Types of Compensation Plans

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One of the determining factors when it comes to selecting a network marketing program is the type of compensation that is being offers. There are many forms of such compensation plans. You need to make sure you fully understand what options you have. Some of these companies give you a one size fits all option. Others allow you to have some say so in what you take part in.


For example, all compensation plans will pay you based on sales. However, there are those that give you a percentage of the total sale amount. For example, you will get 30% of each sale. Others will give you a set price such as $50 per sale. This makes a difference in what your earnings will be so you need to pay close attention to what is being offered.


Many of the compensation plans also have recruiting as an option. However, some of them require you to recruit a certain number per month. Others allow you to take part in recruiting only if you wish to do so. Recruiting means you get others on board to take part in selling as well. Your reward for doing so is that you get compensation for each person that sales below you for as long as they sale. Typically, this is a percentage of their monthly sales.


You should never take part in a company that ONLY gives you earnings if you recruit. Such formats are often referred to as pyramid schemes. They are illegal, but such businesses have found a way to stay within the law with shades of gray since not all of the legalities are black or white.


Comp Plan That Motivates

To keep you motivated, the compensation plan may have a stair step approach in place. As you meet certain goals with your sales numbers or recruitments, you move up the steps. Each time you move up, the earnings you can generate will increase. Some programs have a matrix type of compensation in place. This basically means that they only have a certain number of people on each tier level.


In order to move up the tiers, you are competing against others. This services as a way to motivate and challenge everyone to increase overall sales volume for the company. If you do better than a given number of people, you move up to the higher tier, but you are bumping someone else down. There will be others trying to bump you back down too so you always have to try to generate more sales to climb up or to stay on your given tier.


If you have any questions about a given compensation plan, make sure you ask. Donít make assumptions when it comes to this part of network marketing. You need to know what you will get paid for, how to track what you get paid for, how you will get paid, and when you will get paid. Any company that wonít give you clear answers to all of those questions should be avoided.

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