Know how binary MLM income calculator plan works and why they are so popular in the networking marketing business.
Binary MLM plans are considered to be the most attractive MLM plans of all. The reason is your network can be grown efficiently with all the help you can get from your uplines, downlines and sidelines.
To explain to briefly, a Binary MLM plan, as the name suggests, allows you to have only 2 direct downlines in your network. Yes… just two. Any distributor in this MLM business plan » can have only 2 direct downlines. If you wish to grow your network, you have to keep adding downlines to your downlines.
Binary MLM plans were introduced sometime around the late 1980s and have become one of the four most popular company structures in the 2000s.
The two distributors who have been signed up are called the power leg and the inside leg. New distributors who sign up are usually placed under the next available empty spot under the power leg. The profit leg has distributors who are usually prospected and recruited by the immediate upline. What a binary plan does is that it puts a firm structure in place that ensures that all distributors have a similar fixed income plan as per the depth of their network, i.e., you can earn good money only if your downlines are active and growing your network. Your income stops or becomes stagnant if your downlines are not active.
In a binary plan one can get three types of commissions:
Sponsor bonus: A distributor gets a sponsor bonus when he signs on a distributor directly under him. This can be a lump sum amount or a percentage of the plan signed onto by the prospect.
Pairing bonus: MLM businesses pay pairing bonuses to distributors for the downlines placed under their direct downlines. This bonus is sometimes calculated as a points system for every person signed on or can be a lump sum per person or as a percentage of what a new joinee signs on as.
Matching bonus: It is the amount earned as a percentage for every person signed on by your downlines. This actually starts almost 5-6 levels below you and is actually a motivation for you to grow your network deeper.
Not all MLM companies have the same compensation plans for their binary MLM plan, but some usual compensation plans have been explained below.
Each distributor under you is called a leg and the one performing the worst is called a payleg and the one performing the best is known as the profit leg. As per a balanced volume concept used in binary MLM plans, members of both the trees will be paid a certain part or percentage of the pay leg’s incremental growth. This plan does not look at how much each individual has achieved. This results in a process called flushing, i.e., the sales difference between the profit leg and the pay leg is actually lost by this particular network.
This is a major disadvantage which results in distributors leaving an MLM business or not putting in a enough effort as it does not completely recognize an individual’s efforts.
Most distributors introduce many more sponsors in the pay leg in order to cover up for the backlog. This process is called balancing the legs. This is basically handholding one of your downlines in order to ensure that both your legs are on an equal footing.
Many MLM businesses frown upon this practice and try to avoid this by framing rules that prevent distributors from balancing their legs.
Another disadvantage of the binary plan is that as your network grows, the amount of money earned also reduces. Yes, you read it right. The money reduces. This is because, your network may grow, but the actual sales of your products may not increase by a lot as sales will still be carried out by a only few people.
While this results in your network members growing exponentially, but not your sales. So, your commission and incentives, which are distributed across your team, will not grow exponentially, and what you as an individual get will be much lower than before. This results in a lot of heartburn and resignations and has been cited as the biggest reason for many successful MLM businesses » to shut down.
An important factor which influences the running of your MLM business is the MLM software you choose. Having a binary MLM plan compliant software ensures that you get all the MIS reports in a format of your choice without depending on your company auditors and finance team.
One such software you can trust is DNB MLM Software. Apart from providing the usual software solutions like inventory management, OTP facilities for payments, SMS blasters for instant network communication, excel MIS reports etc. what sets them apart is their ability to customize softwares and solutions as per the requirement of your business. DNB also supports the various binary MLM needs like computing the sponsor, pairing and matching bonuses, keeping a track of the network, the profit leg and the pay leg etc.
A binary MLM plan is currently the most sought after MLM plan as it allows distributors to grow their network easily. However, what is most suitable for one person may not be suitable for another and you should choose your business plan carefully based on your unique needs. Any software you choose thereafter should take into account these needs, so you can derive maximum synergies for your business.