Basic uni-levels have two forms of breakage.
- Limited depth.
- Product price.
Here's how limited depth creates breakage.
Let’s say you’re in a company with a 3-deep Uni-Level pay plan. You sponsor Betty, Betty sponsors Jim, Jim sponsors Darla, and Darla sponsors George. In this case you get nothing for Darla's sponsoring efforts because breakage occurs with George (on level 4).
How about the price related breakage?
Most of the products marketed through a uni-level are either intellectuals (e-books), or some other one-time purchase item with little to no cost to the company offering them. These products offer the company a gigantic profit margin. Let's take a closer look at what this means.
Most MLM companies claim they need to maintain between a 55% to 65% profit margin to pay the bills and pay commissions. But is that really necessary? Take a look at the chart below for a $20 product to see where the money goes.
| Your | % to | % to | Your | Co. |
| Team | You | Co. | Profit | Profit |
| Betty | 20% | 80% | $4 | $16 | Joe | 10% | 90% | $2 | $18 | Darla | 5% | 95% | $1 | $19 | Fred | 0% | 100% | $0 | $20 | Totals | 8.75% | 91.25% | $7 | $80 |
As you can see from the example above the company is making an average of 91.25% profit from your team efforts compared to your 8.75%. Wow, they must have a lot of overhead! Oh, and check out how much the company values your contribution.
Network marketing companies like Uni-Level comp plans because they’re easy to explain and they're highly profitable (to the company). Plus there are plenty of folks out there who think they are in that 0.01% of MLMers that can recruit at will to keep making money.
Most networkers are in MLM to build a large, stable, and profitable income so they can retire. If you’re a super sales person or a sponsor monster that probably doesn't matter to you. You’ll do well with a Uni-Level, because you’ll just go wide.
However, if maintaining communication with your team and building depth for strength of long-term stability are important to you, then a uni-level plan will be the kiss of death to your financial independence.
Your dreams should not be limited by your company's comp plan. So look for a company that rewards well for building enough width to be able to keep up with your front line, while building maximum depth for team strength.
I appreciate you,
Bill Tessore
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