What’s The Best MLM Comp Plan?

best mlm compensation plan

It is a question I am asked by people looking to join a network marketing company all the time… What is the best MLM comp plan?

I can find this a difficult question to answer and the temptation of telling the person the best MLM comp plan is the plan with the multilevel marketing company I am affiliated with.

Would I be wrong in doing so? Probably not, but it really would not be fair for the individual asking the question.

So in today's post, I am going to dive deep into MLM compensation plans. I will try to discover what the best MLM comp plan is. Scroll and read, and tell me if you agree or disagree with my findings.

Best MLM Comp Plan: The Various Types Of MLM Compensation Plans

There are a plethora of multilevel marketing compensation plans. Some of those plans are a mixture of other plans.

The four most common MLM comp plans are:

  1. The breakaway comp plan
  2. The unilevel comp plan
  3. And the matrix comp plan
  4. Plus the binary comp plan

I will first briefly explain those comp plans and I will then tell you about several other comp plans.

You should see these too:

  1. How to Quickly Build a Binary Compensation Plan in Network Marketing
  2. The Stair Step Breakaway Compensation Plan Broken Down
  3. 9 Tips to Build Your Health and Wellness MLM Business Fast
  4. How to Get Your Downline Profitable In As Little As 7 Days

The breakaway comp plan

It is probably the oldest MLM comp plan ever used. Some call it the Stairstep Breakaway Plan or just the Stairstep Plan.

It works just as it says, the distributor climbs steps. For each step gained, the products they purchase or sell are discounted for them at a higher rate. Once the distributor meets a certain level, they “break away” from their upline starting a new line. The original upline will then just get royalties from overall sales of the line.

Here is a PDF explaining the Breakaway Comp Plan in deeper detail.

The unilevel comp plan

This is probably the easiest to understand compensation plan. Simply put, you are building width. You just sponsor into one level and you will earn override commissions on people your downline members sponsor into their first level.

We find that many MLM companies use a type of unilevel comp plan with different additives to it. In many ways, the Breakaway comp plan is basically a unilevel comp plan.

Here is a PDF explaining the Unilevel Comp Plan in more detail.

The matrix comp plan

More and more new MLM companies have used a matrix compensation plan. This plan seems to keep distributors interested as they have people put in their downline for them. The reason this happens is each person can only have a certain amount of people in their 1st level.

These matrix's have various systems:

  • 4 X 7
  • 5 X 7
  • 3 X 9
  • 2 X 12
  • etc…

The first number is width and the other number is depth. So, if your width is full, anyone you sponsor must be put under another person in depth.

Here is a PDF explaining the Matrix Comp Plan in more detail.

The binary comp plan

This is also a favorite of many MLM companies. It is also very successful.

In a binary compensation plan, the distributor only builds 2 legs. They then get paid a percentage based upon on the leg with the least volume… The weak leg. Yes, they get compensation for both legs, but the percentage is dependent on the weak leg.

You can understand the binary comp plan better with this PDF.

The Best MLM Comp Plan: Some Other MLM Compensation Plans

There are various other MLM comp plans too. Some are:

As time move forward, we will probably see other MLM comp plans developed.

But which one is best?

What Is The Best MLM Comp Plan?

It really is quite difficult to tell you any certain comp plan is better than another. Every multilevel marketing comp plan has both pros and cons. I suggest you study all the PDF downloads to see which comp plan you most likely will prefer.

I also suggest that you look at the “extras” nearly every comp plan has.

Best MLM comp plan: Advantages and disadvantages of the breakaway plan

Some of the most recognized MLM companies have used the breakaway compensation plan for years with great success. Some of the major advantages of the breakaway compensation plan are:

  • Those who perform are rewarded
  • It is well accepted by regulatory agencies
  • It has a great record and is well accepted by distributors
  • And, the breakaway comp plan is easy to modify

Some of the main disadvantages of the breakaway compensation plan include:

  • It is probably the most difficult comp plan to explain to new recruits
  • It leads to front-end inventory loading to get volume requirements
  • Many companies using this plan have too high of a monthly purchase requirement

Best MLM comp plan: Advantages and disadvantages of the unilevel plan

Personally, I believe the unilevel plan if used as is, is the worst plan of the primary four plans.

There are really only 2 main advantages of the unilevel comp plan, and I believe these advantages are primarily for the MLM company.

  • It is one of the easiest comp plans to administer
  • It is probably the easiest plan to explain to new recruits

The primary disadvantages of the unilevel compensation plan are:

  • There is really no rank advancement in the plan. You are always just a distributor.
  • There is little support from an upline because it is built more on width instead of depth

Many companies who start with a unilevel comp plan usually revert to a breakaway comp plan.

Best MLM comp plan: Advantages and disadvantages of the matrix plan

The matrix plan is one of the newest plans and overall, I see a split on lovers and haters of the matrix plan. It is somewhat difficult this early in the matrix plan life cycle to say advantages and disadvantages.best network marketing compensation plan

I do know that regulatory agencies are keeping a close eye on any MLM companies using the matrix comp plan because it has looks, in their opinion, to being near a pyramid scheme type of set up.

I personally do not see where it could be perceived as a pyramid scheme as long as it is administered properly.

And, I do know that the matrix plan can create many “dependent” representatives who will just sit back and let their upline sponsor their downline. Because of the matrix, a person can only sponsor so much width and then have to place recruits further down under other recruits. That is the main disadvantage in my opinion, but could also be considered an advantage because many people will stay with the company as long as they have a downline.

Best MLM comp plan: Advantages and disadvantages of the binary plan

Many state that the binary comp plan is the newest plan on the scene. Personally, I would debate that because I believe it was used by several scam systems, but those have been forgotten.

But for some reason, opponents seem to understand that the binary comp plan has its share of scam possibilities. There are many advantages to the binary comp plan, but a person wants to ensure that it is being managed by reputable people because it would not be too difficult to jumble the numbers to take advantage of distributors.

Some of the primary advantages of a binary comp plan include:

  • Normally, this comp plan pays out weekly
  • It is a very easy comp plan to explain to new recruits
  • It is a strong team comp plan that pushes for a group participation

The primary disadvantages are:

  • The bad reputation often leads to legal issues
  • Distributors have a tendency to start several “businesses” under the same MLM to create multiple binary legs. Supporting downline members when doing so can be hard.
  • It tends to be looked upon like a game and there can be bigger push for recruiting versus selling products or services. And as I said, this often leads to legal issues.

The Best MLM Company: Things To Look For When Researching The Company's Comp Plan

It isn't always just the type of comp plan you want to look at, you also want to look at a few other things:

What is the comp plan's overall payout?

This is probably one of the most important aspects. You will want to know what percentage of overall sales is paid out to distributors overall. A plan that pays out 35 – 45% of the company's wholesale purchase volume is about right. Any more than that, the company is liable to have financial difficulties.

And any less than that, the company is taking advantage of the distributors.

What other features or “perks” does the comp plan have?

I mentioned this earlier, but nearly every comp plan has other perks that you will want to look at.

  • Stock options
  • Car allowance
  • Advertising programs
  • Health insurance
  • Free training
  • Etc…

What about orphan commissions?

When a distributor falls short in a given month and is not eligible for the commissions they “banked,” you should find out what happens to those commissions. The good companies will roll those commissions up to the next eligible person in the line. But some companies keep those orphaned commissions.

In my opinion, I would stay clear of a company that pockets those commissions. It is greedy and wrong in my opinion and I have no respect for MLM companies that do that thing.

The Best MLM Comp Plan Is…

Wouldn't it be great if a MLM company could take all the advantages from each plan and create a hybrid comp which mlm comp plan is bestplan that just had the good and none of the bad, but no matter what, no one will be completely satisfied with any comp plan. There is always going to be something we dislike. But, if we work the program, money can be made if we researched and chose a company with products we are passionate about and a comp plan we like.

I cannot say what the best MLM comp plan is… It is the plan you make money with and have no regrets.

So tell me, what is your favorite MLM comp plan?

You can post your answers below in the comment area.

Conclusion

I hope this post gave you some good insight in the multiple MLM comp plans. If you have any questions, feel free to ask below and I will do my best to provide you an answer.

Thank you for visiting and may your comp plan pay out like a Million Dollar slot machine!

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