By: The MLM Pyramid Scheme Exposer, ©2006
Binary means 2. Thus, each sponsor can have only 2 distributors in their immediate downline. The downline is the term used for those recruited distributors who are placed beneath you. The Sponsor is the distributor who is immediately above you. However, the number of levels in the downline is infinite in binary compensation plans. This creates a pyramid that looks like 1-2-4-8-16-32-64-etc… when each level is added up. The first number (1) is you. In this example, when you add up all the distributors in your downline, you would get 2+4+8+16+32+64+etc… = 126+etc... In a binary compensation plan, the distributor must “balance” their downline. We split the downline into two sides, we will call the sides the LEFT side and the RIGHT side. The sides are created due to the binary structure. Binary compensation plans are infinite in levels because group sales volume points are added up and max out at 5000 points on each side. You can have 1000 distributors in your first Business Center (1-BC) possibly giving you 25,000 sales points, but since the maximum you can calculate for commissions on each side of your downline is 5000 points, you max out at 10,000 group sales points. If you have 5000 group sales points on your left side but only 250 group sales points on your right side, then your commission payout is calculated based off the lower of the two sides. In this case, you add up 250 group sales points from each side giving you a total of 500 group sales points ($40 commission). The remaining 4750 GSP on the one side rolls over to the next month. Only a maximum of 5000 points can roll over. If you should have 20,000 points on your left side, it is first readjusted to 5000 points, and then calculated for commissions. Whatever is left over after that rolls over. If you manage to collect 5000 points on your left side and 5000 points on your right side, you max out your business center. In the event this happens, you receive a Re-Entry Certificate. This certificate allows you to create a new Business Center at the bottom of your current business center. This gives the distributor the chance to try and max out another business center, and so on. Each business center can collect up to two Re-Entry Certificates. This allows the distributor to maintain an inevitable balancing act for those earlier business centers created, and continues the incentive to recruit more distributors. This happens because you can get 2 re-entries per business center. You put one of the new business centers on the left side of the earlier business center, and place the next business center on the right side of that earlier business center. So now you are essentially balancing your stacking business centers. The following examples will demonstrate. But first, here is the commissions payout table.
I will put together scenarios. The examples will use the following figures unless noted otherwise:I have one business center which each distributor purchases 25 sales points worth of product each week. I have 126 distributors in my downline (2-4-8-16-32-64) making 6 levels. Level 1 has 2 distributors while level 6 has 64 distributors. The total sales points are calculated by adding together the left and right side of the downline including your own sales points:
(Left Side Points + Right Side Points + Your Own Points)Your own points can be applied to either side of your downline’s group sales points when calculating commission payout. Scenario 1:
In the above example, everything is equally balanced. But what happens if I get a re-entry certificate and begin a new business center at the bottom of the previous one? I will place a Business Center #2 at the bottom left side of my Business Center #1. Scenario 2:
Business Center 1(gray) - The table here represents the distributors who pass the sales points from one business center to the top of the other. These distributors are represented in the gray blocks in the image above.
In the 1st level, one distributor gets 1575 SP and the other distributor gets 4750 SP (3950+775+25).
I will get 6350 SP (4750+1575+25).In the example above, I have two business centers. You can see that after I built my second business center, the first business center changed and became highly unbalanced. You notice that each level contained 1 distributor that carried on the sales points from the business center underneath them. I will call this anomaly the Line Connecting Business Center Distributors. In the graphical images, these distributors are represented by the gray blocks. This line of distributors pass the total sales points from Business Center 2 on up to the top of Business Center 1 to benefit the same distributor for a second time. As you can see, the distributor on the 6th level whom I placed my second business center underneath inherited 3175 SP! But this doesn’t mean the distributor will collect any commission. You can see that while the distributor collected 3175 SP on their left side, they collected 0 SP on the right side. The best this distributor could do is apply their own points to the right side for the commission calculation. Thus, the distributor will have 3175 SP on the left side and 25 SP on the right side. The commission pay out chart shows that the first commission payout comes when you collect at least 250 SP on both sides! At this current rate, it will take 10 weeks for this particular distributor to make $40 in commissions. So just because I started my new business center at the bottom of my previous business center does not necessarily greatly benefit those Line Connecting Business Center Distributors. Now, even I have an unbalancing problem. While my Business Center #2 is quite balanced (1575+1575+25), this is not the case for my Business Center #1. Business Center #1 is unbalanced and looks like (4750+1575+25). However, this can be fixed. This is the reason the Binary Compensation plan allows for TWO re-entry certificates PER business center. Lets see what happens when I put a new business center at the bottom of the right side on my first business center. Now I will have 3 business centers. They will look like the following: Scenario 3:
Thus, in total, I will get to calculate my commission payout as the following
BC-3 = 1000 SP left + 1000 SP right = 2000 SP total = $200.00 commissions
BC-2 = 1000 SP left + 1000 SP right = 2000 SP total = $200.00 commissions
BC-1 = 4000 SP left + 4000 SP right = 8000 SP total = $800.00 commissionsSo in this example, I would make $1200 in commissions for the week. Total amount of distributors in my downline to achieve this is 379 (127+126+126). As you can see, the first business center now gets 9525 SP (4750+4750+25). Build a couple more business centers like this and it causes an inevitable balancing act for distributors who have several business centers. Does the fact that I re-entered a new business center at the bottom of a previous business center greatly benefit those who are part of the Line Connecting Business Center Distributors? Absolutely not. So what is the reason the majority of distributors in my downline cannot succeed? One reason is because they cannot recruit anyone else. If I travel to a distant town and recruit 100 people into my downline, these 100 people try to recruit a friend or neighbor and maybe each one of them succeeds in recruiting 1 person. Now there are 200 people recruited in my downline in a given town and saturation builds. If everyone is a distributor, who is there to sell the product to? Who is there left to recruit? The only way for these new recruits to succeed is to now travel to other towns that are untapped. Problem is, the top distributors in the company have already spread out to every corner because they got placed in the pyramid when it was born. Secondly, the majority of distributors in the example I provided do not collect enough sales points. The are at the bottom couple levels of the pyramid and do not have enough distributors underneath them to provide them with group sales points. It is their job to seek out ways to make those sales points, which is why recruiting is the only way. But because of saturation, they don’t have a chance. The inflated cost of MLM products is another reason they don’t have a chance to succeed. Almost all of competing brand’s products are less than half the price of MLM’s products. This in affect makes the distributors themselves the only customers. While some distributors convince their friends, family, and co-workers to purchase some products, there are virtually no customers outside this triangle. Now there is more to this binary compensation plan to discuss. When you enroll as a distributor, you must choose between a 1-Business Center plan or a 3-Business Center plan. The difference is this: the 1-BC plan is just what it says, one business center. However, the 3-Business Center plan puts YOU in the first two spots in the first level. This looks something like (1(you)-2(both you)-4-8-16-32-64-128). This 3-BC causes you to build two business centers at the same time and then adds the sales points from those to calculate the total sales points for the very top business center. Lets see what a 3-BC looks like. Scenario 4:
Thus, in total, I will get to calculate my commission payout as the following
BC-3 = 1000 SP left + 1000 SP right = 2000 SP total = $200.00 commissions
BC-2 = 1000 SP left + 1000 SP right = 2000 SP total = $200.00 commissions
BC-1 = 3000 SP left + 3000 SP right = 6000 SP total = $600.00 commissionsSo in this example, I would make $1000 in commissions for the week. Total amount of distributors in my downline to achieve this is 253 (1+126+126). Compare this enrolling 3-BC plan to the original example of having three separate business centers tied together with re-entry certificates. 1-BC Enrollment with 2 Re-Entry Business Centers equal to that of the first
Distributors = 379 | Commissions I make = $12003-BC Enrollment
Distributors = 253 | Commissions I make = $1000The difference is that enrolling with the 3-BC plan versus the 1-BC plan supposedly allows the distributor to make more commissions faster. So the 3-BC appears to be more attractive when choosing what to enroll with. Most all distributors end up choosing the 3-BC plan. However, enrolling with the 3-BC puts the distributor deeper into debt and more unlikely to ever recover the expense. When you enroll with the 1-BC plan, you must purchase a minimum of 100 Sales Volume Points every 4 weeks to qualify for collecting commissions. When you enroll with the 3-BC plan, you must purchase a minimum of 200 Sales Volume Points every 4 weeks to qualify for collecting commissions. Now if you signed up with a 1-BC but then managed to get a re-entry certificate and begin a new business center, you now have MULTIPLE business centers. Once this happens, the 200 Minimum Sales Point rule applies just as if you started with the 3-BC plan. These minimum purchases every 4 weeks is known as "Pay to Play" In SCENARIO 4 there are 255 distributors. However, in the 3-BC plan, the top three distributors are the same person. So there are really a total of 253 different distributors. Of these distributors, the following payout in the example pays out as the following: *this example’s structure has sales points perfectly balanced. Rollover amount will apply to both left and right sides. I will also apply the distributors own purchased sales points to put half of it on the left and the rest on the right.
Carrying this on for 52 Weeks (1 Year) the final results are the following for EACH DISTRIBUTOR within each level:All Levels - 253 Distributors - $204,440 of total commissions paid out
Top - 1 Distributor (ME) - $33,000 commission each or 16.14% of total commissions paid out
Level 1 - 2 Distributor (ME) - $16,400 commission each or 8.02% of total commissions paid out
Level 2 - 4 Distributor - $8100 commission each or 3.96% of total commissions paid out
Level 3 - 8 Distributor - $3760 commission each or 1.84% of total commissions paid out
Level 4 - 16 Distributor - $1560 commission each or 0.76% of total commissions paid out
Level 5 - 32 Distributor - $720 commission each or 0.35% of total commissions paid out
Level 6 - 64 Distributor - $280 commission each or 0.14% of total commissions paid out
Level 7 - 128 Distributor - $80 commission each or 0.04% of total commissions paid outRemember, in the 3-BC enrollment plan, I am the TOP distributor AND the 2 distributors in the first level! This totals up to the following figures for a 1 year period: 253 distributors contribute to the $204,440 in commissions paid out.
I make $65,800 in commissions or 32.19% of the total commissions paid.
I purchase only 3900 sales points, which account for $390 of the $65,800 I collected.
The next distributor beneath me makes $8100, or 3.96% of the total commissions paid out.
The Bottom 128 distributors make $80 each, but paid for $33,280 (51%) of my $65,800 in commissions.It is very clear who is reaping all the benefits from the majority of the distributors who are not making enough commission to recover their expenses. In a binary compensation plan, there are between 50% to 66.6% of distributors who are on the bottom of the pyramid. This is because at the most basic level, one distributor with one distributor in the left side of the downline and one in the right side of the downline, the total amount of distributors in this pyramid is three. 1-2, One on top and two on the bottom. Thus, 66.6% of the distributors are at the bottom. As the pyramid grows, the number of distributors on the bottom approach 50%. An example of a pyramid structured as 1-2-4-8-16-32-64-128, there are 128 distributors at the bottom of this pyramid, which accounts for 50.2% of the distributors. The bottom distributors can never make enough to recover their expense. The only solution is to recruit. However, a distributor that turns to recruiting must understand that the more people they recruit into the pyramid, the higher the number of distributors at the very bottom becomes. Even those distributors one level above the bottom are not recovering their expenses. The percentage of distributors at the very bottom two levels ranges from 85.7% to 75%. Like the previous example, when at the most basic form of this pyramid, 1-2-4, the bottom two levels account for 85.7% of the distributors. As the pyramid grows, the number of distributors on the bottom two levels approaches 75%. This is shown by a pyramid like 1-2-4-8-16-32-64-128, there are 192 distributors at the bottom two levels which account for 75.02% of the distributors. Now some people claim that this isn’t really a pyramid scheme because the person underneath you could be making more money than you. This is misleading because the only way this is true is when a distributor creates a new business center after maxing out their previous one, and they put the new business center at the bottom of their previous one. This can be demonstrated in the following example. My Business Center 1 has six levels in it with 127 distributors in it including myself. I achieve two re-entry certificates and put two new business centers at the bottom of my first one. They each contain 126 new distributors in them. I put one on the left most end and one on the right most end of the first business center. Each distributor’s own sales points are either split in half and added to the left and right side of their group sales points, or they are all given to whichever side is lacking the most points. This allows for the most effective and efficient method of benefiting from your own sales points. Each distributor purchases 25 sales points every week. I purchase 25 sales points myself for each business center, totaling 75 sales points each week.
Study the above example carefully. Sales points travel up from the very bottom of Business Centers 2 & 3 and travel all the way to the top of Business Center 1.After 1 year (52 weeks), the figures come out to the following: TOTAL – 379 distributors - $289,120 in total commissionsME – 1 distributor - $79,600 Commission - 27.5% of total commissions paid out
Level 1 – 4 distributors each make $8100 or 2.80% of total - 2 distributors each make $8300 or 2.87% of total
Level 2 – 10 distributors each make $3760 or 1.30% of total – 2 distributors each make $3940 or 1.36% of total
Level 3 – 22 distributors each make $1560 or 0.54% of total – 2 distributors each make $1640 or 0.57% of total
Level 4 – 46 distributors each make $720 or 0.25% of total – 2 distributors each make $800 or 0.28% of total
Level 5 – 94 distributors each make $280 or 0.10% of total – 2 distributors each make $400 or 0.14% of total
Level 6 – 190 distributors each make $80 or 0.03% of total – 2 distributors each make $200 or 0.07% of totalNow for some fast facts:
I make $79,600 or 27.53% of the total commissions paid out. I purchased only 3900 sales points, which is worth $390 in commissions.
The upper 3 levels (ME to Level 2) account for 19 distributors or 5% of the total 379 distributors.
Those upper 19 distributors made a total of $174,080 or 60.2% of the total commissions paid out.
The lower 3 levels (level 4 to level 6) account for 336 distributors or 88.7% of the total 379 distributors.
Those lower 336 distributors made a total of $45,040 or 15.58% of the total commissions paid out.
The bottom level accounts for 192 distributors, or 50.7% of the total 379 distributors.
Those bottom 192 distributors made a total of $15,600 or 5.4% of the total commissions paid out. The recruiting pyramid scheme is quite clear. Even those 12 distributors, who are part of the connecting line (designated in gray in the image of the pyramids) from the top of one business center to the top of the other, are still not making much. Although, those 12 distributors in those lines have a better chance than the ordinary distributor in the same level and usually consist of the top distributor’s family and friends. These commission figures are GROSS income. The distributor still needs to subtract their expenses for the year to get their NET income. For most distributors in this pyramid scheme, the figure is depressing because they are usually in the negative. Most distributors never recover their cost of taking part in this pyramid scheme. We have only considered “active” distributors in these examples. As you can see, the bottom layers perform very poorly, and because of this, most distributors drop out. In order for the top distributors to keep making their millions, they must continually recruit new distributors to replace those who drop out. If they do not keep recruiting, the pyramid scheme collapses and the majority 99% of distributors are left holding the bag while the top distributors make out with all the money by defrauding all the losers. Anti-Pyramiding Video by Direct Selling Association of the Philippines:
Binary means 2. Thus, each sponsor can have only 2 distributors in their immediate downline. The downline is the term used for those recruited distributors who are placed beneath you. The Sponsor is the distributor who is immediately above you. However, the number of levels in the downline is infinite in binary compensation plans. This creates a pyramid that looks like 1-2-4-8-16-32-64-etc… when each level is added up. The first number (1) is you. In this example, when you add up all the distributors in your downline, you would get 2+4+8+16+32+64+etc… = 126+etc... In a binary compensation plan, the distributor must “balance” their downline. We split the downline into two sides, we will call the sides the LEFT side and the RIGHT side. The sides are created due to the binary structure. Binary compensation plans are infinite in levels because group sales volume points are added up and max out at 5000 points on each side. You can have 1000 distributors in your first Business Center (1-BC) possibly giving you 25,000 sales points, but since the maximum you can calculate for commissions on each side of your downline is 5000 points, you max out at 10,000 group sales points. If you have 5000 group sales points on your left side but only 250 group sales points on your right side, then your commission payout is calculated based off the lower of the two sides. In this case, you add up 250 group sales points from each side giving you a total of 500 group sales points ($40 commission). The remaining 4750 GSP on the one side rolls over to the next month. Only a maximum of 5000 points can roll over. If you should have 20,000 points on your left side, it is first readjusted to 5000 points, and then calculated for commissions. Whatever is left over after that rolls over. If you manage to collect 5000 points on your left side and 5000 points on your right side, you max out your business center. In the event this happens, you receive a Re-Entry Certificate. This certificate allows you to create a new Business Center at the bottom of your current business center. This gives the distributor the chance to try and max out another business center, and so on. Each business center can collect up to two Re-Entry Certificates. This allows the distributor to maintain an inevitable balancing act for those earlier business centers created, and continues the incentive to recruit more distributors. This happens because you can get 2 re-entries per business center. You put one of the new business centers on the left side of the earlier business center, and place the next business center on the right side of that earlier business center. So now you are essentially balancing your stacking business centers. The following examples will demonstrate. But first, here is the commissions payout table.
I will put together scenarios. The examples will use the following figures unless noted otherwise:I have one business center which each distributor purchases 25 sales points worth of product each week. I have 126 distributors in my downline (2-4-8-16-32-64) making 6 levels. Level 1 has 2 distributors while level 6 has 64 distributors. The total sales points are calculated by adding together the left and right side of the downline including your own sales points:
(Left Side Points + Right Side Points + Your Own Points)Your own points can be applied to either side of your downline’s group sales points when calculating commission payout. Scenario 1:
In the above example, everything is equally balanced. But what happens if I get a re-entry certificate and begin a new business center at the bottom of the previous one? I will place a Business Center #2 at the bottom left side of my Business Center #1. Scenario 2:
Business Center 1(gray) - The table here represents the distributors who pass the sales points from one business center to the top of the other. These distributors are represented in the gray blocks in the image above.
In the 1st level, one distributor gets 1575 SP and the other distributor gets 4750 SP (3950+775+25).
I will get 6350 SP (4750+1575+25).In the example above, I have two business centers. You can see that after I built my second business center, the first business center changed and became highly unbalanced. You notice that each level contained 1 distributor that carried on the sales points from the business center underneath them. I will call this anomaly the Line Connecting Business Center Distributors. In the graphical images, these distributors are represented by the gray blocks. This line of distributors pass the total sales points from Business Center 2 on up to the top of Business Center 1 to benefit the same distributor for a second time. As you can see, the distributor on the 6th level whom I placed my second business center underneath inherited 3175 SP! But this doesn’t mean the distributor will collect any commission. You can see that while the distributor collected 3175 SP on their left side, they collected 0 SP on the right side. The best this distributor could do is apply their own points to the right side for the commission calculation. Thus, the distributor will have 3175 SP on the left side and 25 SP on the right side. The commission pay out chart shows that the first commission payout comes when you collect at least 250 SP on both sides! At this current rate, it will take 10 weeks for this particular distributor to make $40 in commissions. So just because I started my new business center at the bottom of my previous business center does not necessarily greatly benefit those Line Connecting Business Center Distributors. Now, even I have an unbalancing problem. While my Business Center #2 is quite balanced (1575+1575+25), this is not the case for my Business Center #1. Business Center #1 is unbalanced and looks like (4750+1575+25). However, this can be fixed. This is the reason the Binary Compensation plan allows for TWO re-entry certificates PER business center. Lets see what happens when I put a new business center at the bottom of the right side on my first business center. Now I will have 3 business centers. They will look like the following: Scenario 3:
Thus, in total, I will get to calculate my commission payout as the following
BC-3 = 1000 SP left + 1000 SP right = 2000 SP total = $200.00 commissions
BC-2 = 1000 SP left + 1000 SP right = 2000 SP total = $200.00 commissions
BC-1 = 4000 SP left + 4000 SP right = 8000 SP total = $800.00 commissionsSo in this example, I would make $1200 in commissions for the week. Total amount of distributors in my downline to achieve this is 379 (127+126+126). As you can see, the first business center now gets 9525 SP (4750+4750+25). Build a couple more business centers like this and it causes an inevitable balancing act for distributors who have several business centers. Does the fact that I re-entered a new business center at the bottom of a previous business center greatly benefit those who are part of the Line Connecting Business Center Distributors? Absolutely not. So what is the reason the majority of distributors in my downline cannot succeed? One reason is because they cannot recruit anyone else. If I travel to a distant town and recruit 100 people into my downline, these 100 people try to recruit a friend or neighbor and maybe each one of them succeeds in recruiting 1 person. Now there are 200 people recruited in my downline in a given town and saturation builds. If everyone is a distributor, who is there to sell the product to? Who is there left to recruit? The only way for these new recruits to succeed is to now travel to other towns that are untapped. Problem is, the top distributors in the company have already spread out to every corner because they got placed in the pyramid when it was born. Secondly, the majority of distributors in the example I provided do not collect enough sales points. The are at the bottom couple levels of the pyramid and do not have enough distributors underneath them to provide them with group sales points. It is their job to seek out ways to make those sales points, which is why recruiting is the only way. But because of saturation, they don’t have a chance. The inflated cost of MLM products is another reason they don’t have a chance to succeed. Almost all of competing brand’s products are less than half the price of MLM’s products. This in affect makes the distributors themselves the only customers. While some distributors convince their friends, family, and co-workers to purchase some products, there are virtually no customers outside this triangle. Now there is more to this binary compensation plan to discuss. When you enroll as a distributor, you must choose between a 1-Business Center plan or a 3-Business Center plan. The difference is this: the 1-BC plan is just what it says, one business center. However, the 3-Business Center plan puts YOU in the first two spots in the first level. This looks something like (1(you)-2(both you)-4-8-16-32-64-128). This 3-BC causes you to build two business centers at the same time and then adds the sales points from those to calculate the total sales points for the very top business center. Lets see what a 3-BC looks like. Scenario 4:
Thus, in total, I will get to calculate my commission payout as the following
BC-3 = 1000 SP left + 1000 SP right = 2000 SP total = $200.00 commissions
BC-2 = 1000 SP left + 1000 SP right = 2000 SP total = $200.00 commissions
BC-1 = 3000 SP left + 3000 SP right = 6000 SP total = $600.00 commissionsSo in this example, I would make $1000 in commissions for the week. Total amount of distributors in my downline to achieve this is 253 (1+126+126). Compare this enrolling 3-BC plan to the original example of having three separate business centers tied together with re-entry certificates. 1-BC Enrollment with 2 Re-Entry Business Centers equal to that of the first
Distributors = 379 | Commissions I make = $12003-BC Enrollment
Distributors = 253 | Commissions I make = $1000The difference is that enrolling with the 3-BC plan versus the 1-BC plan supposedly allows the distributor to make more commissions faster. So the 3-BC appears to be more attractive when choosing what to enroll with. Most all distributors end up choosing the 3-BC plan. However, enrolling with the 3-BC puts the distributor deeper into debt and more unlikely to ever recover the expense. When you enroll with the 1-BC plan, you must purchase a minimum of 100 Sales Volume Points every 4 weeks to qualify for collecting commissions. When you enroll with the 3-BC plan, you must purchase a minimum of 200 Sales Volume Points every 4 weeks to qualify for collecting commissions. Now if you signed up with a 1-BC but then managed to get a re-entry certificate and begin a new business center, you now have MULTIPLE business centers. Once this happens, the 200 Minimum Sales Point rule applies just as if you started with the 3-BC plan. These minimum purchases every 4 weeks is known as "Pay to Play" In SCENARIO 4 there are 255 distributors. However, in the 3-BC plan, the top three distributors are the same person. So there are really a total of 253 different distributors. Of these distributors, the following payout in the example pays out as the following: *this example’s structure has sales points perfectly balanced. Rollover amount will apply to both left and right sides. I will also apply the distributors own purchased sales points to put half of it on the left and the rest on the right.
Carrying this on for 52 Weeks (1 Year) the final results are the following for EACH DISTRIBUTOR within each level:All Levels - 253 Distributors - $204,440 of total commissions paid out
Top - 1 Distributor (ME) - $33,000 commission each or 16.14% of total commissions paid out
Level 1 - 2 Distributor (ME) - $16,400 commission each or 8.02% of total commissions paid out
Level 2 - 4 Distributor - $8100 commission each or 3.96% of total commissions paid out
Level 3 - 8 Distributor - $3760 commission each or 1.84% of total commissions paid out
Level 4 - 16 Distributor - $1560 commission each or 0.76% of total commissions paid out
Level 5 - 32 Distributor - $720 commission each or 0.35% of total commissions paid out
Level 6 - 64 Distributor - $280 commission each or 0.14% of total commissions paid out
Level 7 - 128 Distributor - $80 commission each or 0.04% of total commissions paid outRemember, in the 3-BC enrollment plan, I am the TOP distributor AND the 2 distributors in the first level! This totals up to the following figures for a 1 year period: 253 distributors contribute to the $204,440 in commissions paid out.
I make $65,800 in commissions or 32.19% of the total commissions paid.
I purchase only 3900 sales points, which account for $390 of the $65,800 I collected.
The next distributor beneath me makes $8100, or 3.96% of the total commissions paid out.
The Bottom 128 distributors make $80 each, but paid for $33,280 (51%) of my $65,800 in commissions.It is very clear who is reaping all the benefits from the majority of the distributors who are not making enough commission to recover their expenses. In a binary compensation plan, there are between 50% to 66.6% of distributors who are on the bottom of the pyramid. This is because at the most basic level, one distributor with one distributor in the left side of the downline and one in the right side of the downline, the total amount of distributors in this pyramid is three. 1-2, One on top and two on the bottom. Thus, 66.6% of the distributors are at the bottom. As the pyramid grows, the number of distributors on the bottom approach 50%. An example of a pyramid structured as 1-2-4-8-16-32-64-128, there are 128 distributors at the bottom of this pyramid, which accounts for 50.2% of the distributors. The bottom distributors can never make enough to recover their expense. The only solution is to recruit. However, a distributor that turns to recruiting must understand that the more people they recruit into the pyramid, the higher the number of distributors at the very bottom becomes. Even those distributors one level above the bottom are not recovering their expenses. The percentage of distributors at the very bottom two levels ranges from 85.7% to 75%. Like the previous example, when at the most basic form of this pyramid, 1-2-4, the bottom two levels account for 85.7% of the distributors. As the pyramid grows, the number of distributors on the bottom two levels approaches 75%. This is shown by a pyramid like 1-2-4-8-16-32-64-128, there are 192 distributors at the bottom two levels which account for 75.02% of the distributors. Now some people claim that this isn’t really a pyramid scheme because the person underneath you could be making more money than you. This is misleading because the only way this is true is when a distributor creates a new business center after maxing out their previous one, and they put the new business center at the bottom of their previous one. This can be demonstrated in the following example. My Business Center 1 has six levels in it with 127 distributors in it including myself. I achieve two re-entry certificates and put two new business centers at the bottom of my first one. They each contain 126 new distributors in them. I put one on the left most end and one on the right most end of the first business center. Each distributor’s own sales points are either split in half and added to the left and right side of their group sales points, or they are all given to whichever side is lacking the most points. This allows for the most effective and efficient method of benefiting from your own sales points. Each distributor purchases 25 sales points every week. I purchase 25 sales points myself for each business center, totaling 75 sales points each week.
Study the above example carefully. Sales points travel up from the very bottom of Business Centers 2 & 3 and travel all the way to the top of Business Center 1.After 1 year (52 weeks), the figures come out to the following: TOTAL – 379 distributors - $289,120 in total commissionsME – 1 distributor - $79,600 Commission - 27.5% of total commissions paid out
Level 1 – 4 distributors each make $8100 or 2.80% of total - 2 distributors each make $8300 or 2.87% of total
Level 2 – 10 distributors each make $3760 or 1.30% of total – 2 distributors each make $3940 or 1.36% of total
Level 3 – 22 distributors each make $1560 or 0.54% of total – 2 distributors each make $1640 or 0.57% of total
Level 4 – 46 distributors each make $720 or 0.25% of total – 2 distributors each make $800 or 0.28% of total
Level 5 – 94 distributors each make $280 or 0.10% of total – 2 distributors each make $400 or 0.14% of total
Level 6 – 190 distributors each make $80 or 0.03% of total – 2 distributors each make $200 or 0.07% of totalNow for some fast facts:
I make $79,600 or 27.53% of the total commissions paid out. I purchased only 3900 sales points, which is worth $390 in commissions.
The upper 3 levels (ME to Level 2) account for 19 distributors or 5% of the total 379 distributors.
Those upper 19 distributors made a total of $174,080 or 60.2% of the total commissions paid out.
The lower 3 levels (level 4 to level 6) account for 336 distributors or 88.7% of the total 379 distributors.
Those lower 336 distributors made a total of $45,040 or 15.58% of the total commissions paid out.
The bottom level accounts for 192 distributors, or 50.7% of the total 379 distributors.
Those bottom 192 distributors made a total of $15,600 or 5.4% of the total commissions paid out. The recruiting pyramid scheme is quite clear. Even those 12 distributors, who are part of the connecting line (designated in gray in the image of the pyramids) from the top of one business center to the top of the other, are still not making much. Although, those 12 distributors in those lines have a better chance than the ordinary distributor in the same level and usually consist of the top distributor’s family and friends. These commission figures are GROSS income. The distributor still needs to subtract their expenses for the year to get their NET income. For most distributors in this pyramid scheme, the figure is depressing because they are usually in the negative. Most distributors never recover their cost of taking part in this pyramid scheme. We have only considered “active” distributors in these examples. As you can see, the bottom layers perform very poorly, and because of this, most distributors drop out. In order for the top distributors to keep making their millions, they must continually recruit new distributors to replace those who drop out. If they do not keep recruiting, the pyramid scheme collapses and the majority 99% of distributors are left holding the bag while the top distributors make out with all the money by defrauding all the losers. Anti-Pyramiding Video by Direct Selling Association of the Philippines:
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