The unilevel compensation plan is a common in modern day network marketing. By and large, a unilevel compensation plan is a linear, whereby your income is directly proportional to the number of people in your organisation.
By contrast to the stairstep breakaway plan, the unilevel plan is a very easy compensation plan to understand and explain. In companies with more complex compensation plans, you would start as a distributor and move up to Silver, Gold, Platinum, Ruby, Emerald, Diamond etc, etc.
But in a company that employs the unilevel plan, you’re just a distributor. There may be bonuses such as a car bonus, but there are no “generation” override bonuses for leadership groups like there are in a stairstep breakaway, because there is no provision for these in the plan.
Every person you sponsor into a unilevel plan goes onto your frontline. You can go as wide as you want. However, unilevel plans only pay you a commission to a certain level. Most unilevel plans only pay you to the sixth, or seventh level. Any distributors in your downline below this level, you do not receive a commission from.
It’s very easy to crunch the numbers to find out how many distributors you need on a regular monthly volume to make a certain amount of money.
A unilevel compensation plan may pay you like this: You get a 5% commission on all of the volume of your first level, 5% on the volume of your second level, 6% on the third, 6% on the forth, 7% on the fifth, and 7% on the sixth.
But it’s important here to distinguish between a downline and a payline. You may have built a huge downline that goes down, say twenty levels (20), but you’re only paid to the sixth level, so therefore, you’re missing out on a significant portion of your total group volume.
This is the main disadvantage of the unilevel plan. It lacks the flexibility for you to achieve your goals. No distributor gets a promotion, you always stay at the same level. The only way to increase your income is the sponsor more people. So there’s really no incentive to develop leaders in your organisation.
It discourages leading distributors to train any downline member below their payline, since there’s no incentive. They’re not getting any commissions from him, so why bother? It causes sponsors to be thin in support, which is not conducive to retention. Downline retention is so critical to long term success.
The other disadvantage of the unilevel compensation plan is every new person you sponsor goes on your front line, which means every distributor you sponsor is in competition with each other. It discourages people to work together as a team. And teamwork is where all the leverage is in network marketing.
People who can recruit like a machine will get the most from unilevel plans, because they can maximise the compensation plan by going as wide as possible. And it pays to have frontline members who can do the same – go wide, wide, wide.
However, in the network marketing industry, the average distributor will sponsor less than 3 people (2.7 in fact) in their entire MLM career. Hence for the average distributor who simply won’t sponsor multitudes of people into their business is better of in a plan that pays deep, where people can work together as a team.
Due to these limitations, it is common for network marketing companies who start out with a unilevel plan to adapt their compensation plans to act more like a stairstep breakaway.
To your MLM success,
Wayne Wu
Founder, The Profitable Networker
P.S. I would love your input! If you have an opinion that would contribute to this discussion, please leave me a comment below.
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