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Sunday, October 12, 2014

How does mlm and residual income work


What does words like MLM, Residual Income and Pyramid Systems mean and how does it work.

Many uninformed people believe that mlm (multi-level marketing) or network marketing is a pryramid system and that it is illegal.

The structure of a mlm payment system looks a lot like a pyramid and therefore they think that only the top people make money. This could not be further from the truth.

People also believe that it is wrong to pay money to make money.

If you are invited to join a program and only have to pay once you must be careful. Ask the person who invites you where the money comes from to pay the other people.

Why? If there is no money coming into the system from sales of a product, where is the money coming from...have you asked yourself this question.

The only source it can come from is from new investors who are told that they can make huge profits by investing a large amount into a specific system...and they only have to invest once.

MLM is nothing else than sharing commission on a product that is sold. There has to be money coming into a system on a regular monthly basis...that can be from sales or membership fees, etc.

This is the big difference between a legal MLM and an illegal Pyramid System...

When you have a product that can be sold independently without the mlm system you can investigate it further because that will already be proof to you that the product can work without the mlm payment structure and that is a good sign.

The mlm payment structure gives the owners of the product the opportunity to save on big advertising costs in the media, television, radio, etc because they make use of the oldest and best advertising method there is and that is word of mouth...people telling people.

Let's look at an example....

Direct Selling
John is a sales rep and sells product A. He gets 10% commission on every product he sells. At the end of the month his sales gets calculated and he gets paid for all his sales. In the new month he has to start selling again because if he does not sell anything he will not earn anything.

Product  A   10% Commission
R100.00            R10.00

MLM

You get Product A to sell but instead of only you selling, you get other people to help you.

John joins the mlm program (Level 1) and gets somebody ( Mary) to help him (Level 2). Mary gets somebody to help her...(Scott) Level 3.

In the meantime you get somebody else to join as well (Peter) (Level 2)

Example

Level 1                                                       i  John
Level 2                                           i Mary           i (Peter)
Level 3                                           i Scott      i              i
Level 4                                           i           i        i            i
Level 5                                           i     i      i         i    i       i
Level 6                                           i    i   i    i     i   i   i   i   i

Now the commission is split into the different levels and depending on the product owner (company) who decides how much commission is paid on each level you can earn a lot of money from the people below you...depending on who works and who does not work.

You will earn a residual income from all the people below you. This is where a lot of people think residual income, sometimes referred to as passive income means you do not have to work....please wake up....there is no such thing as a free lunch.

Passive Income means you have worked hard to refer Mary.  Mary is also working hard and pays her monthly fee for the use of the product. That fee is then split up in different ways. The cost of the product is deducted...overhead costs (just like any other business) are deducted and the commission is split into the different levels.

That is in short how mlm works. You get paid every month for the work you put in the beginning because as long as every member who join, pays their monthly fee for the use of the product (whatever it is) you will receive an income from the members you referred as well as the members they referred for several levels below you. This mean you can receive a substantial income from several members over a period of time without doing the same work every month. It also means that your income does not start at zero every month but grows as the amount of members in the levels below you, grows.

It also means that you do not have to do all the work yourself but if each person does their little bit of work and refer only one person per month you will have a group of people of more than 2 000 below you in 12 months....imagine the amount of income you will receive from that amount of people.


 

Monday, October 6, 2014

Why do I have to Pay money to make money with MLM


It's funny isn't it.

When you get an offer where somebody offers you a million bucks by doing nothing or something like, just share this photograph or post on FB and you will receive a brand new BMW....most people will say the following..if it's sounds too good to be true...it probably is "too good to be true".

Ironically, a lot of people saying that, will secretly still share that link or photograph in the hope
of getting that car or a million bucks.

We have all seen those posts stating that some super rich millionaire has decided to share his millions of $$$'s with everybody on FB...?

Do you really believe it....have you shared something like that in the past. People do this for the same
reason they buy a lottery ticket...in the hope of becoming an instant millionaire.

Let me share a secret with you quickly...this is how people get's hold of people's Fb profiles and email addresses...and they start sending them spam...unwanted ads and messages...Think twice before you share those opportunities again.

Now, on the other hand, somebody makes a post and places an ad in one of the groups on FB offering people an opportunity to "work from home".  This requires that you sometimes need to pay a registration fee as well as a monthly fee.

Wow...red lights...everybody in that group shouts at the poor guy trying to rob people of their hard earned money by scamming them with registration costs as well as a monthly fee.

My question is, what do people want...everybody wants to earn extra money but nobody is prepared to do anything for it or put in any work to earn it.

This ad is probably about a network marketing product of commonly known as mlm (multi-level marketing).

I will agree with you, there are scammers out there as well  as gimmicks but if you really do your own research you will probably find that is not a scam.

How do you know which ones are scams and which ones are legitimate (legal)

First of all, there must be a PRODUCT. Any business needs a PRODUCT to sell to make money. The owners of the business/product use network marketing to distribute and market the product because people love to talk and share their views and experiences with other people.

This is something that most people do without realising it..."networking". When you have eaten out at a nice new steakhouse you will tell your friends about it (first level) and they will tell their friends about it (second level) and they will tell their friends about it (third level) and so it carries on. This is probably one of the best forms of advertising.

The steakhouse is getting the best possible form of advertising without paying for it and you are definitely not paid for it, are you?  That is all network marketing is...telling other people about your experiences...and getting paid for it.

Now, network marketing was developed many years ago by a company who realised that they could increase their sales by getting their sales reps to appoint their own sales reps underneath them and sharing their commission amongst them. By doing this they could cover a bigger area and reach many more customers which resulted in bigger sales and profits.

This system was developed as early as in the 1920's, 1930 and 1940's with various companies and products. This has been going for so many years and still people think it's a scam?

I agree that some of them may be illegal or scams.

What to look out for...
1. When somebody offers you an abnormally high income with only a once-off payment required. Just ask yourself one question...where does the money come from to pay current members. The answer is.....yes, you guessed it...they need new people to register on a continuous basis to pay the existing members.  Sooner or later the once-off deposit required to join will be increased slightly because the organisation does not have enough to pay the current members anymore. 

With mlm you have to pay for the use of the service or product on a monthly basis and that money is used to pay the company who provides the service or product and also the sales people who get a monthly commission. If you work and grow your organisation, your income grows...not by getting new people to pay more money to pay current members.


This is one of the differences between a legal mlm system and a scam. 

If you are interested in learning more and becoming involved in a legal multi-level marketing product where you can start working part-time from home at a very low cost to:

1. Make yourself an extra income on a monthly basis to cover your monthly expenses

2. Build up a residual income which will possibly help you to retire earlier than originally planned

3. Make sure you have an income to rely on for the day you retire

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