MLM Leads In InstagramMy Profile

  15. Mike says:

    Hi Lisa! Great post and your view on how must don’t discover how they will earn due to the excitement and rush of emotion… Always an important factor in business!
    Thank You for your Leadership!!!


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