90% Payout. How Good is it?

Many MLM (Multilevel Marketing), Network Marketing and matrix programs proudly announce that they have a high percentage payout to members and clearly this is something dear to all our hearts. The greater the percentage of received funds distributed the greater will be the income of the individual members.

It is worth looking at the real full effects of this situation on all members rather than just assuming the benefit as something we can all enjoy in full. So let us consider a payout rate of ninety percent which most of these businesses would be proud of.

A simple business basic is the fact that every business has certain operating costs that must be met from their total income. For an online business there is the cost of domain names and hosting, help desk support, administration and possibly programming and promotional costs.

There is no disputing the fact that to have 90% of the funds available for distribution is a fairly satisfactory situation and would seem to offer significant benefits to participants.

I would like now to consider a hypothetical case so that we can see just how good this 90% payout really is.

I will assume a program costing $50 per month with a membership of 1 million people. The structure of the matrix is not really significant in the calculations I will do as we are applying some business basic thinking and looking in general terms at how the money could be distributed.

I will also assume that there is a scale of incomes with some members earning relatively good incomes and members lower in the matrix earning lesser amounts. This is totally consistent with the reality of these programs at any given point in time.

Therefore total funds available for distribution each month amounts to $45 million (one million members X $50 X90%).

The table below shows how far down the matrix this money might possibly be spread assuming 1% of members are earning a moderately good income and income levels progressively reduce for each next group.

Members Monthly income Total
10,000 $4000 $40,000,000
1,666 $3000 $ 4,998,000
1 $2000 $ 2,000

As you can see the total that is available will reach 11,667 members starting at just a reasonable level of income. This means that, in this case, 98.83% of the members will receive no income at all

I would add here that most of the programs I see promoted offer a much better income potential than $4000 per month.

It does not matter how you structure the matrix or what other figures you use there will always be the vast bulk of members earning much less than an acceptable income.

By the way do you realise that a payout rate of 90% is fairly close to that offered by lotteries, casinos and race tracks?

Learn how to apply some business basics and save yourself from joining the doomed programs in the first place. So often the claims show a potential benefit that, in reality, can only ever be achieved by a minority of members.

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