How is that a pyramid scheme if he is under me?
This is what it looks like
MLM Company
Me
Person A Person B
Person D Person C
Person E Person F Person G Person H
Remember I sponsored Person A and B. Let's say that in this is MLM company compensation plan looks like this.
- First level: Max 2 people, I'll get $1 for each person you sponsor
So I have Person A and Person B
- Second level: Max 4 people, I get $ .25 for them.
(These are the people That A sponsored so they are D and C: Remember I'm getting $.25, A is getting $1 for D and C)
- Third level: Max 8 people, I get $.10 for them
(These are the people sponsored by D and C, so that means E, F, G, and H)
OK so all these rules work the same for everyone. Person A makes only a dollar off of his first level and so on.
Let's do the math
Me = A+B+C+D+E+F+G+H
Me = 1+1+.25+.25+.10+.10+.10+.10 = $2.90
Now let's look at Person A
A= C+D+E+F+G+H
A= 1+1+.25+.25.+.25+.25 = $3.00
How is that a pyramid scheme? If it was I would be making the most money because I'm at the top right?
Now if Person B did the same thing that Person A, it's true that I would be making more than both of them. But that would be because I had more people than both of them.
This is a very very very very basic set up but I think it shows what I'm talking about.
Now let's look at Corporate America
Tackle Shop
Owner
Manger A Manger B
Employee C Employee D Employee E Employee F
Ok let's say that this tackle shop makes 1M in revenue
Let's look at everyone's yearly salary.
- Owner: Unknown
- Mangers: 50K each
- Employees: 30K
Now this company made 1M this year. Salary expense without any over time is $220k
So after everyone gets paid the Owner has 780K left to spend as he wishes. I'm not going to get in to calculating taxes and liabilities he has to pay for the company but let's just call net profit 300k.
So at the end of the day the Owner makes $300k. He paid 220K for the asset of having people work for him so he made 780k off a 220k investment.
It would take a manger making 250K in working over and bonuses to equal what the owner is making.
It wouldn't matter if the owner ever came to the shop or talked to a signal customer he still is going to make $300k.
So as you can see both these methods look like a pyramid.
But only one has all the money going to the top.