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I’m sure you’ve heard this question before, Why are top network marketing company’s products so expensive?

This is one of those ever-present questions that networkers and direct sales people will continue to encounter (probably) forever–and there’s always more to it than meets a simple answer.

One key is not to side-step it. There are good and genuine reasons for legitimate, premium-priced products–and of course there are over-priced ones as well. Honesty is best, as always, and I’ll endeavor to give you the general truth with my answer to the question.

Special Products at Special Prices
First, the products available through top network marketing companies sales and distribution model are mostly what are called “specialty” items. They are higher priced products to begin with, having more costly ingredients and more complex designs or formulas; they are simply more expensive to make and package. Some well-known non-network marketed examples are Clinique makeup and fragrance products, Apple computers, iPods and iPhones, Armani clothing, Mercedes and Lexus automobiles.

Unless you’re dealing with a scheme or a scam, these premium products outperform their cheaper, off-the-shelf counterparts, giving consumers more and better benefits. Since they have greater value, they cost more.

If these products are being outsourced by the networking company (produced by a “third-party” vendor/supplier), they tend to be manufactured in smaller production runs that do not allow for all the optimal low-cost advantages of buying and making in the high volumes mass-marketers enjoy. The manufacturing processes are more complex and exclusive. The profit margins are higher. This results in a higher quality product with more attention to detail and quality control.

The reason manufacturers and marketing companies select network marketing and direct sales is because these higher-priced products are of higher quality, and they therefore require special methods of distribution and sales.

Simply put, they cannot compete with the lower-priced, lower quality “commodity” products, which are sold based mainly on discounted mass-market pricing and brand awareness alone. Think Wal-Mart and Costco.

Specialty products are “education-intensive.” They need greater explanation; for example, what formula, ingredients and/or processes makes the product more expensive than those mass-market goods available through direct response marketing (such as the Internet and mail-order) or retail chain store sales. Many require demonstration.

Mass-market products depend on advertising, promotion and merchandising at “point-of-purchase,” all of which are required to get consumers’ attention, let them know the product exists (to create “trial” especially if it’s “brand” new), and to give them enough compelling reasons to purchase and keep on purchasing.

Going head-to-head with nationally advertised products, many to most of which are heavily discounted and sold at the lowest price possible, is a tough game for just about all smaller businesses to win. Imagine trying to sell vitamins or nutritional beverages or “prestige” cosmetics against a major manufacturer selling through Wal-Mart, or a natural toothpaste against a tube of Crest® through Kroger or Publix supermarkets.

Specialty products are perfect for the person-to-person, information-rich education, demonstration and service oriented methods of network marketing.

And that’s where the important second aspect of network marketing’s “higher price” comes in: the added value which you as a “distributor” add to the specialty products you sell.

Added Value Added

Network marketing and direct sales representatives add significant value to the product they sell and they are well paid when they do so successfully.

We reach consumers with the awareness of new products and services that ads and merchandising–no matter how persuasive or promiscuous–would not be able to reach out and touch. And by virtue of our one-on-one, personal relationship with these buyers, we appeal to them with a level of trust and service no mass-market, retail product advertiser could hope to compete with.

The extraordinary level of service Network Marketers provide is not available when buying through mail order or retail outlets. It is a real and tangible benefit, part of the product’s value–and its price.

For example: Someone tries a network marketing anti-aging health product. It’s personally presented for them–either in person or via mail–with a host of educational material about the product: scientific studies, article reprints, even books or tapes explaining how the product was made, how to use it, its unique features and its benefits.

Within one to two days, the network marketer again contacts the person to follow up, asking how they are doing, checking to see that their customer is following use directions properly, make recommendations, etceteras. These service calls continue daily, bi-weekly or weekly until the customer is satisfied and happy.

The network marketer will also continue to send informative and educational material such as updates from scientific literature. He or she will also let the customer know about other products the company offers that this particular customer with his or her unique needs and wants might also enjoy.

This is an extraordinary level of service that is a real and tangible benefit for the consumer. This kind of personal and knowledgeable attention is not available when buying through the Internet alone, or mail-order or most all retail outlets. It is one of the things network marketers are paid for and it is part of the product’s value–and its price.

Are there cases where the above education and service are not offered? Of course.

Are there products that do not have special ingredients or qualities that support a higher price? Sure.

And are there times when a network marketed product is simply more expensive to pay for the multiple-level commission structure? Yes.

Back in the early 1950s, a dog grooming service was opened in New York City to serve people living in the exclusive Park Avenue, 70th and 80th Streets area. They charged $25 to shampoo and clip a dog. They had no customers. Then they jacked-up their prices to $250 per visit–and were an instant success. The Cadillac Seville, when first introduced in test-market showrooms priced at under $10,000, bombed; at $14,000 the very same automobile became an instant best-seller.

Value is a perception. The relationship between quality, benefit and price, i.e., value, is in the mind of the consumer-beholder. Businesses price goods and services according to what the market will bear. Successful marketers come up with just the right mix of value-benefit-price.

The majority of network marketing direct sales products are of the genuine higher-quality variety, not available in stores, special in ingredients, design and making.

Most offer the convenience of in-home or on-line ordering and to-the-door delivery. They are also special in terms of…

Marketing and Customer Service

The network marketing “sales person” adds value to the product through his or her education, service and sales to the customer.

All of this has its price. And according to consumer trends and the explosive growth of network marketing direct sales companies and their products worldwide, more and more people every day think it’s worth it.

What’s the truth about the price of products offered through network marketing? Are they too high? And if so, why?

The full answer to this one is complicated. If you need a short one, mine is:

High? Usually, yes.

Too high? Sometimes… yes, but generally no.

So, if they are high, why? Let’s start with looking at what kind of products we’re really talking about here.

The Truth is, Specialty Products Cost More

Network marketing is predominantly a “specialty products” business: The products we sell most often tend not to be the type you’d find in supermarkets, drug stores or any other mass merchandiser. They are not the kind that combines the lowest possible price for the least acceptable level of quality. For a conventional retail parallel, look at the products in a natural or health food store, beauty salon, boutique or upscale department store.

Specialty products cost more to make. The ingredients are unique and high quality and production is low quantity–the amounts manufactured usually are not great enough to take advantage of the economies of scale enjoyed by big-time, high-volume, mass-market producers. So these products more expensive–both to make and to buy.

Also, specialty product makers usually cannot depend on major advertising to increase sales: they don’t have that kind of money. So they have to use more expensive forms of distribution, such as small, individual retail outlets whose profit margins are higher than mass-market stores and chains.

Profit Margins and Markups

Here’s an example: a discount chain drug store might be able to markup a bottle of vitamins that normally sells for $3.00 wholesale for less than the normal 33 percent retail profit margin. And, because they buy in large volumes, they’ll get the product for less than $3.00 to begin with.

A natural or health food store might buy that same product at the full $3.00 wholesale price, and use a markup of 50 percent to get their full 33.3 percent retail profit margin.

To the consumer, buying at retail, here’s the difference: $3.99 at the drug store and $4.50 at the health food store.

And then there’s “what the traffic will bear.”

There are sexy boxes of imported chocolate that go for $38.00 each, and poly-bags of 50 mini Reeses Peanut Butter Cups you can get for less than $3.80. If your taste tends towards expensive, you’ll generally pay more–in “margin” percentages to middle-people and in total dollars.

Let’s look at a comparison of one single product offered through the conventional manufacturer-to-retailer distribution system and the exact same product sold through network marketing.

$$$ From Conventional Manufacturer to Consumer

We know specialty products cost more to make; again, the ingredients are unique and high quality, and the production is low quantity, so they are simply more expensive.

Manufacturers speak of “Cost of Goods” (CoG): that’s the figure that a product costs the company to make, including overhead, ingredients, packaging and labeling, sales commissions (such as broker’s fees), etc.

The very minimum a manufacturer needs to sell that product for is double, or a 50 percent margin. Considering that most competitive businesses operate on a six percent pre-tax profit, that leaves them 44 percent to pay for everything else. So, the $2.00 CoG product they make, they sell for $4.00.

Now, some manufacturers sell direct to retailers–not many, but a few do, and when they do, they’ll take a higher profit margin to pay for the Cost of Sales (CoS).

However, most manufacturing companies deal through distributors, who charge for warehousing, shipping and selling the products to retail stores. Normal wholesale is a 25 percent markup, which you get by multiplying the purchase price–plus freight if not included–by 1.33. So, our $4.00 item would be sold by a wholesale-distributor to the retailer for $5.32. (Again, plus or not freight costs which can run 10 to 15 percent additional.)

To achieve a 33.3 percent profit margin, the retailer has a 50 percent mark-up–or higher. Our $5.32 product ends up on the shelf at $7.98.

Now, this is the minimum scenario–not what normally happens except in the more strongly competitive markets. It’s not the least bit unusual to find the manufacturer selling that $2.00 CoG product for $5.00 or $6.00… the distributor working on 35 percent instead of 25 percent… and a retailer – especially from a specialty market segment–look for a 50 percent profit (i.e., a 100 percent markup), instead of “only” one third.

And if all of that were true, the retail price of the product through that sales and distribution system would be more like $14.95.

$$$ In Network Marketing Direct Sales

Let’s work this one backwards (because that’s how most of the numbers are figured for your commissions).

If the networking company’s product sells to consumers for $15.00 it will have an average retail commission to the networker of from 20 percent to 40 percent. So, using a 30 percent retail commission, the company’s “wholesale” price to the mlm distributor will be about $10.50.

Let’s say that your company pays out a full 50 percent in “downline” or organizational commissions. That means that the company’s lowest from-the-warehouse price for the product would be half of wholesale, or $5.25.

That’s right in the ballpark for specialty manufacturing, distribution and sales.

It’s a Question of Value

There is also a greater value, beyond the “specialty products” issues of ingredient quality, cost of manufacture and so forth and that’s the education, information and service delivered by the person-to-person distribution network.

Learning the product’s proper use, additional uses, history, all about the ingredients, etceteras, is all part of its value. And products offered through word-of-mouth network marketing have more of this “added value” than any others.

This last point begs the question:

“Are products purchased through network marketing higher priced to make up for the compensation or commission payments to distributors and their networks?”

Can they be? Yes.
Are they… usually? No and Yes.

In an authentic, intelligent, sincere and sensible network marketing direct sales company, one that’s well-managed and directed… a company that understands that the financial health and well-being of the men and women in the field MUST lead their mission, decisions, strategy, policies and procedures… no.

But that new ostentatious corporate headquarters in the prestige location… corporate jet… an army of “distributor service” personnel… rock concert “conventions”… $50,000 “big name” keynote speakers… resort vacations and incentive cruses to exotic locations paid for by the company… luxury car allowances… are all expenses that need to be paid for. Where does that money come from?

Directly (in terms of potential commissions that will not be paid out to people) or indirectly (in over-priced products and/or inflated charges for marketing materials, self-replicating websites, business building tools and trainings), the money comes from only one place… the men and women in the field.

“So… do network marketed products cost more?” Sometimes yes and other times no.

Can they be more expensive than similar items of equal value offered in a conventional market such as a retail store? Yes, they can.

In fact, you can find numerous examples of both conventionally retailed products and networking products of similar sizes, shapes and qualities at prices that vary by as much as 30 to 40 percent or more.

The only sure rule in product pricing the world over is, “What the traffic will bear…” No matter what distribution and sales route the product travels. It’s not so much a game of “Let the Buyer Beware,” as it is and always will be…

“Let the Buyer Be Aware.”

Factor in the at-home shopping convenience… the customer service… the satisfaction guarantee… personal attention… education and information–and in today’s increasingly competitive global marketplace, the “aggressive pricing” posture being taken by more and more networking companies around the world–along with the generally superior quality of the products available through network marketing and direct sales…

… and I believe a growing number quality-conscious consumers will agree with me, top network marketing company’s products represent outstanding value.

Network marketing is drawing a lot of interest these days. Part of it is due to the bad economy. Others are simply looking for opportunities that network marketing provides, especially with the use of the internet.

But what does it take to succeed in a network marketing business? Despite all the hype, not everyone who gets involved in network marketing is wildly successful. In fact, because they lack the most essential ingredients for success, most will eventually grow discouraged and give up.

This is too bad, because a network marketing business provides a wonderful opportunity for those looking to get more control of their lives and improve their financial situation.

There are several essentials that every network marketer — or aspiring network marketer — needs to keep in mind. The sooner these are understood the better.

Essential #1 — the network marketing company

There are countless network marketing opportunities available today, offering a large variety of products and services. But not all of these opportunities are the same. Each one depends on the quality of the company behind the opportunity.

As you consider a network marketing business, be sure and learn some things about the company that you are thinking about. How long has the company been around, and what is its financial condition? What is the compensation plan and bonus structure that the company provides? Can you find people who have been with the company for years, or does everyone you meet seem to be a newbie? The presence of representatives who have been around a long time is a good sign of a healthy company.

One other area to look at is what drives the company. Is it driven simply by a desire to make money, or a passion for its product or service? I’d tend to prefer a network marketing company that had its product or service developed before it went into business, as opposed to a company that set up shop and then tried to come up with something to market.

If you desire to succeed in network marketing, take a careful look at the company offering you an opportunity.

Essential #2 — the marketing strategy

Most network marketers have very little strategy. At best, they seek to grow their business by sharing their product, service, or opportunity with as many people as possible, beginning with those closest to them. The problem with this approach is that it not only alienates you from your friends and relatives, but it is also not the most effective way to connect products and services with interested users.

When real businesses market, they have a strategy to connect with their target market. Those with a network marketing business need to do the same. An ideal way for network marketers to accomplish this is by providing high quality education and information. The possibilities of doing this has grown exponentially, thanks to the internet.

The system of attraction marketing [http://www.networkmarketingsolved.com/what-is-attraction-marketing/2008/9/18/what-is-attraction-marketing-in-network-marketing.html], which relies on the provision of quality information, has given network marketers a whole new way of doing business that brings success.  It’s strength is that it serves to attract prospects to the marketer and what she has to offer.

Essential #3 — the network marketer

Once a network marketing company is selected and a marketing strategy is developed, the network marketer becomes most important for success. There’s no such thing as just signing up with a company and plugging into a system, and then going to the mailbox to retrieve checks. Network marketers must work the system they have developed to see success.

To realize the success that’s possible through network marketing you must have patience.  Don’t expect big results overnight, but build for long-term results. Be organized, and discipline yourself when it comes to your schedule. Don’t look to others to motivate you, but be motivated from within. Implement what you are learning, and continue to work hard.

Considering the state of the economy and the increased opportunities on the internet, it’s really a very good time for network marketing. With a good company, and the diligent application of a sound marketing strategy, there is no reason why anyone willing to persevere in their network marketing business cannot succeed.

If you are new to network marketing, or evaluating your approach, keep these essentials for success before you.

~ Network Marketing is a method of marketing products, services, and/or ‘opportunities’ to other people you know, you know of, your relatives know, your friends know, or your cousin’s boyfriend’s mother’s sister’s co-worker’s mailman’s aunt’s father-in-law, etc., etc. knows. “Word-of-mouth” has been proven to be the most effective form of marketing. There are all sorts of names and terminology associated with “network marketing”, such as “relationship marketing” or “referral marketing”, but most of them are redundant. The two main ‘types’, or subsets, of network marketing are “MLM” or “Multi-Level Marketing”, and single-tier marketing.

~ MLM, or “Multi-Level Marketing” – This is a type of network marketing that uses a multi-tiered compensation plan. Unless you were one of the people who formed the company, you will have an ‘upline’. Normally, the person who signed you up for the MLM ‘opportunity’ is the next person above you in your ‘upline’. This is not always the case as you will find some people higher up in the company, perhaps even one of the original founders, will be out giving seminars (usually sales presentations with the fervor of an evangelist) and aggressively recruiting interested parties like yourself, and possibly anybody who came with you, to become new participants / distributors / representatives or other similar titles, now that you have heard the hype about becoming an ‘instant success’; a ‘millionaire’ who gets that way by making ‘money 24 hours a day’ while only actually working a ‘couple of hours a week’. Exciting, isn’t it? “Take your time. Promoters of fraudulent business opportunities are likely to use high-pressure sales tactics to get you to buy in.

If the business opportunity is legitimate, it’ll still be around when you’re ready to decide.” -(from the FTC)- “Consult an attorney, accountant or other business advisor before you put any money down or sign any papers. Entering into a business opportunity can be costly, so it’s best to have an expert check out the contract first. If the promoter requires a deposit, ask your attorney to establish an escrow account where the deposit can be maintained by a third party until you make the deal.” Once you have signed on, you will be expected to build a ‘downline’ of equally passionate ‘followers’ (participants / distributors / representatives / etc.) underneath you who will purchase DVD’s, magazines, flip charts, order forms, websites and other training / selling aids, just like you did when you signed up, and of course, inventory. Your ‘downline’ in an MLM will usually consist of one, two, three, or even sometimes more, people directly under you.

Each of those people will be expected to build a similar ‘downline’, for which you will usually receive some form of compensation or company ‘credit’ whenever they make a sale or recruit a new participant / distributor / representative / etc. This first tier (under you) may provide a source of ‘residual income’ for you as long as they are actively selling &/or recruiting in the organization. Historically, that is not long. ‘Downlines’ are typically the factor most critical to your success in most MLMs. Depending on the compensation plan of the MLM, you may receive compensation, or ‘bonuses’, as far down as seven levels. In the meantime, your efforts will most likely be providing compensation to the members of an equal number of levels above you – your ‘upline’. In the U.S., there is little actual regulation of MLMs, other than on a state level, and that is usually complaint driven after-the-fact. In California, there are some legal requirements spelled out in its Seller Assisted Marketing Plan requirements, but they are only applicable when the initial investment to participate in a company’s MLM ‘opportunity’ exceeds $500, an obstacle that most MLMs easily navigate around with a ‘did you want fries with that?’ strategy.

~ Single-tier marketing (a term not widely used) is also network marketing to other people, similar to MLM, but without the complicated compensation plans. It is a more traditional approach to marketing and selling and is more prone to be successful with total strangers (like the old ‘door-to-door’ business model and the current in-home-party / presentation model) than MLM as it usually does not involve aggressively recruiting or selling an ‘opportunity’ – just a product. If the product is a good product, usually so is your compensation. That compensation is based primarily on the success of your own efforts and sometimes those of a sales force under your direct control, but not the thousands of participants that MLMs can potentially involve. You are almost never more than three levels down from the main office or supplier (Ownership / Regional Manager / General Distributor or such structure). Your commissions on products are usually many multiple times that of those in MLMs.

~ Many people use the term “Direct Selling” or “CDM” (“Consumer Direct Marketing”) interchangeably with Network Marketing and MLM, and there is even a Direct Selling Association that seems to be trying to be all things to all network marketers. But calling most MLMs ‘direct selling’ companies seems to be somewhat spurious when most MLMs make more than 80% of their, and their participants’, monies by recruiting, rather than by selling products. This never-ending recruiting by so many MLMs and their complicated compensation plans is what has gotten the entire business of network marketing associated with the term, “pyramid scheme”. Regardless of whether a compensation plan is structured for you to have two, three, or more people on the first tier directly under you, diagramming the plan on paper gives it the appearance of a pyramid. Most single-tier network marketing companies that provide a good product at a fair price are still unfairly looked at by most of the general population as being pyramid-like in nature and thus share the negative connotation. But this is no more true for them than it is for any business employing independent sales people. In reality, Network and Multi-Level marketing has been around for more than half a century, with three of the top 25 companies based in the U.S., according to Nexera, still going strong after all that time. Eight of them have been in business at least 30 years. Many famous businessmen, such as Robert Allen, Donald Trump, Mark Victor Hansen, Robert Kiyosaki, etc., are proponents of network marketing.

~ One other term that many people use in error when discussing Network Marketing is “Attraction Marketing”. This is a style of marketing that can be used in nearly any venue and is not limited to network marketing.

~ Some of the attractions of network marketing are the ideas of working for yourself (being your own boss, setting your own hours/schedule), creating residual income, and (usually) little up-front investment (unlike franchising). The idea that you can create a business and an income solely from your own efforts has always been part of the entrepreneurial, or pioneer, spirit. But are you really your own boss if you want to be successful in network marketing, particularly MLM? How many hours a day or week will you have to work at this? Are you seeking an alternative source of income? What are your motives? Do you like people? Can you accept the responsibility for the failures and mistakes as well at the rewards?

BE YOUR OWN BOSS: Robert L. FitzPatrick of PyramidSchemeAlert.org reports in his “The 10 Big Lies of Multi-Level Marketing” that “MLM is not true self-employment. ‘Owning’ an MLM distributorship is an illusion. Some MLM companies forbid distributors from carrying additional lines. Most MLM contracts make termination of the distributorship easy and immediate for the company. Short of termination, downlines can be taken away with a variety of means. Participation requires rigid adherence to the ‘duplication’ model, not independence and individuality. MLM distributors are not entrepreneurs but joiners in a complex hierarchical system over which they have little control.” To be your own boss, you will have to be able to generate the same amount or more of the hype, excitement, and passion that attracted you to this business in the first place. Even if you are a gregarious person by nature, you will still have to develop the marketing and ‘people skills’ that it takes to gain followers.

SET YOUR OWN SCHEDULE: Will you be joining a network marketing company on a full-time basis or continue to maintain your current work schedule and ‘work the business’ on a part-time basis? For success in any venture, you will have to put in the hours. Can you spare the time without losing any income? In network marketing, by definition, you have to ‘press the flesh’ with your potential customers. In MLM, as ‘downlines’ are crucial to your success, that interaction requirement will be magnified immensely for you to acquire, not only customers, but, new recruits on an ongoing basis. Your schedule will be dictated by when they are available and when your ‘upline’ is having sales and/or training meetings. At some point, when you are educated enough in your product or promotion, your marketing methods and routines, and the business end of networking / relationship-building, you will have to start scheduling your own presentation meetings, based on the availability of your potential customers &/or recruits. Almost all of these meetings will be in the evenings and on weekends.

CREATE RESIDUAL INCOME: “Residual Income” is cash flow that recurs continually as a result of your initial efforts. This is the goal of almost any participant in MLM, but is statistically rarely achieved. Other than the entertainment industry, there are few industries that can claim success at generating residual income without additional action, such as servicing their clients by way of maintenance. To help achieve this goal, most network marketing companies deal in “consumables” – products that, once used up by your happy customer, will be automatically sent out to the customer for as long as the customer likes without saying, “NO!” A few well-known network marketing companies have been very successful at this with their own unique lines of products, but not many MLMs; particularly those who provide a mediocre product at an inflated price to more recruits or participants than actual retail customers.

WORK FROM HOME: As long as you are working with a ‘small circle of friends’ you can probably hold most of your meetings/presentations in your home or theirs (if they’re looking at joining into your business model). But to actually make a profit in network marketing, you will probably have to widen that circle substantially, or augment your marketing with brilliant use of the Internet (The FTC offers some excellent advice to consumers considering an Internet-related business opportunity). The demographics simply don’t work to support yourself on sales of nearly any single line of products by staying in your own neighborhood. Although you can start out with a ‘localism’ approach, success with limited products &/or services will require you at some point to extend a broad reach. Some network marketers are leveraging the Internet for sales as far away as China. Credible research from the Consumer Awareness Institute and others has deduced that less than 1% of U.S. participants in MLMs make an annual profit. You will likely have to leave home to increase your income to the point of profit.

~ The odds of making a profit in an MLM (remember, not ALL network marketing is MLM) are worse than making a profit from gambling in Las Vegas. The rewards can be very high if you are one of the early-adopters in a company, are gregarious and people “know, like, and trust you”, if you have a large pool of potential customers &/or recruits to work with, and can provide all the support your ‘downline’ needs to prosper. Most network marketing companies have a very low initial investment requirement, or ‘buy-in to play the game’, so the cost to you up front is one of time more than cash. But to increase your odds of success, there are a few things you should try to find out about the ‘opportunity’ before you jump in with both feet:

1. Can the company show that they sell more products directly to consumers than to recruits &/or distributors / representatives / agents / participants / etc.? Most MLMs sell 80% or more of their products to their ‘downlines’ and less than 20% to retail customers. This is why the term, “pyramid scheme” is frequently applied to MLMs and why many of them are sued in states’ courts for their questionable business practices. Do your research.

2. Are the company’s products the same ones you can find somewhere else for less money? If they’re not the same, are they similar? Do they have the same makeup or contents? Besides you, what would be your customers’ motivation for dealing with you as opposed to just picking up the same or similar product on their next trip to the grocery store or mall? The FTC says, “If the business opportunity involves selling products from well-known companies, call the legal department of the company whose merchandise would be promoted. Find out whether the business opportunity and its promoter are affiliated with the company. Ask whether the company has ever threatened trademark action against the business opportunity promoter.” Do your research.

3. What kind of support and warranty does the company provide for both you and its products (They must provide excellent support)? Does it accept returns? Are there restocking fees? Is there 24/7 access to someone in customer support and your ‘upline’ management? Have there been any product recalls? What kind of history does the company have? How long has it been in business? What is its rating with the BBB? Have there been lawsuits against the company? Has Consumer Reports reported on the company or any of its products? What kind of marketing & advertising budget / plan does the company have over & above what you would have to do on your own? What kind of publicity has the company produced or plans to produce? If the company is new and you are looking to ‘get in on the ground floor’, what can you find out about its founders and top-line management and their history and backgrounds? DO YOUR RESEARCH.

4. Who actually makes the money? Make sure that you completely understand the company’s compensation plan and just how & where you will fit into it, and what you will have to achieve to become a “success” with that company. How is that success measured (you can’t eat blue ribbons and trophies)? What percentage of participants in the company are successful. What is the dropout rate? Is the person who interested you in this venture making any money? The FTC says, “If a company claims its participants can earn a certain income, then it also must give the number and percentage of previous purchasers who achieved the earnings. Get these earning claims in writing.” “Results may vary.” The FTC requires most business opportunity promoters to give potential purchasers the names, addresses and phone numbers of at least 10 previous purchasers who live the closest to the potential purchaser. Ask questions. DO YOUR RESEARCH.

~ Besides the FTC, another government agency, the Bureau of Labor Statistics, has information online in their Occupational Outlook Handbook, 2010-11 Edition – This covers Direct Selling vs. MLM, Network Marketing, etc.

~ You CAN find well-established, reputable companies out there that depend on sales of their products &/or services to consumers more than recruitment or sales to distributors / representatives / agents / participants / etc. You will appeal to them because of your network of friends, relatives, and acquaintances (your ‘warm market’) who are more likely to listen to your views of a product or service – your ‘word-of-mouth’ – than they are proven to be from conventional advertising. Just remember to
DO YOUR RESEARCH!

Copyright 2010 – IMSI / Bite The Recession

Without any doubt if you are an advocate of financial freedom or a person open to new business opportunities, chances are you have heard about multi-level marketing (MLM), direct selling, or network marketing business opportunity and your problem is to know the best network marketing company to join as there’re varieties to choose from.

You may probably have an image firmly planted in your mind of what network marketing is, based on the seemingly endless debate over whether these companies and programs are legitimate business opportunities or not. You may have been in the industry for some time, shifting from one company to the other searching for the best company to join.

This article will give you the real scoop about network marketing and how to know the best company to join in MLM. I strongly believe that the entire industry is poised for explosive growth and can be one of the most significant solutions to any country’s youth unemployment crisis. The biggest problem in the industry is amateur networkers coming into the industry without proper training about network marketing and the leaders in the industry are not doing much to train the upcoming and aspiring network marketers.

Those who are in the industry are not willing to invest in their education to know the right way to do the business, that is why “The beauty of MLM is the low cost of entry and the bad thing in MLM, is also the low cost of entry. People fail to invest in their education once they join any MLM company and expect to be successful in the industry and once they are not getting the result they anticipated thy move to another company because the money they spent in joining the previous company is something they can forget without a fight.

If they spend a fortune to start it, they will do everything possible to make it work; they will invest in their education, give their time because the money involves cannot go down without them looking for ways to recover it. But in network marketing they expect more from the little investment and if they don’t see that in few weeks they will start screaming SCAM. One thing network marketing does is to expose you to your weaknesses and require you to address them through education or you quit. Many leave the company once that weaknesses showed up and label that company fake.

In every company business presentation the presenter will say they are the best and their distributors will go out to say the same to their prospects. I will not blame them for that as any company that puts money in your pocket is the best company to you. To be successful in any network marketing company require a renewal of your mind, you must have a positive mental attitude towards network marketing.

I cannot list a number of Good network marketing companies, below are some of the factors that make up a good network marketing company and it will help you choose wisely.

Check The Registration and Ranking Status: In the Network Marketing and Direct Sales industry there is an organization called the Direct Selling Association (DSA) http://www.DSA.org. There are thousands of Network Marketing Companies in the world, only about 200 or a few more of them are registered with DSA. The reason is because every member company must abide by high strict business ethics given by the organization which include on how they deal with their distributors. It does not mean that any other company that is not registered with them is not legit, but you will be on the safe side working with a company registered with them because they belong to a regulatory body that check-mate their excesses. For ranking check mlmrankings.com and businessforhome.org search on the company to know if they have been featured or rank on these sites. Check an honest review of the company through Goggle and YouTube to know what distributors and online network marketing coaches and writers have been saying about the company. I know there are companies out there with good intentions that are not registered with DSA, so explore every other means below to make your choice.

How old is the company in business?

You may hear terms like “ground floor company” or “start-up opportunity”. This entirely means the company is brand new. Statistics show that high percentage of new companies fail within their first five years because they are still in their formation stage. Every company started new and those that play the gamble of joining at the formation 5 years are the one reaping most of the dividend today therefore If you are OK with joining a new company in hopes that it will still be around after five years and you are one of the few that “got in early” then this should not be a problem for you.

Check the Integrity of the Management Team. If the company is relatively new and you want to go ahead with it, check the integrity of the management team, the experience of the CEO and the team in Network Marketing Industry, their backgrounds and reputations. How many years’ experience they have in the industry and have they been successful in other companies in the network marketing industry. Their experience will help them shape the company to last a very long time than a money bag that just want to take advantage of the industry to amass wealth.

If you can, talk to people that are currently involved with the company. Ask the person that is presenting the business opportunity to you if they can introduce you to other members, preferably members not in their team and listen to their stories about their real life experience with the company.

Check Their Products or Services: This is a business, and just like if you were running a franchise or a storefront you must take a franchise of a product you know you can sell easily. Find out the features and benefits of their products to see if it will meet the need of the people you want to introduce into the business and those that will be your customers, will they use it and need more of the products?

Examine the Compensation Plan. Compensation plans come in all shapes and sizes. Some are extremely complex to understand and others are very simple. You must know how fair and generous the overall distribution is. This is really important as the pay plan represents exactly how you’ll get paid–or not get paid. If you don’t understand the pay plan how are you supposed to know how much effort will be required for a certain level of pay?

Sincerely Compensation explanation is complex subjects that cannot be explain fully in this article, even when you are explaining a simple compensation plan, but you must know the basis before starting your own network marketing business.

There are five types of compensation plans used in Network Marketing industry, with many variations of each. There is probably no one plan that is perfect or right for everyone at every time. What may be the best plan for you today could change due to regulations, your experience in the industry and/or the type of product, even new technology. And, it’s those variations that can make the difference.

Let’s take a look at the 5 different types of plans in their most basis forms, they are…

1. Stair Step Break A Way {Board Breaking etc)
2. Uni-Level
3. Matrix
4. Australian
5. Binary

Most new aspiring network marketing business owners always ask, which of these network marketing compensation plans is best. There is no one sentence that fits the answer to this question. It depends a lot on your personality and what you want to achieve from your network marketing business. The thing to remember is that, apart from retail profit where applicable, a network marketing compensation plan pays you for a combination of product sales and sales management. So if you are more of a traditional salesperson who can move tons of products, it may be advisable to go with the company that pays more for product sales than for managing sales teams. If you really want to make it big in network marketing, study the compensation plan of any company before signing up.

Online Marketing: Make sure the company policy allows you to utilize the internet as a marketing tool and they must have system in place that will help you do that, such as your replicated website, online payment system, online product delivery system etc. People are utilizing the internet as their main marketing tool because of the automation on the internet that has allowed a much more consistent method of following up.

The only reason why some companies don’t accept online marketing is due to people who utilize it to spam and that can give a very bad reputation not only to the distributor, but also to the company you’re working with.

In conclusion, the best company in network marketing is the one that has a realistic pay plan, which is a compensation plan where the incentives given to members are achievable by the company through their product and services. You must also take notice of some of the points listed above to make your choices.