Compensation Plans in the MLM business:

Binary Compensation Plan

All Binary pay plans are fixed width in nature, limited to no more than two frontline individuals for any income center. One of the two frontline is referred to as the head of the “Left Team” and the other the head of the “Right Team”.

Sales volume is then accumulated between each team to unlimited depth. While the methods of qualifying to accumulate volume can vary slightly from pay plan to pay plan, most Binary compensation plans will pay on accumulated volume in one of the three following fashions:

1. 1/3 – 2/3 Plan; this plan type calls for a prescribed number of sales to be present in total between both teams, with a minimum of 1/3 of the required volume present in one of the teams. E.g. 9 total sales with a minimum of 3 in one team pays a $50 commission.
    
2. 2. 50 – 50 Plan; this plan type also calls for a prescribed number of sales to be present in total between both teams, however it looks for an equal number of sales between teams. E.g. 10 total sales with a minimum of 5 in each team pays a $50 commission.
    
3. 3. Weak Leg %; this variation of the Binary pays commissions on a percentage of the sales in the weak leg when a prescribed number of total sales are present between both teams. E.g. have 10 total sales between both teams and you will receive 10% of the sales in your weakest leg (Note: weakest leg being the one with the fewest sales present).

Many Binaries also break payment of commissions down into what are referred to as “Steps” and “Cycles”. The term Cycle refers to the payout of a full commission amount. The term Step refers to increments of Cycle payout intended to get money into a distributor’s hands as quickly as possible.

As an example, a company may have a $300 Cycle that pays in three Steps. When 1/3 of the necessary sales have been gathered a $100 payout is issued. When 2/3 of the necessary sales have been gathered a second $100 payout is generated and the final $100 is paid when the remaining 1/3 of the required sales is collected.

Once sales are paid upon, a Cycle has been completed and those sales are removed from a distributor’s Left and Right team counts.

Unilevel mechanics are exceedingly easy to summarize – Unilevel pay plans allow an individual to have an unlimited number of income centers frontline.

Beyond that, a Unilevel is essentially rule free. That is, the plan designer is free to add any other qualifications, commissions, bonuses, etc. that he or she wishes to the basic unlimited frontline structure.

Binary/Unilevel Hybrid plans bring two dynamic compensation plans together in one package.

The Binary represents the “front end” of the system. Each distributor that joins the company receives a position in the Binary and can choose to qualify it for commissions (or not) at their discretion. The Binary genealogy is built off placement sponsorship and takes spilling into account. For additional information on Binary pay plans and spilling, click on the “Binary” tab in this area.

Binary plans make a great compensation front end due to the excitement and quick, yet substantial, commission checks that they can produce.

While the Binary represents the front end of the compensation plan, the Unilevel represents the back end. As with the Binary, each distributor receives a Unilevel position by default and is automatically eligible to earn retail commissions on the retail sale of product/service to customers. The Unilevel genealogy is built off enrolling sponsorship with no spilling taking place. For additional information on Unilevel pay plans, click on the “Unilevel” tab in this area.

Unilevel plans are a solid compensation back end due to their ability to build stability in the form of long term recurring commissions.

Width for any particular Matrix can be determined by looking at the first number present in the Matrix description. For instance, a “3 x 7” Matrix indicates a maximum frontline width of three. The second number typically references the depth of levels based commissions to be paid within the plan.

Spilling is the result of fixed width. Fixed width plans restrict the number of frontline income centers that any individual can have; once the prescribed number of frontline individuals is in place, any additional personally sponsored must be “spilled” into the Downline.

There are a number of different methodologies for spilling distributors into the Downline, however the default methodology offered by MLM Builder is “Left to Right, Level by Level”. This spill type inserts a new position into the Downline

Will Netprecision support other plan types – Hybrid Plans (e.g. Binary/Unilevel), Australian Plans, Recycling Matrices, Stair-Steps, Stair-Step Breakaway, etc.? Absolutely!

Netprecision has been engineering software and making clients’ software dreams a reality since 1996. We specialize in putting your vision into practice.

Each of our software releases is tailored to provide accurate reporting for the compensation plan type that it houses. Whether you require a replica of an existing compensation plan or a truly original design, we have the knowledge, expertise, firepower and commitment to deliver.