We buy products at wholesale prices and sell them at retail prices. (It's worth noting that we can buy a single unit of a given product at wholesale price. We don't have to buy multiple packages of the same product.) The second option is a percentage of the generated turnover. Each company calculates this differently. The principle is that we recommend this business to friends. Once they sign up, they can sell products, earning profits from the margin. We then have a set rate/percentage of the turnover they generate.
Initially, it may be a small amount. However, with every hour devoted to this business, our payout increases.
For X time, our payout amount will depend directly on dataset how much we produce/sell. There is also a development point beyond which the group creates the amount of our payout.
This point is also a critical point. Many people can't wait until this point. They give up multi-level marketing before they even achieve the expected benefits.
Where does the money come from in MLMs?
From the distribution of the products offered. Companies operating in the MLM system give up certain things, which consequently increase the price of the product. These things include advertising (on TV, radio, etc.), intermediaries, and the shelf in the store. The only advertising comes from the distributors who offer the product. By giving up this advertising, the company can use this money to improve the product and pay commissions to distributors.
Therefore, for money to come in, sales of goods are necessary. That's why we recommend products to family and friends. What guarantees success for an MLM company?
