Originally Posted by bibleman
Let's play with this for a minute...
You are saying that if a company sells bouncy balls that normally cost someone roughly $5 at their local sports store...but in order to participate, you are required to buy the $5 ball for $10 in order to have a commissionable payout split 5 levels...and further, that you are required to buy a new $10 bouncy ball every month in order to collect the commissions on your own sale of bouncy balls (mostly to other distributors who are recruiting their own distributors/customers) that it is a pyramid scheme.
BibleMan,
1) USANA distributors would be required to purchase $100 worth of bouncy balls every four weeks in order to participate in the compensation plan. (There is no way for a distributor to make a single penny if they don't make these required purchases)
2) Normally these bouncy balls retail for $5, but USANA sells them to their own distributors for $10 and tells its distributors they could then resell it for $15 and make a profit margin. (Obviously the notion that a distributor could retail the bouncy ball for a profit is nothing but lip service and does not happen in the real world)
3) 40% of the price of each bouncy ball ($4) goes toward paying out commission to as many levels as it takes to max out the given leg. If you string together a line of distributors all on the left leg, and each distributor purchases their required amount of bouncy balls for the 28 day cycle, then the commission gets paid up 50 levels before maxing out. This is much higher than the 5 levels you mention.
4) Since commission payout is only calculated based on the lesser of your two legs (the balancing act), it ensures that USANA will never pay out too much (helping to ensure a 40% distributor incentive rate).
5) Since a perfectly balanced BINARY MLM structure yields a 87% guaranteed profitless rate (not including other business expenses than the required purchases), and since balancing your downline legs is virtually unheard of and near impossible, it sends the profitless rate up close to 99%.
6) So 99% of distributors who are out purchasing bouncy balls every 4 weeks enrich the pockets of the top distributors and company executives while those 99% of distributors lose money.
7) In fact, the recent $3 billion in sales milestone USANA reached was achieved by 99% of the USANA distributors who themselves LOST MONEY and never made a profit by forcing their distributors to purchase their expensive product.
Whether USANA distributes bouncy balls or nutritional supplements, the effect is the same. The compensation plan is designed to prevent 99% of distributors from ever making a profit. So what's the fair solution? Well, instead of shutting down thousands of MLM companies one by one, all that is required is to restrict MLMs from forcing their distributors to purchase personal product on a regular basis in order to participate and be commission qualified.
MLM companies should make their distributors direct SELLERS instead of direct BUYERS. Get rid of this stupid point system and the stupid balancing act. In other words, MLMs should stop playing games with their distributor's money. If a distributor brings in 100 preferred customers, then that distributor should be paid commission based on those preferred customer's purchases whether the distributor personally purchases USANA product for them self or not. Stop forcing distributors to purchase overpriced product.
Just so everyone knows, these forced purchases distributors must make do not pay out commission to the distributor who makes the purchase. So if a distributor RESELLS the product they were forced to purchase, and they resell it at their cost, well, they are paid ZERO commission for that sale. However, each and every upline member gets paid a commission on it whether you resell it, or flush the garbage down the toilet.
