[finance-guy]

Can You Make Money With Optavia

Optavia is a Baltimore based health and wellness company. There is a wide range of Optavia products, ranging from muesli bars and snacks, to pre-made meals.

They were formerly known as Medifast, but have now decided to rebrand themselves as Optavia, and sell their weight loss and dietary products through multi-level marketing. Here at The Finance Guy, we have the opinion that you can’t make money with MLM, but we are happy to be proven wrong, so we’ll have closer look and ask can you make money with Optavia

How do you make money with optavia

To find out how you can make money in this MLM, we looked at a copy of the Optavia Compensation Plan. This document explains all the ways you can make money as an Optavia coach, as well as what you need to do in order to qualify for commissions.

The first thing that stands out is that they tell us that this compensation plan gives Optavia coaches the ability to shape their destinty and create a life of greater momentum. It’s not the first time we’ve heard similar claims in a compensation plan, but we’ll keep going.

They tell us that to earn from all 9 of their potential income streams, Optavia coaches need to be competent in 3 areas which are: - Client Support - Team Buiding - Leadership Development

Before they go into 9 ways Optavia coaches make money, they first explain that with Optavia, there are 2 types of Volume. Compensation Volume (CV) and Qualifying Volume (QV)

Compensation Volume is used to calculate how much commission coaches can earn. All Optavia products have a CV between 0% and 100%. Commissions are based on these values. Coaches will also earn CV from people they sponsor. Coaches they personally sponsored are shown as Frontline Compensation Volume (FCV). Coaches sponsored by others in their downline will contribute to their Group Compensation Volume (GCV).

Qualifying Volume is used to help determine coaches rank in the Optavia system. Their rank will determine which commissions they do or don’t qualify to earn. Just as with CV, coaches can also earn Frontline Qualifying Volume (FQV) and Group Qualifying Volume (GQV).

Client Support Commission The amount of commission Optavia coaches can earn is shown in the table below:

As we see from this diagram, coaches can earn commission from their frontline volume. That is the people who they have personally sponsored to join Optavia. It starts at 15%, but increases if the coach is able to sponsor 5 different éntities’.

If you do sponsor 5 or more front line coaches, then you will qualify for the client support bonus. This will increase depending on the monthly volume ordered by the people in your frontline. If they order a combined volume of 6,000 points, you will earn the maximum bonus of 13%, taking your total Optavia client commissions to 28%

Coach Consistency Bonus If your frontline achieves certain qualifying volumes for 3 months in a row, then Optavia will pay you a lump sum bonus. The amounts your can earn are shown below: - 2,000 FQV = $250 - 4,000 FQV = $500 - 6,000 FQV = $1,000

While these bonuses are all well and good, it’s important to remember that the person who sponsored you into Optavia can also qualify for them. In other words, the person who sponsored you has a vested interest in making you spend large amounts on Optavia every month

Coach Accelerator Bonus This is what most MLMs refer to as a ‘fast start bonus’. Optavia makes this available to new coaches for their first 3 months. If you personally sponsor 3 frontline Optavia coaches, and they each buy 345 QV worth of product in a month, you will get a lump sum payment of $150. If you manage to do this with 5 new coaches, then they’ll give you $250.

Accelerator Assist Bonus If someone you personally sponsored earns a Coach Accelerator Bonus, then you will also get paid the same amount.

These accelerator bonuses are a nice way to reward new coaches who ‘hit the ground running’. Having said that, they also create an incentive for the person who sponsored you to make you spend as much as possible as soon as you join. After all they need you to spend 345 QV or you won’t be eligible for their accelerator bonus. The person who sponsored them will be equally enthusiastic to make you spend because they too will get the bonus.

We might think that the Optavia accelerator bonuses are designed to make people sponsor new coaches and get them spending as much as possible as quickly as possible.

Team Growth Bonus This is Optavia’s version of what other MLMs would call ‘downline commissions’. Optavia coaches can only start earning this payement once they achieve the rank of ‘Senior Coach’ with Optavia. The amount of commission they earn from their down line will depend on their rank as shown in the table below:

While it’s nice that Optavia is willing to pay all these commissions, it does mean that 32% of the price Optavia Coaches pay for any products goes to their upline as a team growth bonus. On top of that up to 28% will be paid to their sponsor as a client support commission.

While they may tell you how exciting it is that you can earn all these commissions, we think it’s important to remember that 60% of what you pay for your Optavia products, goes to your upline as commission. You should also keep in mind that this is before Optavia has made any profit for themselves.

A universal challenge we find with all MLMs, is that their products or services have to be very expensive in order to include all the layers of commission offered by the MLM compensation plan.

Fully Integrated Business Coach Consistency Bonus The compensation plan tells us that you can reach a level of mastery with Optavia if you achieve their level of Fully Integrated Business Coach (FIBC). As expected the qualifications for this are volume based. To become a FIBC, you will need: 6,000 Frontline Qualifying Volume At least 5 Front Line Optavia Frontline Senior Coach Teams 15,000 in total Group Qualifying Volume for the month

If you manage to achieve all these criteria for 3 consecutive months, then Optavia will pay you a bonus for the month of $1,000. The only way to obtain this bonus is if you have a very active downline who are purchasing a lot of Optavia products.

Once again, if you have recently joined, then your upline has a vested interest in making you buy as much Optavia products as possible every month

Executive Director Gerneration Bonus To qualify for this bonus, you must first achieve the Optavia rank of Regional Director or higher. The amount you can earn will depend on how many Éxecutive Director Teams’ you have in your Optavia downline. Each time someone in your downline reaches the Optavia rank of Executive director, that leg in your downline will qualify. You don’t need to have personally sponsored the Optavia coach who reaches the rank.

The amount of Optavia Director Generation Bonuses paid at each rank are showed in the table below:

As you climb the Director ranks within Optavia, you will qualify for more and more and more generations of bonuses..

Elite Leadership Bonus These are 3 additional bonuses of 0.5% each which are paid when Optavia coaches achieve the qualifying ranks for each bonus. The qualifying ranks are National Director, Global Director and Presidential Director. These bonuses are cumulative, so an Optavia coach who reaches the rank of Presidential director, will get paid all three elite leadership bonuses.

While it’s nice that you can earn all these bonuses, it’s important to remember that they represent a total of 13.5% of the price paid by coaches for Optavia products. If we include the commissions and bonuses we looked at previously, we see that when Coaches buy Optavia products, 73.5% of what they pay goes to their upline to fund the compensation plan. And this doesn’t include the other one of cash payments that coaches may earn.

Like all MLMs Optavia will tell us how proud they are of their generous compensation plans, we see it a a problem. If they are paying so much in their compensation plan, the only way the company can turn a profit, is to include it in the price paid by Optavia coaches in their MLM

How are optavia coaches promoted

In order to qualify for all the commission available in the Optavia compensation plan, coaches will need to get promoted through the ranks of their MLM.

To reach each level, coaches must reach a combination of sponsoring and volume quotas. This is shown in the table below:

Are Optavia coaches making money

To find out if they are making any money in this MLM, we looked a copy of the Optavia Income Disclosure. All they have given us is a table of earnings for the previous 12 months, with very little explanation.

For example Optavia have not explained how they selected the coaches who are included in their table. Looking at the first line, which is Optavia Coaches who earned nothing. We see that they represent 22.42% of all coaches, and they were active for an average 13 months. This seems like a high average. Maybe Optavia is only showing us the data for Coahces who were active for the entire 12 moths. They have not told us how many coaches quit during the year, but we are guessing that like most MLMs, it is a very substantial number

While we are not convinced we have all the information, from the table they have given us we can see that: - 22.42% of Optavia Coaches earned no income at all - 2.17% of Optavia Coaches earned over $50,000 for the year (enough to replace a full time job)

Even if Optavia have given us limited information with only their most active Coaches, it still shows us that 97.83% of active Optavia Coaches earned less than a full time income

Why is it difficult to make money with Optavia

To find out why it’s hard to make money from the Optavia business opportunity, we looked at Dr Jon Tayolors 5 Step MLM evaluation. This study looks at 5 potential red flags, and Dr Taylor explained that if any MLM raises any 4 of the 5, then they should be considered a product based pyramid scheme, and not a legitimate business opportunity. They are:

Red Flag 1 - Constant Recruitment of New Members There is a strong emphasis on recruitment in Optavia. They only way to earn some commissions such as the accelerator bonuses, is to ensure that new Optavia coaches are being constantly recruited into the downline. Optavia definitely raises red flag 1!

Red Flag 2 - Promotion Through Recruitment As we saw, the only way to climb the ranks with Optavia is to meet their qualifying criteria, which includes building a downline. It is therefore impossible to get promoted without recruitment. Based on this, Optavia raises red flag 2

Red Flag 3 - Pay to Play While there is no specified quota for coaches to remain active in Optavia, there is a requirement for their downline to have Group Qualifying Volume. So even if Optavia isn’t asking you to buy product every month, it’s very likely that your upline will be pressuring your to add to their GQV. Technically Optavia didn’t raise this red flag so we won’t count it.

Red Flag 4 - Most of the Rewards go to your upline Dr Taylor warns that the compensation plans of most MLMs results in extreme inequality of payouts, he estimates that while a few people at the top make a lot of money, 99.6% of people who join MLM will lose money.

As we already noted when looking at the various commissions paid in the compensation plan, 73.5% of the price paid by Optavia coaches goes to their upline as commission. It’s safe to say Optavia has raised this red flag.

Red Flag 5 - More than 5 levels in the payout plan Dr Taylor says 'Excessive levels in a downline is another sign participants are expected to sell primarily to their downline, rather than to the general public.  This makes it an exploitative money transfer scheme, or product-based pyramid scheme'.

Optavia did not mention any limitations to the commission paid on their bonuses. Their compensation plan suggests commission is paid on the entire downline in your team. Even if someone reaches the high ‘director ranks’ the coaches above them at the equal or higher levels will receive some commission from their entire downline. Optavia definitely raises this red flag.

Based on our understanding Optavia has raised 4/5 red flags from Dr Taylors MLM evaluation system. His study found that any opportunity which raises 4 or more flags should be considered a product-based pyramid scheme.

Dr. Taylor estimated that 99.7% of participants will lose money in a business such as Optavia. The reason is that there is no real demand for the products being sold. The business is an endless recruitment chain in which only the very few at the top will make real money.

Should you join optavia

The first thing to be aware of before joining any MLM, is that it is a sales job. You are not owning your own business, and it’s not as simple as just telling a few friends to get on board with you. The only way to succeed will be to sell large amounts of the product and sign up large numbers of complete strangers into your downline.

Before you join Optavia, it would be a good idea to try some of the products and see if you would be willing to pay full price for them. At the end of the day, if you wouldn’t buy the products without being part of the compensation plan, then you can’t expect others to do so.

It might also be a good idea to look into some reviews of the Optavia diet. One review we read found that their system simply put people on a diet where their calorie intake was reduced to between 800 and 1200 calories a day. That is half the recommended caloric intake for an adult. In other words the Optavia diet is simply starving the weight off your body. While this may result in weight loss, it might not be healthy for everyone.

is Optavia an Illegal pyramid scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

We also looked at the 2018 FTC Business Guidance for MLMS. The FTC explains that several activities used by MLMs to promote their business opportunities, may be misleading and unlawful.

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

Being legal does not make MLM ethical. All companies are in business with the goal of selling goods and services for a profit.  Network marketing companies are able to charge a higher price because they create a customer base of loyal members who believe that by consuming these products and recruiting others to do so, they will become financially free. Keep in mind that making such promises is in breach of the FTC guidance.

As always, we’d love to hear your feedback about Optavia. Feel free to share your thoughts and feedback in the comments section below:

For more posts like this, look at our list of mlm reviews. 

[finance-guy]

Can You Make Money With Reliv

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Founded in 1988 in Chesterfield, Missouri, Reliv produces a large range of dietary supplements. They say that they are ‘backed by science’, and use all natural ingredients to promote ‘optimal nutrition’.

Rather than using traditional marketing through stores, Reliv uses a network of ‘independent distributors’ to promote their products in a MLM system. Here at The Finance Guy, we think you can’t make money with network marketing, but we’re willing to be proven wrong. In this full review of Reliv, we’ll find out if their business opportunity can make you money, or if it’s just another MLM.

What Is The Reliv Opportunity

To find out what it’s all about, we looked at the official Reliv opportunity page. Here we learn that you can ‘be the best boss you’ve ever had’. Then there’s some stuff about how consumable products are great for repeat customers. There’s even the standard claim that this is the best compensation plan in the industry.

So far Rliv hasn’t shown us anything we haven’t seen before. We’ve heard about the ‘benefits of consumable products’ and almost every MLM claims to have ‘the best compensation plan’. To find out what make Reliv different, we looked at this video:

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The video starts off by telling us that there is a health crisis. They claim that only 14% of us eat the proper amount of fruit and vegetables, furthermore we could spend 75% less on healthcare if we all ate properly. It then moves on to tell us about our financial distress. They tell us that 75% of us live pay check to pay check. To make things wore, most of us have credit card debt, loans, and will have to work past retirement age.

Are you where you want to be with your health, your finances, and your life? If not then relax, because Reliv has the answers. They tell us, you can ‘live your dream lifestyle through the Reliv vision’. They tell us a bit more about their wonderful health boosting products, then get back to the business opportunity.

It doesn’t take long, for us to hear a familiar mantra… ‘you’re in business for yourself, not by yourself’. MLM companies enjoy this slogan because it makes them feel like they are offering the opportunity to be your own boss, but also have the support of a major corporation.

What they are really saying is that you can sell their products, and use their systems. They’ll handle things like production and shipping. They’ll even give you access to their online tools so you can promote and sell their products. To us, this is similar to a regular sales for commission job.

It took over 8 minutes, but the video finally gets to the points we want to hear:

How Do You Make Money With Reliv

The video explains that there are 5 ways to make money with Reliv, as shown below:

The video goes into each in detail, but to help us understand them even better, we also found a copy of the Reliv compensation plan. This document explains all the ways you can earn money with Reliv, as well as what you need to do to qualify to earn.

The first thing we notice is that before you can earn any commission from Reliv, you need to make sure that you are ‘active’. To remain active, you need to buy at least 50 Personal Volume (PV) points worth of Reliv products every month. While this may not sound like a big deal, it can be a problem. In many MLMs we’ve found that people spend more on staying active, than they earn in commission. This can lead to stockpiling product and losing money.

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There are 5 ways to make money with Reliv, we’ll go through them below:

1. Retail Profits The amount of retail margin you can earn selling Reliv products, depends on your rank with Reliv. Your rank depends on how much personal and group volume PGPV points you generate each month. This is a combination of the points for products purchased by you, your customers, and any distributors in your downline.

The amount of retail commission you can earn at each rank, and the PGPV required, are shown below:

As we can see, you can start earning 20% retail commission right away. As your business grows (and your monthly volume increases), this will increase. Once you reach the ‘Master Affiliate’ rank, you will be earning the maximum 40% retail commission. We think that retail sales is the best way to make money in any MLM. After all without retail customers, all the money is coming from existing distributors.

2. Wholesale Profits This commission is the difference between your retail profit level, and that of those in your downline. For example, if you are a Master Affiliate, you will be entitled to 40%. If you sponsor a brand new retail distributor, their retail commission will be 20%. You will earn a 20% wholesale profit on any volume ordered by the retail distributor.

3. Override Commissions Reliv describe this as the ‘most lucrative’ commission. It can only be earned by those distributors who reach the ‘Master Affiliate’ rank. If someone in your downline also reaches the rank of Master Affiliate, then you will not be eligible for any wholesale profit commission from them. You can however earn an override commission on any volume their group generates. This is paid on up to 5 levels of Master Affiliates, as shown below:

As we can see, it is possible to earn a total of 23% in override commissions from up to 5 generations of Master Affiliates in your downline. While this all looks very generous, to us it is a concern because it’s included in the price Reliv charges their distributors.

If you are a new distributor, then 20% of what you pay goes to your upline as ‘wholesale commission’ then another 23% goes to other Master Affiliates as override commission. That means that a total of 43% of what Reliv distributors spend on products, goes to their upline as commission.

If you manage to sponsor more than 2 Master Affiliates, then you could qualify for the Star Director bonus. This is paid in addition to your override commission, and is paid on unlimited generations of master affiliate in your downline. The more master affiliates you personally sponsor, the more you earn, as shown below:

Once again these bonuses would be great if you are able to grow your downline. Having said that we should remember that the only way for Reliv to pay all these commissions if if they are included in the prices charged to distributors.

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4. Cash Bonuses and Trips At any time Reliv may run special promotions where distributors are able to qualify for special cash bonuses or trips. Unfortunately we couldn’t find any information about current promotions. It could be that the information is only available to active distributors or it could be that there aren’t any running at the time or researching.

5. Ambassador Program If you reach the ‘Managing Director’ rank with Reliv, you might qualify for the Ambassador program. This is an invitation only bonus which pays out 4.5% of total sales volume as bonuses to the top Reliv distributors. Your share of the Ambassador commission depends on how much volume your downline generates, and how many distributors you have sponsored (and who then got themselves promoted).

It should be no surprise but what we see is another 4.5% loaded onto the price distributors pay for Reliv products. All in all, we are seeing a sytem where it looks possible to earn a lot of money, but we think it’s unlikely.

How Much Are Reliv Distributors Earning

To find out how much distributors are earning, we looked at the 2017 Reliv Income Disclosure Statement. They start of, as most MLMs do, with a story about how most distributors join just for product and use the opportunity to share Reliv with a few friends and make a few dollars. Only very few join it with the goal of making a career of Reliv.

They then give us a table showing the breakdown of earnings for all distributors who earned commission in 2017. We used their data to create the table below:

The first thing we notice is that there is a severe disparity in the earnings. It seems that the only ones who are earning a full time income are the 0.47% who reach the PDR rank. This also tells us that 99.53% of Reliv distributors earned less than a full time income in 2017.

Remember that these figures only represent the distributors who earned a commission. The income disclosure suggests that only 16.35% earned a commission. In other words, 83.65% of Reliv distributors earned no commission at all in 2017.

If we were to include these all distributors in the income table, we’d find that only 0.07% of Reliv distributors earned a full time income. Or 99.3% of Reliv Distributors earned less than a full time income from this business opportunity

Why Is It Hard To Make Money With Reliv

We believe that the problem is not unique to Reliv. The problem is with the business model. In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join direct selling companies end up losing money.  Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any network marketing company.

Network marketing is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal ‘Ambassadors’, who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

Dr. Taylor has also provided a 5 Step MLM evaluation, which is designed to show you if you have a chance of turning a profit with any MLM opportunity. We looked at each of the 5 flags for Reliv, as shown below:

Red Flag 1 - Constant Recruitment of New Members and Red Flag 2 - Promotion Through Recruitment If you want to earn anything more than 20% for retail sales, you need to recruit. The only way to climb the ranks with Reliv, is to grow your downline. To maintain your income and rank you will need to replace all the distributors who quit each year. This means you will need to constantly recruit to maintain your Reliv downline.

Red Flag 3 - Pay to Play If you don’t purchase your PV worth of Reliv products each month, you won’t qualify for any commission. This is known as pay to play. Dr. Taylor found that this can lead to hyper-consumption. Distributors are buying product because they want to be part of the compensation plan, not because they actually want the products. This is why several MLM participants admit to having collected stockpiles of product. If they were buying for personal use, or to sell to retail customers, stockpiling would not happen.

Red Flag 4 - Most of the Rewards go to your upline If you are a new distributor with Reliv, you can only earn 20% retail commission. However more than 43% of what you spend goes to your upline as commission. This means that people above you in the system earn more double what you do from your sales. When people in your upline encourage you to keep spending money, it’s important to realise that they are earning commission from your spending.

Red Flag 5 - More than 5 levels in the payout plan The compensation plan pays overrides and Ambassador commissions to unlimited levels in your downline. Dr Taylor says 'Excessive levels in a downline is another sign participants are expected to sell primarily to their downline, rather than to the general public.  This makes it an exploitative money transfer scheme, or product-based pyramid scheme'.

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Is Reliv An Illegal Pyramid Scheme

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

Remember that there is a difference between being legal and being ethical. Would you feel comfortable recruiting people to an opportunity if you knew that 99.7% of them would make more money with a regular job?

Should You Join Reliv

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We think that the only reason to join any MLM, is if you are already using their products, and are happy enough to recommend them to others. At the end of the day, you can’t make money in MLM unless you make a lot of sales.

If you are a good salesperson, and you have the ability to be part of the 1% who turn a profit in Reliv, then we suggest that you look at all your options before becoming an Ambassador. It’s quite likely that you can make more money in a regular sales job than you would in the Reliv opportunity.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Reliv

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

[finance-guy]

Can You Make Money With Beautycounter

Based in Santa Monica California, Beautycounter was founded in 2013. They have a range of skin care and cosmetics products, which they say are free of dangerous chemicals.

Rather than using traditional methods to promote their products, Beautycounter has over 33,000 independent consultants who sell the products through their mulit-level marketing system.

Here at The Finance Guy, we believe that you can’t make money with MLM, but in this full review of Beautycounter, we’ll give them a chance to prove their opportunity isn’t just another MLM.

What is the Beautycounter Opportunity

To help us understand the opportunity, we found this video made by a Beautycounter consultant who is at the director level:

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The video starts off telling us how excited she is, before informing us that Beautycounter is a ‘B-Corporation’. This means that they have made some effort to be socially and environmentally responsible. This is definitely a positive as it’s nice to know that they are doing their best to create cosmetics which don’t pollute the planet.

We then learn that after several years using beauty products, the representative learned that they contain dangerous chemicals. Luckily for us, Beautycounter only uses safe ingredients!

We then learn that the products aren’t just for women, there’s also a line for babies and for children. And of course there’s Beautycounter products for men. You can have the whole family on these products with their all safe ingredients.

According to this Beautycounter director, the products are 85% organic. She then tells us that all we need to do to join, is buy a $98 starter kit. It even comes with some cream and a lipstick….There’s also some brochures and a booklet. It’s everything you need to start sharing this business.

She then rambles on about how you can earn 20% commission selling Beautycounter, but you can earn even more if you grow your business. The video finishes with her excitedly telling us about how she has a great upline and I guess that means we should join her team.

While the video did give us a few details about Beautycounter, we still wanted to know more, so we looked at the official page of the Beautycounter opportunity. As expected the page has some photos of happy looking consultants. There are some quotes about how it changed their lives.

Beautycounter tells us that this opportunity is ‘where lipstick meets legacy’. They claim to provide a ‘platform which empowers you to create your own career’. If you become a consultant you’ll get your own Beautycounter website so sell from.

You can choose to sell online, in person (1 on 1) or in group ‘pop-up’ parties. We see that there is some online training, and Beautycounter tell us they provide ‘all the tools you need to run a successful business’. We are then reminded that all it takes to get you up and running, is the $98 starter pack.

While it’s nice to know that there are some excited consultants, and that there are some standard online tools, we still had more questions. We still don’t understand how this opportunity is going to make us rich.

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How do you Make Money With Beautycounter

To find out how consultants earn commission, we had a look at the Beautycounter compensation plan. At just a single page, Beautycounter officially has the most concise compensation plan we’ve seen to date. Having said that, we can still get an idea of how it works. Like all MLMs, there are lots of ways to make money:

Retail Commission Just like the video said, you can earn a 25% commission on any sales you make. We assume this includes sales made through your website. This is is useful because it means that if customers buy online themselves you automatically get a commission. This allows you to focus on promoting your website and generating sales. You don’t need to worry about handling products and delivering them to clients.

Personal Sales Bonus If you generate enough Personal Volume sales, you can earn bonus commissions. The compensation plan explains that this is based volume of sales made to your customers. Therefore this bonus should be considered as additional retail profit. The amount you can earn and the PV required is shown below:

Override Commissions These are the commissions you can earn from your downline. If you sponsor others to become Beautycounter consultants, then any product they order will count as your Business Volume (BV). The amount of commission you can earn depends on your rank in the system. They override commissions and qualifications at for each rank are shown below:

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If you sign on as a new consultant, you can earn a 5% override on any orders placed by other consultants you have personally sponsored. Once you start climbing the ranks, you can earn more commission from more levels in your downline. It’s important to note that the commission is paid on Commissionable Value (CV), which is 75% of PV. So when they say 5%, you are actually ending up with 3.75%. This makes the compensation plan a little confusing. We are not sure why they have done this, but it looks like an attempt to make the Beautycounter compensation look better than it really is.

Even after the adjustment from PV to CV, you can still earn quite a bit of commission once you reach the Director ranks in Beautycounter. While this all looks very generous, to us it is a red flag. All these commissions are included in the price charged by Beautycounter to consultants. This means that is you are a new consultant, then 22.75% of what you pay to Beautycouner, goes to your upline as commission.

Director Generation Overrides If you do manage to reach the rank of ‘Director’ with Beautycounter, then you will qualify to earn this additional commission, as shown below:

If someone in your downline becomes a director, then you no longer will get standard overrides from them. Instead they become a ‘generation’, and you earn a flat override from their entire downline volume. If someone in their downline becomes a director, this becomes your 2nd generation and so on. As we can see, director generation overrides are paid on up to 4 generations.

Once again the amount paid is based on CV, so when they say 3%, it’s actually 2.25% of PV. Even so these commissions can still add up to an extra 9% in trailing commissions. This means that for new consultants 31.75% of what you pay to Beautycounter, goes to your upline as commission.

These generous commissions means that even at their ‘discounted’ prices, the products need to be expensive. After all, they have to pay for the compensation plan, as well as normal costs of production, then there is still the profit margin for Beautycounter.

While we can see that it’s possible (for those at the higher ranks) to make money, we still wanted to know more, so we kept researching

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Are Beautycounter Consultants Making Money

To find out how much consultants are earning, we looked at the 2017 Beautycounter Income Disclosure Statement. The first thing we notice is that Beautycounter had a total of 33,408 ‘registered consultants’, and 29,000 active consultants. This tells us that in 2017, there was a total of 62,408 Beautycounter consultants.

They explain that the difference between the two is that ‘active consultants’ earned at least one commission in 2017. They are also telling us that registered consultants did not earn a commission. In other words 53.53% of Beautycounter consultants earned no commission in 2017

Beautycounter then proudly tell us that in 2017, they paid $80 Million in commissions to consultants. However when we consider that there were a total of 63,408 consultants, it’s not a great result, it averages to less than $1,300 per each. In other words, on average, Beautycounter consultants earned less than $110 per month.

Beautycounter has given us information about how much consultants at each rank earned in 2017. We included the 'registered consultants’ and created the table below:

As we can see, the vast majority of consultants earned very little commission with Beautycounter. Only those who reached the rank of ‘Senior Director’, or higher earned a full time income. 99.12% of Beautycounter consultants earned less than a full time income from this opportunity.

Let’s not forget that there is a difference between income and profit. The earnings shown do not include the expenses consultants incur running their Beautycounter business. If we were to include expenses it’s quite likely that we’d find that most Beautycounter consultants are losing money.

Why is it Difficult to Make Money with Beautycounter

We believe that the problem is not unique to Beautycounter. The problem is with MLM as a business model. In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join direct selling companies end up losing money.  Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any network marketing company.

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MLM is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal believers who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

The compensation plan may look appealing, but it makes the products more expensive. Even at their wholesale prices, there is a 31.25% price loading to pay the commissions to the MLM.

The only way to make money with Beautycounter, is if you make a lot of sales. Any salesperson will tell you that the best way to make sales, is with a good quality product.

While we didn’t try any of the products ourselves we did find an independent review of Beautycounter products. While the products were found to be good, the review noted that, Beautycounter products are not as good as competitor products. In our opinion, this would make it difficult to generate consistent retail sales. After all if your customers find that other chemical free products are better, they are likely to switch.

Is Beautycounter an Illegal Pyramid Scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

Should You Join Beautycounter

The only reason you should join any MLM, is if you are already a customer, and you believe in the products. If you are happy paying full retail price for the products without any commissions, then you might be able to sell to others.

If you are looking for an opportunity to earn extra money, then we suggest you look at all your options before deciding to join Beautycounter. If you have the incredible sales skills it takes to make money with Beautycounter, it’s quite likely that you could use those skill to make even more money in a regular sales job.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Beautycounter

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

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[finance-guy]

Can You Make Money With Nuskin

Nuskin was founded in 1984 in Provo Utah. There are a wide range of cosmetic and skincare products made by Nuskin. Since inception the company has grown and products are now available in more than 50 markets worldwide.

Rather than using traditional avenues to sell their products, Nuskin has a network of over 1 million independent distributors. Nuskin distributors earn money through a mulit-level marketing system. Here at The Finance Guy, we believe that you can’t make money with MLM, but we’ll take a closer look at Nuskin to see if they are any different.

What is the Nuskin Opportunity

We found this short video which explains the opportunity

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If the video left you wanting more information, we also looked at the Nuskin Success Formula, all you need to do is follow their 5 steps.

Dream - This is exactly what it sounds like. Nuskin want you to think about your dreams. In particular your financial dreams. Where do you want to travel, what car do you want to own, where will you live. Focusing on dreams is supposed to motivate you

Set Goals - If dreams are the end result, then goals are the steps along the way. It’s important that goals are measurable. They should be set to achieve a specific result within a set time.

Believe - By this, they mean believe in your goals. If you believe you can achieve them, then you are more likely to push yourself toward them. We think it’s also important to set realistic goals

Take Action - It should be no surprise that success requires action. The only way to achieve your goals and your dreams, is to take the daily action required to get you there.

Lead - Nuskin explains that your success, depends on the success of your downline. In other words, it doesn’t end with your goals and dreams. You have to help the people you recruit stay focused on their daily action too.

We agree that setting goals and working toward them is a good idea. It’s a success formula that can be applied to anything. We’ve seen similar goal setting strategies before. This is not unique to Nuskin. We want to know how the Nuskin opportunity works.

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How do Nuskin Distributors Make Money

To find out how you can make money as a distributor, we looked at the Nuskin compensation plan. This document explains how much commission you can earn with Nuskin, and what you need to do to earn it.

The system is summarised in three words, Share, Build, Lead. This could describe any MLM we’ve ever looked at. All you need to do to make money, is ‘share’ their range of products and services. Then you ‘build’ a downline of new recruits under yourself. Then ‘Lead’ them to do the same. Theoretically this should result in your team growing to huge numbers as everyone keeps recruiting new members.

Sharing If you share Nuskin, you can earn a retail profit. This is a simple as finding customers who are willing to pay full retail price for Nuskin products. If customer want to order online, and get a discount, they can become ‘registered customers’. You can still earn 5% - 25% in sharing bonuses for any orders made by registered customers

Building You can also earn money by building with Nuskin. To do this you need to accumulate ‘blocks’. For every 500 worth of sales points, you get one Nuskin block. If the sales come directly from customers or members who you have personally recruited, then you get a ‘sharing block’. If the volume comes from people recruited by someone else in your downline, then you can earn building block. All blocks reset every month.

If you accumulate enough blocks over 6 months, then you could qualify to be a ‘brand representative’. Once you’ve reached this rank, you can earn ‘building bonus’. This bonus is measured against the ‘Commissionable Sales Volume’ (CSV).

Your building bonus can range from 5% - 40% of you CSV. The amount you earn depends on how many building blocks are in your downline, as shown below:

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As we can see, you can earn a 5% bonus for your first 2 building blocks. You then earn 10% on the 3rd block, 15% on the 4th etc. By the time you’r organization is 16 blocks worth of CSV, you can earn the full 40%. The building bonus is paid weekly on any new blocks you’ve accumulated. The amount you earn each week is based on the number of blocks you’ve built for the calendar month

Leading If you build a big enough team, you may be able to lead with Nuskin. If people you sponsor become Nuskin brand representatives, then you may be eligible to earn the ‘leading bonus’.

You can earn from 2.5% - 10% on the commissionable sales of your team as a leading bonus. If you continue to build your Nuskin business, then you could have ‘leadership teams’ in your downline.

If this all sounds a little confusing, you’re not alone. To us the Nuskin compensation plan doesn’t make sense. Why would anyone sign up to a business that they don’t fully understand? I guess it comes down to the $$

How Much are Nuskin Distributors Earning

To find out how much you can earn, we looked at the 2017 Nuskin Distributor Compensation Summary. One of the first things we notice is that they claim ‘many people become Nuskin distributors just to buy the products’. Call us skeptical but to us this sounds like an excuse for why most distributors lose money.

We read along and see that of the ‘active distributors’, in 2017, the average annual commission was $1,806.36. In other words on average Nuskin Distributors earn less than $35 per week.

To make things even worse, they tell us that only 15.42% of distributors earn commission every month. In other words in any given month, 84.58% of Nuskin distributors get no commission at all.

We then look at the table of Nuskin Distributors who did earn commission in 2017. The highlights are shown below:

If we look at the 2017 annual commissions, we see that the ‘Ruby Executives’ averaged $33,576. That’s less than a full time job! Only 0.44% of distributors made more than this. Doing a little math, we see that in 2017, 99.56% of Nuskin distributors earned less than a full time income

Why is it Difficult to Make Money With Nuskin

We think it’s hard to make money with Nuskin because they use MLM. If you sign up with any network marketing company, their goal is to make money selling you products, they aren’t trying to make you a business partner.

We applied Dr Jon Tayolors 5 Step MLM evaluation to Nuskin, and found that it raises all 5 flags. According to his research, if a MLM raises 4 flags then your chances of making money are less than 1%.

If you are looking for a money making opportunity, then we suggest that you look at all your options before signing with Nuskin!

Is Nuskin an Illegal Pyramid Scam

Even though MLMs closely resemble pyramids, they are not illegal. The technicalities date back to a 1979 Amway ruling. To the best of our understanding, Amway managed to word their documentation in a way that bypassed the pyramid scheme laws. This opened the doors for other MLMs to do the same.

While the paperwork may make them legal, that doesn’t mean that Nuskin and other MLMs are ethical. If you join any MLM, you have to realize that the only way to make money is if people below you are losing money

Should You Join Nuskin

If you are already paying full retail for Nuskin products and are happy to recommend them to others, then maybe you should join. If you are looking for a way to earn a little extra money, then we suggest you look at other options. It’s quite likely that a regular job will pay you more than you’d make with Nuskin

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Nuskin.

Are you wondering if you can make money with MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

[finance-guy]

Can You Make Money With Young Living

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Young Living has been producing essential oils from their farmlands in Utah and Idaho since 1994.  They have developed their own process for distilling essential oils, which they call seed to seal.  Since inception, Young Living has expanded internationally and now has offices and farms all over the world.

Over the years, more than 2 million people have signed up to become members of the Young Living network marketing system.  At the Finance Guy, we believe that you can't make money with network marketing, but we decided to do a full review of Young Living. We want to find out if this really is an original money making opportunity, or if it's just another MLM.

There is no doubt that Young Living is making money.  In 2016, they generated $1.0 Billion in sales which earned them the No. 22 spot on the 2017 DSA Top 100 list.  However we're not interested in how much profit the company is making.  We want to know if it's possible for you to make money from joining the Young Living Income Opportunity.

What is the Young Living Opportunity

To find out how we can earn money, we looked at the Young Living Compensation Plan, which they say is 'designed to help you achieve abundance'.  We've heard similar claims from almost every MLM we've reviewed in the past, but let's have a look at the different ways to earn with Young Living

Retail Profit The first benefit we see is that you get wholesale pricing and can save up to 24% off the retail price of Young Living Products.  While not included in the compensation plan brochure, we assume that this also means that, Young Living Members can sell products to retail customers and earn a 24% profit

At The Finance Guy, we believe that retail sales are an essential part of any business.  After all, selling to customers is how companies generate profit.  Without retail sales, there is no profit.  It's a little concerning that Young Living does not think that this essential part of the sales process is worthy for inclusion in their compensation plan.

Unilevel Commission This can best be explained as 'referral commission'.  If you convince others to become Young Living Members, then you can earn a commission on any product they purchase.  However you can only earn this commission if you personally buy enough Young Living products to generate 100 points of Personal Volume (PV).  Unilevel commissions are paid on up to 5 levels in your downline as shown below:

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The requirement to generate PV would be a concern for Dr Jon Taylor, as it is Red Flag 3 - Pay to Play.  In order to make money with Young Living, you have to spend money with them, and that's just wrong!  A PV quota is essentially a minimum spend.  This means that members aren't business partners, they're Young Living customers

As a relatively new member to Young Living, you might also qualify for the 'Rising Star Team Bonus'.  Young living will devote 1% of their commissionable sales each month to paying this bonus.  To be eligible, you must be either a 'Senior Star', or an 'Executive Star', and build at least 3 legs.  In other words, you have to recruit.. As you keep recruiting you and building legs, you can climb the Young Living ranks.  This raises Red Flag 2 - Promotion Through Recruitment.

Our concern with these commissions is that they're based on the 'wholesale prices' paid by members.  This means that if you join the Young Living business opportunity, then every time you order Young Living products, 26% of your 'wholesale price', is going to your upline as unilevel commissions.

Generation Commissions If you are lucky enough to recruit enough members to generate 10,000 worth of Organizational Group Volume (OGV), then you might qualfiy for this bonus. While PV is generated by money you spend with Young Living, OGV comes from money spent by those you recruit.  In other words, if you share the opportunity and convince others to become Young Living Members, then you can earn a commission from their Personal Volume spending.  This also means that the people above you in your organization earn money from your spending.

It doesn't stop with the people you have recruited.  You can also earn money from the people that they recruit. The recruits of your recruits would be your second generation OGV.  Based on our understanding of the Young Living Opportunity, if you manage to recruit enough members to become Young Living 'Royal Crown Diamond', you can earn from up to 8 generations in your MLM downline.  This triggers Red Flag 5 - More than 5 levels in the payout plan

The Young Living Generation commissions paid to the top members is shown below:

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While it is possible to generate OGV from just a few recruits, we believe that to achieve real success in Young Living, you need to recruit a lot of new members.  For us this raises Red Flag 1 - Constant Recruitment of New Members.  We think a business should be focused on sales, not hiring new people...

Along with the generation commission, once you have reached the rank of Silver,  you could qualify for a Generation Leadership Bonus. Young Living sets aside 6.25% of their commissionable sales each month to pay this bonus to the upper ranks of their members.  If you keep recruiting new members and generating OGV, you might reach the rank of Diamond.  At this time you may qualify for the extra 0.5% of commissionable sales paid as the Diamond Leadership Bonus.

Once again, our concern is that these commissions are based on the 'wholesale prices' paid by members.  This means that if you join the Young Living business opportunity, then every time you order Young Living products, 28.25% of your 'wholesale price', is going to your upline as generation commissions and bonuses

This is on top of the 26% which goes toward Unilevel payments.  If you become a new member, then a total of 54.25% of what you spend on Young Living is paid to your upline.  This raises Red Flag 4 - Most of the Rewards go to your upline

How Do You Get Promoted In Young Living

We thought we'd let an enthusiastic Young Living Member explain what it takes to climb the ranks in the video below:

 Are Young Living Members Making Money

To find out if members are making money, we looked at the  2016 US Young Living Income Disclosure.  The commissions paid to U.S Young Living Members in 2016 is shown below:

The first thing we notice is that 94% of all active members are at the 'Distributor' rank. This means that only 6% or 1 out of 16 members achieves any promotions at all in the Young Living business opportunity. 

In the small print beneath the table, we see that the average commission paid to active Young Living Members in 2016, was $25, and the median was $0. The mean is the statistic measure of the middle point.  So if the mean is $0, we can see that more than half of active Young Living members earned no commission at all in 2016 

Those that did earn commission might probably weren't much better off than those that didn't.  Commission is not profit, it doesn't include the $100 per month spent on Young Living products to remain active. In other words it cost members at least $1,200 in expenses to generate an average of $25.  In other words, in 2016, the average member lost $1,175 in the Young Living Business Opportunity

 Why is it Difficult to Make Money With Young Living

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We believe that the network marketing business model makes it hard for anyone to succeed in Young Living.  MLM isn't designed to help people make money or gain financial freedom.  It's a system designed to promote and sell products.  MLM is profitable for Young Living, who are making money from selling products to members, but not for the members who join the business opportunity.

MLM is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal believers who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

We believe that the best way to make money with Young Living, or any MLM, is through retail sales.  As we've seen, most members aren't earning much from the business opportunity.  This could be because it raised all 5 flags in Dr Jon Tayolors 5 Step MLM evaluation. According to his research, if a network marketing company raises 4 or more flags, then the chances of you turning a profit with the opportunity is less than 1%

 Can You Recruit a Team With Young Living

If you want to earn part of the 54.5% which Young Living pays as commissions, then you need to build a large team.  The only way to do this is to recruit new members and have them do the same.  In theory, it's as simple as sharing Young Living with a few friends.  In reality building your MLM downline with Young Living will take substantial time and effort.

If you decide to become a new member of Young Living, then recruiting new members will be essential to your success.  After all, if you can't build a downline, then you'll end up in the 94% who never earn more than 13% commissions.  If you want to tap into the full 54.25% offered by the Young Living compensation plan, then you need to be very good at recruiting new members.

Even if you are good at finding new recruits to sign up for the Young Living Income Opportunity, you might still struggle to build a downline.  This is because network marketing companies struggle to keep members in their MLM systems.

Young Living is no different, in their income disclosure it states that '51% of members who joined in 2015, didn't make a purchase in 2016'.  In other words, if you recruit new members to your Young Living team, you can expect that more than half of them will become inactive within a year of joining.  If your recruits aren't buying product, then you're not earning commission

We also read that '57% of all members who joined in 2014 had quit by 2016'.  This is probably because once they stop buying product, they don't renew for another year either.   If you join the opportunity, then you should expect at least half your Young Living downline to quit every year.

 How Good Are Young Living Essential Oils

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 It's important to remember that success in any MLM requires you to make a lot of sales.  If you join the Young Living opportunity, then you'll be selling their products.  Any salesperson will tell you that the best way to make money, is with good products.

Rather than try the oils ourselves, we decided to rely on the internet for our product reviews.  First we looked at a review by Essential Oils Haven.  They seemed very happy with Young Living.  The review explained a bit about the company then went on to tell us that essential oils had a wide range of uses including; - Psychological benefits - Pain Relief - Immunity Boosting - and many many more

 This review certainly puts Young Living in a positive light.  It could be because the products are really good, or it could be because it was written by a Young Living member trying to sell us essential oils.

In our search for a more balanced review, we found a collection of FDA warnings to Young Living.  Mostly the FDA is concerned with how Young Living products are being promoted to consumers.  Reviews, such as the one we looked at above, claim that essential oils have a wide range of benefits.  According to the FDA, these claims would qualify the oils to be drugs, however there are no FDA-approved applications for these products.

No doubt Young Living would make the standard MLM claim, that 'this is just a few rogue members'.  However there are problems with the products themselves.  The FDA notes that Young Living essential oils are not generally recognized as safe and effective for use under the conditions prescribed, recommended, or suggested in the labeling.  are not generally recognized as safe and effective for use under the conditions prescribed, recommended, or suggested in the labeling. 

We also looked at Live Science, who acknowledged that essential oils are used in some alternate forms of medicine.  They then explain that there is limited scientific evidence that they provide any real benefit.  So it would appear that the problem is not just with Young Living, it is with all essential oils.  While they may create nice smells, that is where the benefits end.

Is Young Living an Illegal Pyramid Scam

Even though MLMs resemble illegal pyramid schemes, they are legal as long as there is a product or service attached to them.  We don't think that Young Living members are trying to scam you.  It's more likely that they themselves believe that the products work, and the opportunity will one day make them wealthy.

Young Living is like any other company, they are in business to make profit.  As we noted earlier, they appear to be doing quite well and are one of the most profitable MLM companies in the world.  If you took a sales role with a top 100 company, you'd expect to make money.  Yet if you become a Young Living member, then your chances of building a downline are less than 1 in 20.

 Should You Join Young Living

If your goal is to make money with Young Living, then we think you should probably examine all your options before making a decision.  Before you join you should probably try using the products yourself for awhile.  Before you try to make money convincing others to spend $100 per month on essential oils, you should do it yourself.  Try the oils before there's any financial incentive.  If you feel any real benefits which you think you can share, then you might be able to make money with Young Living.

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As with most network marketing companies, it is possible to make money with Young Living, but it is very unlikely.  Imagine if you were offered a sales job at a company where more than half the sales force quits every year, and most sales people are losing money.  Would you accept the job?

If you have the skills to make money with Young Living, then we believe that you'd probably make more money applying those skills to a different opportunity.    That's just our opinion, as always we welcome your feedback in the comments section below.  We'd love to hear what you think about Young Living especially if you can share your personal experiences with the company

For more posts like this, look at our list of mlm reviews. 

[finance-guy]

Can You Make Money With Team Beachbody

One of our readers recently asked us to look at a network marketing company called Team Beachbody.  Here at TFG  we believe that you can't make money with MLM, but we'll see if this proves to be an exception.  Our  full streetonomic review of Beachbody will find out if this a legitimate opportunity, or just another MLM

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What Does Beachbody Do

Beachbody started in 1998 and is based in Santa Monica, California. They are the company behind several of those exercise programs you've probably seen on late night infomercials.  Some Beachbody programs include, Insanity, Brazil Butt Lift, Hip Hop Abs, P90X, and many more.  Beachbody also sells a collection of nutritional supplements.  The most popular one being, Shakeology

In 2007, they create the offshoot company 'Team Beachbody', which uses network marketing to sell their products and services.  Globally, there are over 400,000 Team Beachbody 'coaches' in this multi-level marketing system.  Coaches are customers who want to earn referral income by recommending Beachbody to others.

In 2016, Team Beachbody reported revenue of US $863 Million.  This earned them the 28th spot on the 2017 DSN Gobal 100 list.  With sales results like that, it's clear that Multi-level marketing has been profitable for Beachbody.  However what we want to know is, are Team Beachbody Coaches making money?

 How Do You Make Money With Team Beachbody

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We looked at the official page for the Team Beachbody Opportunity.  We learned that customers who use the products, can become Team Beachbody coaches.  All they have to do is pay $39.95 upfront then an ongoing $15.95 per month.  Along with the ability to earn sales commission, you will also get a discount on any Beachbody products you buy for yourself.

From this we get the impression that you can not join the business opportunity unless you have already or are willing to buy some Beachbody products.  We believe that the best sales people are the ones who are also customers and as they say are a 'product of the product'.  Having said that, we also feel that being a customer should be not be compulsory, it should be optional

 What is the Team Beachbody Compensation Plan

We read through their Policies and Procedures manual, which  includes the Team Beachbody Compensation Plan (starting on page 32). The first thing we notice is that they have used the binary compensation model.  This is one that we seen used by several MLMs.

In a binary system, your 'business center' will have 2 legs one being left, and the other being right...  When you recruit new members to the system, you will be able to place them either in your 'left leg', or your 'right leg'.   We made the diagram below to help explain it:

Once you have paid the $39.95, you will enter the MLM with your very own 'Coach Business Center' (CBC).  You will then have the ability to start sponsoring new recruits to the system.  As you sign them up, you can decide which 'leg' of your downline their CBC will appear on.  This is shown in the diagram above, with each circle representing a CBC in the Beachbody MLM. 

The 'tell a few friends' approach may sound good, but to us it raises Red Flag 1 - Constant Recruitment of New Members in Jon Taylors MLM evaluation model.  In reality most people who join these systems end up losing money.

Like all MLMs, there are several ways to earn with Team Beachbody.  Once you have a CBC all you really need to focus on is making sales and recruiting new members to join your downline.  We'll summarize the ways to earn with Team Beachbody below:

Retail Commission The compensation plan explains that you can earn 'up to 25% commission', on all sales made to customers through your Beachbody website.  That commission is based on the full retail price, and you will earn it on all future purchases made by your customer.  You can also earn 40% commission if your customers purchase Beachbody on Demand memberships

Beachbody does not give more detail on the retail commissions.  We'd like to know why you earn 'up to 25%'.  This gives us the impression that it's also possible to earn less than this.  It is our opinion that retail sales are your best chance to make a profit with Team Beachbody.  In network marketing, retail commission is the only way to earn which does not rely on recruiting others.

Shakeology Fast Start You can earn $20 every time one of your personally sponsored Coaches buys a 'Shakeology Home Direct Starter Pack'.  If you become Beachbody Coach, it is quite likely that the person who recruited you will encourage you to get this pack.  While they may tell you how good the drink is, you should also remember that they will make money if buy Shakeology.

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If you manage sell one Shakeology Starter Pack per week for 5 weeks in a row, then you can earn an extra $100.  This is known as the Shakeology Fast Start Plus Bonus.  Essentially it doubles the original bonus, if you can time your sales to close at least one per week for 5 weeks.

Challenge Pack Fast Start Bonus This is a bonus which is paid the first time one of your personally sponsored Coaches purchases a BeachBody Challenge Pack.  These packs are a combination of BeachBody nutrition products and exercise programs.  The packs range in price from $140 up to $295.  The amount you can earn when your new recruits join, depends on which pack they buy.

It is important to remember that Coaches do not have to buy any BeachBody products.  Take time to study and sample the products before you pre-pay for your exercise regime and dietary supplements.  No doubt the people above you in your Team BeachBody network will tell you how great these programs are.  We'd just like to remind you that the people in your upline make a commission from any money you spend with Beachbody.

Team Cycle Bonus To qualify for this weekly bonus, you must first qualify at the 'Emerald Level' or above.  You can become an Emerald by recruiting 2 new Beachbody Coaches and placing one on your left leg, and the other on your right.  Once you are an Emerald, you will need to remain active.  To maintain your 'active status', you will need to personally purchase enough BeachBody to generate 50 Personal Volume (PV) points every 4 weeks.  

The requirement to remain active may not seem like a big deal, but we see it as Red Flag 3 - Pay to Play in the MLM evaluation system.

The amount you can earn each week from your Beachbody Team Cycle Bonus, will depend on how much is spent by the Coaches you recruit (and their customers).  When people below you in the network spend money on BeachBody, they will generate Team Volume (TV) for you.  If you have at least 300 worth of TV in your downline, you can qualify for this weekly commission.  One of the rules of the Beachbody binary system is that you need to have at least 1/3 of your TV on your 'weak leg'.  This is shown in the diagram below:

Our hypothetic Emerald BeachBody Coach shown above would qualify for a team cycle bonus.   They have remained active by personally spending 50 PV on BeachBody.  All the Coaches on the Left leg of their downline have spent 200 points of TV.  The Coaches recruited to the right side of their team have spent 100 points worth of TV.   This means our Coach will receive a team cycle bonus this week.

As an Emerald Coach, the team cycle bonus would be $14.  This increases to $16 if you reach the rank of 'Ruby', and $18 if you are at the Diamond levels.  These amounts may not sound impressive, but is it possible to earn more than one Team Cycle Bonus per week.  In fact BeachBody allow you to qualify for up to 96 team cycles per day!

Every time you accumulate 300 worth of TV, you will qualify for a cycle bonus.  Any left over volume can be saved until you have enough to qualify for your next cycle bonus.  Remember that you must accumulate at least 1/3 of the TV for your bonus from each leg.  This rule is common with the Binary MLM model.  It is designed so that all Coaches have to actively work to earn their Team Cycle Bonuses

If you are a new BeachBody Coach, then theoretically the Coach who recruited you will continue to recruit new Coaches.  Some of the Coaches recruited by those above you in the system, will appear in your downline. If these Coaches recruited by your up line spend money on BeachBody, then this will count toward your Team Volume.

Depending on how active the people above you in the network are, you might end up having a lot of extra Coaches placed on one of your CBC legs.  This is an ideal scenario, because it means that you can concentrate all your energy on building up the other leg (which is not getting recruits from above).  This will initially be known as your 'weaker leg', because it will only grow from Coaches you personally recruit. 

The 1/3 rule means that it is possible for your strong leg to accumulate substantial amounts of TV without you earning any cycle bonuses.  It's important to remember that your cycle bonus earnings are limited by Team Volume on your weaker leg.  This may end up being a disadvantage if the person who sponsored you has a particularly active upline.  If you are placed on their 'weak leg', then you will not benefit if people above your direct sponsor place new recruits on their stronger leg.  The best advice we can give is to concentrate on finding your own recruits, because there is no guarantee that you will get any freebies from your upline.

The Team Cycle Bonus can be earned from unlimited levels in your downline.  While this sounds appealing if you have a huge downline, we wonder how BeachBody can afford to pay on so many levels.  It could only work if very few people qualify for team cycle bonuses.  This also raises Red Flag 5 - More than 5 levels in the payout plan

Matching Bonus Once you reach the rank of 'Ruby' or above, you can qualify for a weekly matching bonus on any team cycle bonuses earned by your personally sponsored Coaches.  Ruby level BeachBody Coaches can earn a 5% matching bonus.  Coaches at the Star Diamond level and above earn a 10% bonus.

Star Diamond Leadership Bonus Every 3 months BeachBody pays out 2%  of their entire TV to their top performing Diamond Coaches.  This amount is based on the performance of the entire MLM network, not just the Coaches in their own downlines.

These bonuses raise Red Flag 4 - Most of the Rewards go to your upline.  Essentially the people at the upper levels of the system are earning more from your work than you are, and that's just not fair.

In order to move up the ranks in BeachBody, you have to grow your downline.  For example, to become a Diamond Coach, you need to have personally sponsored 2 Emerald Coaches and another 6 Active Coaches (at any level).  This raises Red Flag 2 - Promotion Through Recruitment. In order to succeed in Team BeachBody, you need to personally recruit Active Coaches.

As we have seen, BeachBody has raised all 5 red flags in Dr Taylors MLM evaluation model.  According to research, if a MLM raises 4 or more flags  then you have less than 1% chance of making a profit.

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 Are Team BeachBody Coaches Making Money

We found a copy of the 2016 BeachBody Income Disclosure Statement the table below is from this document:

BeachBody has presented their Statement of  Coach Earnings in a way that is vague and a bit difficult to understand. They have included all the legally required information, but it's not well presented.  For example buried in the small print, they state '51.05% of Coaches recieved a bonus or commission'.  From this we learn that in 2016 48.95% of Beachbody Coaches earned nothing.

As expected there is some money being made by those who have reached the 'Star Diamond' level.  Their average earnings in 2016 was $109,225.  The next best earners were the 'Diamonds', who averaged $14,671, or $282 per week.  Things only get worse for those who haven't reached the Diamond ranks of the system.

From the small print at the bottom of the statement, we see that 51.05% of the active MLM  received a bonus or commission.  This means that 48.95% of BeachBody Coaches earned nothing in 2016.  To make things worse, these earnings figures are only based on Coaches who were enrolled for the entire year.  If they were to include the results from all Coaches who were enrolled at any time in 2016, we are sure the figures would have been even worse.

What we are seeing is a business opportunity, where less than 2% are earning enough to replace a full time income, and close to half are earning nothing at all.  As we can see from the Star Diamond, it is possible to make money with Team BeachBody, but 98.3% of BeachBody Coaches are making less than they could in a regular job.

 Why is it Difficult to Make Money With BeachBody

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We believe that the problem is with the network marketing business model.  It's not designed to help people make money or gain financial freedom.  The system is designed to promote and sell products.  MLM is profitable for the companies which produce the products, but not for the members who join the business opportunity.

MLM is a way for companies to sell products and services without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal believers who are willing to spend money and spread the word.  The only motivation they need, is the hopes of possibly achieving financial freedom at some point in the future.

Another problem is in the compensation plan.  In order to qualify for most of the payments, you need to be a BeachBody customer.  If you want to advance through the ranks, you need to recruit others, who will also become both Coaches and customers.  This creates a system which focuses more on recruitment than on retail sales.

It is difficult to make money with any network marketing system because there is no organic demand.  Most of the sales are being made to people who have joined the business opportunity.  This means that the people at the top of the system only make money when the people below them are spending it.  MLM is not designed to give you a business, it's designed to make you a customer.

 Are Shakeology Supplements Good Quality

Any salesperson will tell you, that the best way to make money, is with quality products and services.  It's true that sales skills play a part, but it always helps when whatever it is you're working with, 'sells itself' a bit.  If you are going to make money with Team BeachBody, then Shakeology will be part of what you are selling.

We did not purchase or try any Shakeology products, instead we outsourced this.  We had a look at a review of Shakeology by the certified nutritionist at Ancestral Nutrition.  Their review found that Shakeology can help you lose weight but also noted that it: - Is unhealthy - Contains ingredients which may have harmful side effects

Looks like your best bet for safe results, is a healthy balanced diet made up of regular food.  

 Should You Join Team BeachBody

Before you join Team BeachBody, or any MLM, you need to make sure that you like the products and services.  We would recommend being a customer first.  If you are happy paying full retail price and would recommend BeachBody to others when there there is no financial incentive, then maybe you can make money with Team BeachBody

We would also suggest that you compare the products and services offered by BeachBody with others on the market.  You might find that supplements with similar ingredients to Shakeology are already available at lower prices in your local supplement store.

The workout videos will get you into shape if you do them.  However before you spend a lot of money every month, you may want to try some of the similar ones already available for free on Youtube.  That's right, there are some fitness coaches who post their videos on Youtube and their only fee, is that you get a bit of advertising.   Here's one we recently did at home:

Just like the BeachBody fitness videos, free ones such as this will get you into shape, if you are willing to do the work.  If you join Team BeachBody, you will be trying to convince people to pay for their exercise videos.  Just remember that the competition is giving away a similar service for free.

 Our Final Thoughts

There's no such thing as a proven path to financial success.  It doesn't matter how well others have done, you can duplicate every move they made and still lose money.  In our opinion it is very unlikely that you'll turn a profit with Team BeachBody or any other MLM.  Those are our thoughts, we'd love to hear from you in the comments section below, especially if you want to share you own experiences with BeachBody

For more posts like this, look at our list of mlm reviews. 

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[finance-guy]

Can You Make Money With Unicity

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Unicity is a Utah based company which sells a wide range of dietary supplements and cosmetics.  They have been promoting their products through network marketing since 2001.  Here at The Finance Guy, we believe that you can't make money with MLM, but we'll give Unicity a chance to prove us wrong.

 What Does Unicity Do

There is a wide range of over 400 Unicity products, which are being sold in more than 50 countries by their network of MLM distributors.  They say that the products were developed using Unicity science, which helps 'improve health and quality of life'.

Like most MLMs they like to promote some products more than others.  They call these the Unicity core products.  Based on what we read in the brochure, these products might: - Improve muscle strength, mental clarity and bone structure - Optimize blood sugar and lose weight - Support healthy cholesterol and triglyceride levels - Ensure you’re getting 100% of your recommended daily intake for many essential vitamins and minerals - Contribute to normal, energy-yielding metabolism - Clear your body of toxins and other wastes

 How Do You Make Money With Unicity

We looked at the official Unicity Opportunity page, which only had some very limited information.  We did learn that this was a system which costs US $40 to join and can 'improve your health and build your wealth'.

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In true MLM tradition, there are 8 ways to earn income with Unicity.  As expected, the the amount you can earn will depend on your rank.  Unicity tell us that they have a 'simple rank advancement system'.  They go on to tell us that you will 'receive a detailed guide after you enroll as a distributor'.  

While this lack of detail might be explained as 'not wanting to confuse new recruits'.  It could also be explained as 'Unicity is trying to sign you up before you see all the details'.  We believe that this sort of lack of transparency is an early warning sign that the opportunity doesn't work.

We didn't pay the $40 joining fee, but we did find a library which included the 2017 Unicity Compensation Plan.  This is the MLM document which explains all the different ways to earn, and how you qualify to earn them.  We will go through the ways to earn with Unicity below:

1 - Retail Profit You can earn a profit margin if you buy products at the distributor price, and sell them at either the full retail price or the preferred customer price.  The amount you can earn from each product is shown on the 2016 Unicity price list. We believe that retail margins are the best way to earn income with any MLM.  At the end of the day when you join network marketing, you become a commission based salesperson.  Unfortunately, like all MLM compensations plans, Unicity only gives a 2 sentence mention to retail profit.

As we saw in the price list, each product also carries a Personal Volume (PV) value.  In order to earn any commissions other than retail profit, you will need to order at least 100 PV worth of product per month.  We estimate that it will you will need to order +/- US $125 per month at distributor prices.  Dr Jon Taylor would say that this raises  Red Flag 3 - Pay to Play 

2 - Personal Rebate Starting in your second month as a Unicity distributor, you can receive monthly rebates.  This is like a refund on money you paid to them during the month.  We think charging you a lower price would make more sense, but that's just our opinion.  To qualify for the rebate you must order at least 100 PV worth of product.  The more you order each month, the larger your rebate will be.  The table below shows the different rebates and the PV needed to qualify for them:

3 Fast Start Bonus The reason you can't earn rebates in your first month, is because your PV will go toward a Fast Start Bonus.  Unlike other MLMs there is a chance that you will not actually earn this bonus.  Depending on how qualified they are, your up-line will get bonuses of between 38% and 53% on whatever you spend in your first month with Unicity.  

It is possible for new distributors to earn the 15% 'Enroller' bonus.  To qualify for this, you'd need to order 1,000 PV worth of product in your first month.  In other words you can get a a 15% refund if you spend US $1,250 on Unicity products in your first month as a distributor. They might say that this is an incentive to get you started.  We might say, it's a way to get you to spend a lot of money before you really understand the products.

4 - Unicity Lifestyle Bonus You can qualify for lifestyle bonus payments for the first 6 months after you have achieved specific Unicity ranks.  The ranks and the lifestyle bonus payable are shown below:

5 - Infinity Share Bonus This is the commission you can earn from the PV generated by all the distributors in your Unicity downline.  You can earn an infinity bonus of 5% on the PV of distributors in your downline.  As you achieve higher ranks in the Unicity hierarchy, you can earn this on greater 'depth'.  Once you reach the rank of 'Presidential Diamond', you can earn 5% on up to 9 levels in your Unicity downline.

The infinity share bonuses paid at each Unicity rank are shown below:

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6 - President's Club Bonus This is very similar to the lifestyle bonus.  The only differences is that it's paid at higher ranks, and the payments are a lot higher.  The potential bonuses you can earn if you achieve the presidential ranks in the Unicity hierarchy are shown below:

7 - Additional Distributor Position If you reach the rank of Presidential Diamond, you will qualify for your first additional distributor position.  If you make it all the way to the rank of 'Global Ambassador', then you will have earned a total of 5 additional distributor positions (ADPs).  The advantage of these ADPs is that you can effectively become part of your own downline.  Unicity will also let your new position qualify at the presidential levels. 

If you sign up new distributors under your new ADPs, then you can earn multiple infinity and lifestyle bonuses on any PV generated.  Effectiely you can increase your share of commission from each distributor in your downline by up to 400%!

8 - Chairman's Club Bonus This is another bonus similar to the lifestyle bonus.  You can earn these one off payments if you hold down a rank of double diamond or above for 3 months.  The bonuses paid at each level are shown below:

9 - Founders Club Bonus Even though they told there were 8 ways to earn, there is also a ninth. If you achieve the rank of 'Global Ambassador', then Unicity will pay you this bonus in every month that you provide a Unicity training seminar.  

 How Much Are Unicity Distributors Earning

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The compensation plan has shown us that it is possible to earn money with Unicity, but that doesn't mean that it's probable.  To find out how much people are making, we looked at the 2015 Unicity Income Disclosure Statement, which is the most recent one provided. It could be that the years since have not been as good but even in 2015 we see that the Unicity opportunity is just another MLM.  

It starts with the familiar claim that the Unicity opportunity can 'Make Life Better by getting Unicity's quality products at a special distributor price'. We later see the claim that 'A large majority of people sign up as Unicity Distributors just to get the product discount'.  If that is true, then why do people become preferred customers?

We don't believe we've ever seen an income disclosure with as little detail as this one.  Despite the vague data provided, we were able to produce a table showing the commissions earned by Unicity Distributors in 2015:

We did our best to construct the above table with the limited data provided by Unicity. We included expenses of $1,500 per year to show the cost of 100 PV per month.  Remember that this is the minimum spend required to qualify for commission.  Based on our calculations, 97.3% of Unicity distributors lost money in 2015.

Even though Unicity offers many ways to earn, only 0.2% are making as much as a regular job. In other words only 1 in 500 Unicity distributors is earning a full time income.  The opportunity which claims to 'improve health and build wealth', appears to be failing for  499 / 500 distributors.

 Why is it Difficult to Make Money With Unicity

We believe that the problem is with the network marketing business model.  It's not designed to help people make money or gain financial freedom.  The system is designed to promote and sell products.  MLM is profitable for the companies which produce the products, but not for the members who join the business opportunity.

MLM is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal believers who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

Another problem is the generous compensation plan.  If you reach the Presidential Diamond rank, you can earn up to 45% in infinity bonuses.  the problem is if you aren't at this level then these bonuses are included in the distributor price you pay for your Unicity products.  As a new distributor 45% of what you pay to Unicity goes to your upline as commission.  

Dr Taylor would say that this raises Red Flag 4 - Most of the Rewards go to your upline.  The depth of the bonuses also raises Red Flag 5 - More than 5 levels in the payout plan.  As we have seen in the past, your chances of making money is less than 1% when these flags are raised.

 Is Unicity an Illegal Pyramid Scheme

Even though network marketing systems closely resemble pyramid scams they are legal as long as there is a product or service attached to them.  That being said, there is a difference between legal and ethical.  By attaching the smoke and mirrors of future financial freedom, Unicity is able to charge substantially inflated prices.  

We already identified that at least 45% of the distributor price goes to the compensation plan, and this doesn't include all the lifestyle, presidents and founders bonuses.  Even if we ignore all these other commissions, then we still see that Unicity only gets 55% of the distributor price to cover all the costs of production and to turn a profit for themselves. Based on this we can see that Unicity distributors are paying close to double the traditional wholesale price

 Should You Join Unicity

If you are looking for an opportunity to replace your income, then we suggest you research all your options before making a decision.  It's quite likely that you might find one where your chances of success are better than 1 in 500.  If you are considering joining just to get the products cheaper, then we recommend researching competitors products.  With most MLMs, we find that you can get products of equal or better quality at lower prices from regular stores.  The over inflated distributor prices are often more expensive than competitors full retail prices.

This review is an expression of the opinions we formed while researching the Unicity opportunity.  We'd love to hear your opinions in the comments section below, especially if you can share your experiences with Unicity.

For more posts like this, look at our list of mlm reviews. 

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[finance-guy]

Can You Make Money With Ambit Energy

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One of our readers recently requested that we look at Ambit Energy.  They are a US based provided of natural gas and electricity.  The company was founded in 2006 in Texas.  Customers are referred to Ambit by a network of more than 250,000 independent consultants who are paid through a Multi-Level Marketing system.  Ambit is about to expand into Japan and will so become another multi-national network marketing company.

Here at The Finance Guy, we believe that you can't make money with network marketing, but we'll happily be proven wrong.  Our review of Ambit Energy will take a detailed look at their business opportunity.  We want to find out if this is a great way to make money, or just another MLM.

 What Does Ambit Energy Do

Ambit provides Natural Gas and Electricity in deregulated markets across the US.  On the Ambit Energy Website, they tell us that they are 'focused on being the finest and most-respected retail energy provider in America, offering cost-effective choices for today’s energy consumer.'

In 2016, Ambit Energy generated an estimated revenue of US $1.20 Billion. This secured them  16th place on the 2017 Direct Selling News Global 100.  We also see that in ' 2010, Ambit was named #1 Fastest-Growing Private Company in America by Inc. magazine.' 

With results like this we have no doubt that the company is turning a good profit.  However we want to know if the consultants are making money from the business opportunity.

 What is the Ambit Opportunity

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The official Ambit Opportunity homepage, says it will show us how 'Ambit Energy Consultants are discovering Financial Freedom'.  There's a 6 minute video on there which explains how this 'life changing opportunity' allows you to earn money every time people use either their gas or electricity.  They also purport that Ambit is the right partner to help you take advantage of the deregulation of the energy markets.

The video then tells us how well Ambit is doing and lists some awards that it has won. Including their placement on the DSN global 100 list.  It's nice to know that the corporation is turning a healthy profit, but we want to know if this is a good opportunity for consultants to make money.

Ambit then explains that their opportunity is superior to others we might have seen because everyone uses energy.  All you need to do is give people the opportunity to save money on their power and gas bills.  You can even show them how to get their power for free, all they need to do is refer a few friends to Ambit.

Obviously what they are getting at is that every Ambit customer is also a potential Ambit Consultant.  After all, nobody would say no to free power and gas, and most people would appreciate a few extra dollars a month.  While this might sound well and good, we see it as an early warning signal.  After all,  when we looked at Dr Jon Taylors system for MLM evaluation, we see the first red flag is constant recruitment.

 How Do You Make Money With Ambit Energy

If you want to set out on the road to financial freedom with Ambit Energy, then your first step is to pay the once off fee of US $75 to become an Ambit 'marketing consultant'.  After that your only fixed cost is the $24.95 per month to maintain your Ambit website and access to all the online tools needed to run your Ambit organization.

Like all network marketing companies, there is more than one way for consultants to earn an income with Ambit Energy.  They are enthusiastically explained in this short video:

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To help us better understand the opportunity, we also read through all 4 pages of the 2016 Ambit Energy Compensation Plan.  Our research lead us to believe that the Ambit Energy Opportunity is unsustainable.  We also found several read flags which gave us the opinion that most Ambit Consultants aren't making much money.  

At 4 pages, the Ambit compensation plan does it's best to avoid going into too much detail.  Fortunately we were also able find their more extensive 17 page explanation of the 3 ways to earn with Ambit.   Our initial research suggests that the Ambit opportunity displays all 5 red flags identified in  Dr Jon Tayolors 5 Step MLM evaluation.  His research of 100's of MLMs, found that if a network marketing company raises 4 or more flags , then you have less than 1% chance of turning a profit from joining. We will go through them as we explain the ways to earn below:

Jump Start Bonuses As a new consultant you have the opportunity to earn a 'Jump Start' bonus of of $100 in your first 4 weeks with Ambit.  All you have to do is earn 5 customer points.  Your first customer point is as easy as switching your own power to Ambit and therefore you are your own first customer!  This is an example of Red Flag 3 - Pay to Play - To their credit, Ambit does make this a mandatory requirement to 'remain active'.  Having said that we can see that part of the process of becoming a consultant, is becoming a customer

You get another 2 customer points when you set up your 'business building website'.  While not listed as a compulsory step, the $24.95 to run your website would also raise the pay 2 play flag.  To be blunt, we don't believe that it costs Ambit admin fees of $24.95 per month to give you these 'tools'.  At the end of the day all they are doing is adding you as a user to their existing system.   If you open a Gmail account, you will also get access to a collection of Google apps such as cloud storage, a calendar and many more.  If every new user costs so much per month, then why is Google giving all this away for free to several million people ever month?

If you have become a customer and set up your Ambit website, then you'll have 3 customer points.  All you need to do now is sign up 2 new Ambit customers in your first 4 weeks, and you can earn a $100 jump start bonus.  If you continue to accrue customer points at a fast rate, then you can earn up to 6 Jump Start bonuses in 12 weeks.  If you achieve all 6 then you will earn a total of  $400 in jump start bonuses Ambit Energy as shown below:

Team Builder Bonus This bonus can best be described as a matching bonus.  If one of your customers decides to become an Ambit marketing consultant, and they qualify for their $100 Jump Start 1 bonus, then you will also earn $100.  The team builder bonus can be earned on every consultant you personally sponsor!  

On the upside, the team builder bonus should motivate your sponsor to help you get your first 5 customer points in your first 4 weeks with Ambit.  On the flip side, after 4 weeks they will most likely want to focus their energy on new consultants who have the potential to earn them a team builder bonus.  The team builder bonus also keeps everyone actively looking to recruit new consultants, which raises Red Flag 1 - Constant Recruitment of New Members

Leadership Income When you first sign up for the Ambit Energy opportunity, your title will be 'Ambit Marketing Consultant'.   To qualify for leadership income, you will need reach the higher levels in the Ambit hierarchy. 

You can get yourself promoted.  To do this you will need at least 5 customer points (which you've done if you've earned Jump Start 1).  You will also need to build a downline team of 6 marketing consultants (and have personally recruited at least 2 of them).  Once you have ticked all these boxes you will automatically be promoted to the level of Ambit Regional Consultant.

If you continue to recruit new consultants, and meet the predetermined criteria, you can make your way all the way up to the rank of 'National Consultant'.  This well defined path to advancement would be appealing to most.  For us we see it as Red Flag 2 - Promotion Through Recruitment

Once you have qualified at one of the 'leadership ranks' with Ambit, then you will be eligible to earn 'leadership income'.  This is very similar to the team builder bonus except you can earn it whenever any consultant in your organization earns a Jump Start 1 bonus.  It is paid to unlimited levels in your downline!

To make things even better,  your can earn more as you advance through the ranks.  The leadership income paid at each level is shown below:  

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If you attend an Ambit recruitment session, they'll tell you how this leadership income will someday be the key to your financial freedom.  If you ask us, it's Red Flag 4 - Most of the Rewards go to your upline

As a new consultant if you qualify for the first Jump Start bonus, you will earn $100.  The person who recruited you will get a Team Builder bonus of $100 and there will be $240 of Leadership Income distributed to people in your direct network marketing upline.

What we see here is that Ambit is willing to pay a total of $440 in total bonuses if you can successfully obtain 5 customer points in your first 4 weeks.  Only catch is that you only get $100 for doing all the work, and the other $340 goes to the upline.  In other words you do all the work and get 22.7% of the reward.

The 'unlimited levels' of leadership income would sound good to anyone. Imagine how easy your financial life would be if all that money just flowed in every month.  It looks good from the outside but we think it is Red Flag 5 - More than 5 levels in the payout plan

Customer Residual Bonuses This is the Ambit equivalent of 'passive income'.  You can earn income every month bills are paid by customers signed up by yourself or any marketing consultant in your Ambit organization to unlimited levels. This once again raises red flag 5, but we'll move along with the review.  The amount you can earn per month per customer at each rank is shown below:

Residual Income This is similar to customer residual bonuses with two important differences.  The first is that it's only paid to 7 levels (still raising red flag 5).  The second difference is that it's paid on all customers in your Ambit organization, not just those signed up by new 'marketing consultants'.  The monthly residuals you can earn on customer power bills is shown below:

Here we see a combination of Red Flag 4 - Most of the Rewards go to your upline and Red Flag 5 - More than 5 levels in the payout plan.  For every customer you personally bring to Ambit, you can earn from $0.05 to $0.30 per month in monthly residual income from their bills.  While this doesn't sound like a lot, the important thing to remember is that someone 7 levels above you in Ambit, who you've probably never met, is earning from $1.50 to $6.00 per month on the same customers.  It's our understanding that when you sign a new customer to Ambit, a random stranger will earn up to 30 times more monthly income than you for the work you have done.

In case we've been too subtle, we'd just like to point out that we believe you can't make money with Ambit Energy.  Despite this the company has enough consultants to generate $1.20 Billion in annual revenue.  If their business opportunity is all about helping people get free energy, then it does make us wonder who paid the $1.20 billion worth of energy bills in 2016

 How is Ambit Energy Being Promoted

If you know anyone who is an Ambit Energy Consultant, then it's quite likely that they've tried to sign you up as a customer and have invited you to see the 'opportunity'.  In true network marketing tradition, it's quite possible that the business opportunity was presented to you and a collection of other prospective new recruits. 

If you attend a presentation, you might be shown a video such as this one:

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Along with this video, we also read through a copy of the 2017 Ambit Energy Business Presentation Script.  The script is a step by step set of instructions for how do use a powerpoint presentation to recruit new consultants to the Ambit MLM.  It follows a similar pattern to the video above and shares most of the same information.

The presentation introduces it as a 'life-changing opportunity'.  The video goes a s step further purporting that this is a 'unique and proven system'.  They both go on to explain that the Ambit opportunity is helping people just like you and me take advantage of a 'massive transfer of wealth'.  The opportunity they refer to is deregulation of the energy markets.  They might talk about it while you see a picture similar to this one:

The presentations then continue to tell us how successful Ambit has been and that they intend to continue to grow.  The company was started by a couple of guys we've never heard of before, but should be impressed by.  It's nice to know that the company is turning a profit, but they haven't proven that consultants in the MLM are seeing good returns for their efforts.  

The presentations will then show you how easy it is to make money with Ambit.  Everyone uses power, and everyone wants to save money on their bills.  Offering people the opportunity to earn free energy sounds like an easy sell!.  At just $75 it's a better deal than any franchise.  We then see the familiar network marketing pitch being something along the lines of: Making money is as simple as telling a couple of friends, then have them duplicate.  Here's a copy of a slide you might see while being told how simple this business is:

Next the business presentations moved on to the compensation plan.  Explaining how much you can earn and how to get yourself promoted to earn even more.  We've already discussed this so we won't go over it again.  In our assessment of the ways to earn, we saw all 5 red flags.  In the Ambit business presentation, they see it as a path to long term financial freedom. 

We saw several warning signs that suggest making money with Ambit would be difficult, but in their business presentation, they show how if you recruit 3 consultants (and collect 20 customers), and they all 'duplicate',  then by the time your organization reaches 7 levels you'll be earning almost US $10,000 per month.  This is shown in the image below:

 Why We Think It's Difficult to Make Money With Ambit Energy

 A Flawed Business Model

We believe that it is extremely difficult to make money with any network marketing opportunity.  Essentially we think that  MLM as a business model is designed to make you a customer, it is not designed to help you generate wealth.   

MLM has a bad reputation,  which could explain why Ambit, and almost every mls company tells you that 'their opportunity is different from anything else in the  network marekting industry'.   We've heard that claim several times, but the opportunities always end up looking like just another MLM.

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Generous Compensation Plans

Some common MLM claims made by Ambit is that they have 'the best compensation plan in the industry'.  They also promote it as a simple system. Achieving financial freedom is as easy as 'gathering a handful of customers'.   

The compensation plans which they say are a 'simple pathway to financial freedom', are in fact the reason why very few will ever succeed in MLM.  We'll go through some of the problems we see in the ambit compensation plan below:

Duplication Ambit calls it 'helping others do the same', ironically they are doing the same as all other MLMs.  We've seen the concept of 'duplication' in every network marketing opportunity we've looked at so far.  In theory all you have to do is introduce a few friends to the MLM opportunity.  Then they see how wonderful it is, sign up and proceed to tell a few of their own friends.  As we saw in the Ambit business presentation, just introducing three new consultants can lead to almost $10,000 per month.

The problem is that in practice, duplication simply doesn't work. It doesn't matter if you copy the exact steps taken by someone who was successful.  There is no guarantee that you will achieve success of your own.  It's important to remember that timing, market conditions and luck all play a part.  Taking the same steps at a different time or in a different market might turn out to be unlucky.

The Ambit Opportunity does not make you a business owner No matter how many times Ambit or any other MLM tell you that this is an opportunity to become a business owner, this simply is not true.  Even if their presentation shows you Robert Kiyosaki's cashflow quadrant, it's still not an opportunity to be a business owner.

If you become an Ambit Consultant, or member of any other MLM, you are an independent contractor.  This is a role which is most similar to a commission only salesperson.  While it's true that you can pick your own hours and determine your own income, you do not own the company.

For one thing a business owner gets a share of company profits.  As an Ambit consultant you get paid a commission on the sales you and your team generate.  You are not entitled to any company profits.  Another important thing to remember is that you do not have any control.  Ambit decides what services consultants can sell and how much they get paid to do so.  Ambit also has the power to terminate your agreement leaving you with no income at all.

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MLM is Not a Franchise The Ambit presentations we looked at mentioned that $75 is lower risk and cheaper than any franchise.  This is another myth we see in several network marketing presentations.  They explain how successful franchises such as McDonald's have been.  Then they tell you something along the lines of it's more profitable to buy a McDonald's then try and create your own burger. 

They imply that joining the MLM (Ambit or any other), will give you similar benefits to joining an established franchise.  While the concept is similar to a franchise, there are some key differences which is why we think Ambit is not like a franchise.

The main problem we have is with the constant recruitment.  If you go into a McDonald's and order a meal, does the teenager with the 'trainee' badge try to convince you to start your own McDonald's franchise?  If not then McDonald's is not like MLM.

Franchises don't simply let new stores open at will.  If you apply to purchase a franchise, then first you will have to prove that you have the skills to successfully own and manage the business.  Then the location will have to be approved.  These are important keys to the success of the franchise.

Ambit will encourage you so recruit as many new consultants as possible, and then to 'duplicate'.  If you started recruiting your friends and they started recruiting their friends.  It wouldn't take long before you were competing with each other for new customers and new recruits.  You will also be competing with Ambit consultants from other mlm organizations who know the same people you know and are trying to recruit them before you do.

Endless Recruitment This is similar to the effects of market saturation.  Every time a new consultant joins Ambit, they are in competition for new customers and mlm recruits with all the existing Ambit consultants.  This means that the potential profits made by each consultant will decrease as more consultants join the MLM.  This is probably why Jon Taylor found that less than 1% who join any MLM will turn a profit.  We assume that the 1% who do make it, are those at the top of the pyramid.

The problem with recruitment based models, is that there is no focus on the organic customers.  People become fixated with finding the next consultant instead of finding the next customer.  This means that a very high percentage of the 'customers' are also consultants.  This is a problem because it means a large percentage of any bonuses you might earn is paid for by other consultants.  The bonuses are included in your monthly bills so this means that only those near the top will turn a profit. 

Network marketing companies like to deny that they don't have many organic customers.  We don't know the exact figures for Ambit, but have managed to find this Ambit training manual.  Here we see that they are teaching new consultants that the key to success is in finding customers that can be turned into consultants.  In other words they are fueling the problem.

All those compensation payments are included in the price Ambit pays monthly commissions for every active customer in your organization.  Some are paid to 7 levels and some to infinite.  The problem for the customers is that all these bonuses are included in their monthly bills.  When you join Ambit and become a customer, this means that part of your electric bill is going toward paying your upline.  Given that some bonuses are paid to infinite levels, your bills will need to keep increasing as the MLM grows and more people above you qualify for bigger monthly payments from your bills.

 Deregulation Doesn't Guarantee Transfer of Wealth

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The main selling point we took away from the Ambit business opportunity presentation, was about deregulation.  They showed how after deregulation industries such as telecommunications experienced a disruptive shift.   It changed the way customers could access telecommunications and we saw lots of new companies offer a whole lot of new services. 

Several years after deregulation of telecoms, there are some players who have become Multi-Billion dollar companies.  This is what Ambit want us to think of... Deregulation leads to new super successful companies.  What we're not paying attention to, is the fact that for every successful business there were a few that failed, and no longer exist because they went bankrupt.  

The real pattern which we see when deregulation disrupts an industry, is that there is a huge influx of new players.  In time most of them will disappear and only the few super successful ones will remain.

 Does Ambit Lower Customers Bills

As we've expressed from the onset, we are skeptical about whether the Ambit business model can deliver cheaper power.  We looked at the Ambit rates and plans for Fresno California. The first thing we noticed in the terms of service, is that Ambit is not the direct provider of electricity or natural gas.  Ambit does not have any infrastructure and is not generating any power.  They are a sales company which buys power from infrastructure providers and then sells it to customers for a retail profit.

We then noticed that the terms of service state that 'Ambit Energy may amend the terms of this agreement at any time'.  In other words once you are out of fixed term contract, they can increase the prices.  All they have to do is notify you 30 days in advance.   Their method of notification may be an email, a letter, or a note attached to your monthly bill.  I don't know about you, but I generally pay the amount owing on the bill and don't spend much time reading through the print to see if there's a notification about rate changes...

What really concerned us about the Ambit terms of service, was that there is an arbitration agreement.  Which suggests that Ambit is currently the subject of a class action lawsuit.  The lawsuit which was filed in New Jersey alleges that Ambit uses deceptive tactics to hide the real cost of the energy they are supplying.  This has lead to some customers being surprised with charges at the end of their discount period, that for some have added up to thousands of dollars.

It would appear that New Jersey isn't the only area where Ambit customers (who may also be consultants) are opening unexpectedly high bills from Ambit Energy.  There is a dedicated online Ambit Complains Board, where several customers from all over USA are sharing similar stories.  We also found this detailed story of an Ambit consultant hit with a 'massive electric bill', a year after joining the MLM.

 Is Ambit an Illegal Pyramid Scheme

Despite the similarities to pyramid schemes, network marketing is legal.  If there is a product or service attached that can be sold to consumers, then the system is not illegal.  By this definition Ambit is not an illegal pyramid scheme.  Even though they are legal, we believe that MLM is an unethical business model.

MLMs know that they strongly resemble illegal pyramids, and they do their best to play this down.  Ambit is no different, we found their response to the question: Is Ambit a Pyramid?  Here found the classic MLM response, which is that all companies are pyramids.  It's true, there is a hierarchical system with a CEO at the top, then layers of executive followed by managers and finally workers.  

Ambit even claim that 'You will only get ahead if someone above you dies or quits'.  They then flip it around to show us how with Ambit this consultant is earning more than the people in his upline.  We'd just like to point out that this is possible with any commission based sales role. Given that MLM is essential commission based sales, we believe that the author might have earned more than his upline.  Back in 2008, the Finance Guy actually achieved this.  While working as a loan writer for a bank, his bonuses for the year meant that he got paid more than both his direct boss and the one above him.  So this is definitely possible outside of the MLM world

We are willing to agree with Ambit that most companies have a  hierarchical structure, but we disagree that this makes all companies resemble pyramid schemes.  When we look at the actual definition of a pyramid scheme, we see that the key element of a pyramid scheme is the constant need to recruit new members.  That's where the difference is between network marketing and companies which don't resemble pyramid schemes.

Normal companies only hire new staff to replace those that resign or when the company is growing fast enough to justify it.  Ambit doesn't care how many consultants sign up because it costs them no hire them, and they only pay them for results.  If they follow procedures and 'become their own first customer', it could be argued that Ambit profits from new consultants joining the MLM.

Ambit, and all MLMs, claim that all companies resemble pyramid schemes.  We obviously disagree, unless a primary part of every role in every company, is recruiting new employees.  It could be that they've all made an honest misunderstanding.  It could also be that MLMs want to mislead us to make their opportunity look better than it really is.

 Should You Join Ambit Energy

If you want to save money on your bills, then make sure you compare all the available options.  Also make sure to read through the terms and conditions before you sign anything.  As we've seen, some deals appear to be good, but can end up costing you more over the longer term.

If you are looking for a new business opportunity, then take your time to examine all your options.  If you think you have what it takes to turn a profit as an Ambit consultant, then you can probably make even more in a regular sales job.

One study found almost all MLMs are a waste of time.  They found that your chances of success are extremely small.  This because of the unrealistic expectations of a constantly expanding down-line.  

This review is based on the opinions we have formed while researching Ambit Energy.  We'd love to hear what you think in the comments section below.  Specially if you can share your own experiences with Ambit.

For more posts like this, look at our list of mlm reviews. 

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[finance-guy]

How to Buy Bitcoin

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As we write this post (10/26/17), the price of Bitcoin is sitting at US $5,506.  It is down 8.54% from the high of US $6,020 reached on 10/21/17.  Having said that it is still up 3.40% over the 2 weeks from 12/10/17, at which time the price hit a new all time high of US $5,325.

What we are trying to highlight, is that the price of Bitcoin is extremely volatile.  This post will show you how to invest in Bitcoin, but before we do that, we want to make sure that you are aware that the value of your Bitcoin (measured in cash), can experience dramatic rises and falls in a relatively short time, as shown in the graph below (and the price has moved up a little since we started):

What we want you to see is, that, like all investments, Bitcoin carries financial risk.  It is important to understand that your funds are at risk, and you should never invest more than you can afford to lose.  Having said that, we have invested in Bitcoin, mostly through USI-Tech Bitcoin packages, and will continue to invest in Bitcoin (with amounts we are happy to put at risk).

 How Do I Buy Bitcoin

Step 1 - A Bitcoin Wallet

If, like us, you are fairly new to investing in Bitcoin, then getting started can be a daunting task.  No matter how you buy your Bitcoin, you will need a trusted wallet to store your Bitcoin.  

After some web surfing, we decided to create a blockchain wallet. The Blockchain website is well established and has a good reputation.  We felt confident trusting them as a wallet provider.   One thing we found is that the default security settings are for fairly easy access.  If you want extra security (such as mobile phone SMS verification and other additional security), you need to manually activate these features.

Once you have set up your free Blockchain wallet, you can find your wallet address by pressing the 'request' button.  From here, you can see that Blockchain has automatically given you both a QR code and an alphanumeric Bitcoin wallet address as shown below:

Once you have set up a Bitcoin wallet, you are ready to receive Bitcoin.  It's important to remember that a Bitcoin wallet, it is yours forever.  While we are not actively using the above wallet, any funds sent to that QR code or wallet address would still be ours.  For this reason it is important to make sure that you keep track of any Bitcoin wallets you set up and make sure you know how to access them.  

 Step 2 - Buy Some Bitcoin

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After setting up our wallet, our next challenge was in buying some Bitcoin.  For this we managed to buy Bitcoin with a credit card through CEX.  CEX is purely an exchange so they do not offer a wallet service. You should set up a wallet before buying Bitcoin, then once the buy has been confirmed, you can transfer your Bitcoin from CEX to your external wallet.

CEX has 2 factor authentication to login.  For us we can only access our account after we have verified our login from an SMS sent to our mobile phone number.  This added level of security is reassuring as hackers would need access to our personal phone in order to access our account

A note of Caution: CEX, like many other Bitcoin service providers, will only show balances of confirmed transactions.  The first time we sent a small amount of Bitcoin to CEX, it took over 6 hours for the Blockchain to confirm the transaction.   During this time, the balance in our Blockchain wallet had decreased, but there was no sign of our funds in CEX... this was to say the least a bit stressful.

The reason we share this is because it might happen to you, and believe it or not, it's nothing to stress about.  The delay in our transaction was partially our fault, for not opting to pay a higher fee for faster transactions.  Transaction lags are part of how Bitcoin works.  The important thing to remember is that if you have sent the correct amount to the correct wallet, then you have nothing to worry about.  The worst thing that can happen is that the transaction is cancelled and your Bitcoin is sent back to your original wallet.

 A More Convenient Way To Buy Bitcoin

If you are looking for a simple one stop shop to buy and hold your Bitcoin, then Bitpanda is for you.  Bitpanda automatically sets you up with wallets for Bitcoin and a selection of other cryptocurrencies known as 'alt coins'.  Bitpanda also offers 2 factor authentication via sms to a phone.  Once again we like this added level of security which prevents hackers accessing our funds.

Bitpanda offers a very user friendly website which makes it easy to manage your Bitcoin and Alt Coin holdings.  Our Bipanda Bitcoin wallet is shown below:

Bitpanda also makes buying Bitcoin simple offering a variety of ways for you to buy your cryptocurrency, as shown below:

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We have tested Bitpanda for both buying (with a credit/debit card) and selling (through Skrill).  We can confirm that everything went as expected.  One advantage we noticed is that Bitpanda balances updated very quickly and we were able to sell our Bitcoin for Fiat currency extremely fast.  Unlike others, Bitpanda didn't make us wait several hours while the blockchain caught up with our transactions.

Bitpanda is an excellent option for buying and holding Bitcoin.  They make buying and transferring Bitcoin as simple as copying and pasting.  Once you know the wallet address and amount of Bitcoin you need to send, all you need to do is fill in the boxes.  Bitpanda provides a simple way to buy hold and transact with Bitcoin and other alt coins.

Another one stop site we found was Coinbase, who are another company who let you buy and sell Bitcoin with a Credit/Debit card.  We discovered that in Australia they do not allow you to sell to a credit/debit card, but you can still buy Bitcoin through them.

Like Bitpanda, Coinbase has a very user friendly website for managing your Bitcoin.  (and other cryptos).  One thing we liked is that they let you set up multiple wallets - this would be useful if you want to track payments from a specific source, you could set up a wallet specifically for them.  Our first Coinbase wallet is shown below:

 While the fees on Coinbase are slightly higher than those on Bitpanda, they are currently running a promotion where if a new customer buys US $100 or more worth of Bitcoin, then they will give you an additional US $10 (in Bitcoin) as an opening deposit bonus.  It costs you nothing to open and keep the wallet so you could get US $10 just for signing up with Coinbase and making a deposit of $100.

Once you have a wallet and a way to buy and sell Bitcoin, then we hope that investing in Bitcoin will be a lot easier.  We have only shared our experiences with services we have tried ourselves, we'd love to hear from you in the comments section below.

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[finance-guy]

Can You Make Money With Lifevantage

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Lifevantage is a Utah based wellness company which was started in 2003.  The range of Lifevantage  products are all made with the common goal of 'promoting healthy living.'  In 2009, they decided to give up on traditional retail sales.  Instead they chose  to promote their products using multi-level marketing.  In June 2017 they estimated that they had 64,000 active distributors in their international network marketing system.

Here at The Finance Guy, we believe that you can't make money with MLM, but we'll give Lifevantage a chance to prove us wrong.  Our review of Lifevantage will take a close look at their business opportunity.  We want to find out if this is a legitimate way to earn an income, or just another MLM.

 What Does Lifevantage do

Lifevantage describe themselves as a 'science-based nutraceutical company dedicated to helping people achieve healthy living'.  Their flagship product appears to be Protandim, which they say can reduce the effects of aging.  They explain that the antioxidants in this product can help your body on a cellular level.  Along with fighting back the hands of time, healthy cells will also improve your energy levels in the day and your quality of sleep at night.

Lifevantage also produce a large range of other products which look similar to most supplement based mlms.  There's a weight loss range, a cleanser, something for energy, and some cosmetics for those that want to be as beautiful as possible.  What did make Lifevantage stand out is they make a product for dogs.  Petandim allows you to give your best friend the benefits of science-based anti aging supplements.

 How do you Make Money with Lifevantage

According to the official Lifevantage opportunity webpage, this is 'The Opportunity of a Lifetime'.  They say they have the tools and training which are part of their 'proven plan', to help you 'get a quick return on your investment, and earn long term residual income'.  This all sounds great but there doesn't seem to be much detail.

To find out more we watched this video explaining the Lifevantage compensation plan:

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The 16 minutes of video is an attempt to explain the 2017 Lifevantage Compensation Plan.  We decided that we'd do our part and read through the full document and share our own findings below:

Like the video, the compensation plan starts off explaining that there are 8 ways to earn with Lifevantage.  We see this as an early warning because we've seen a lot of MLMs with overly complicated ways to earn.  Usually the result is that most distributors are losing money. Having said that we'll go through the Livevanatage ways to earn:

1. Retail Sales You can earn a retail margin from Lifevantage when customers purchase either directly from you or through your Lifevantage website.  We believe that retail sales are your best option to make money in any MLM.  Lifevantage calls retail the 'most obvious way to earn money', but doesn't really tell us much more than that about it.

If you join any network marketing company, it's important to remember that sales are a key part of your business.  If you're not selling product, then you're not making money.  In our opinion, building a retail customer base is critical to making money in MLM

2. Smart Start Bonus The Smart Start Bonus is designed to reward you for signing on either new preferred customers or new distributors to Lifevantage.  This bonus is paid for the first calendar month after you have enrolled a new customer or distributor to Lifevantage. 

Depending on how much Personal Volume (PV) you have generated, you can earn a smart start bonus of either 30% or 40% on all Lifevantage products purchased by new preferred customers.  You can also earn a smart start bonus if your newly enrolled distributors join with either a silver, gold or platinum pack.

3. Launch Bonus This is similar to the smart start bonus except it's paid on customers and distributors recruited by others in your downline organization.  Lifevantage call this a 'trickle up' bonus.  There are 6 levels of launch bonus that are paid to the next eligible Lifevantage rank in the upline.   

Depending on your rank, and which package the new distributor buys, you might earn a launch bonus ranging from $2.50 up to $50.00.  To qualify for the launch bonus, you and your customers must buy enough Lifevantage products to  generate at least 200 PV per month.

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4. Royalty Commissions Royalty commissions are the monthly income you can earn from all product sales within your Lifevantage organization.  In order to qualify for more royalties, you need to obtain a higher rank in Lifevantage.  Rank is achieved by recruiting a downline and generating enough product sales to meet the PV and organizational volume (OV) requirements.

The amount of commission which you can earn at each rank, and the qualification criteria is shown in the image below:

Lifevantage proudly tell us that they pay commission of up to 43% on all products purchased within your organization.  The most you can earn per sale is 9%, but it is true that a total of  43% is paid to all the different levels in the MLM.

5. Generational Matching Once you reach the Lifevantage rank of 'Pro 3' or higher, you will qualify to earn a monthly generational matching bonus.  This amount is calculated based on the royalty commissions earned in your downline.  It is paid on up to 5 levels below you in your organization as shown in the image below:

Lifevantage can pay up to 30% in generational matching bonuses on any royalty commissions earned in your organization.   The video we watched explained that this bonus kept people at the higher levels in Lifevantage motivated to help everyone in their downlines.  By this we assume they mean that this bonus ensures that people in your upline will want you to keep buying product.

6. Elite Bonus Pool This monthly bonus is only paid to those who have reached the level of Pro 7 or higher with Lifevantage.  Every month Lifevantage will take 4% of all sales made in all organizations in the MLM, and pay this as an Elite Bonus Pool to those who have reached the highest ranks.

The higher up the ranks you go, the more Elite Bonus you can earn.  1% is shared with Pro 7, 8, 9, 10.  Then another 1% is shared with Pro 8, 9 10.  A third 1% is shared with Pro 9, 10.  The final 1% is only shared with the Pro 10 members of Lifevantage.

What we see is that 4% of every dollar you spend on Lifevantage products is funding this bonus.  You are paying an extra 4% so that those at the top of the system can earn this bonus.

7. Achievement Bonus This bonus is a one time payment made to those who reach the Pro 10 levels with Lifevantage.  The payment can range from $100,000 at the 'master level' to $500,000 at the Presidential level'.

8. Business Centers If you reach the Lifevantage rank of 'Premier Pro 5', then you will be eligible for your first new business center.  By the time you achieve a rank of Pro 10, you will have been eligible for a total of 4 new business centers.

A new business center allows you to sponsor yourself and start a new Lifevantage business in your own downline.  You can then earn commission at two levels on any sales made under your new business center.  If you strategically place all four new business centers, you could earn on up to 5 different levels from the sales generated by the lowest business center.

 Are Lifevantage Distributors Making Money

We had a look at the Lifevantage 2017 US Income Disclosure.  The first thing we noticed was the the following statement. 'There were approximately 63,000 total U.S. Distributors during the period, with approximately 48,500 U.S. Distributors paid in the same period.'  After some simple math, we see that 14,500 or 23.02% of US distributors earned no commission in 2017!

We then see a table showing what was earned by those who did earn any commission in the 12 months to June 2017.  This is shown below:

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Once again we did some math and we could see that even at the Pro 5 level the average commissions paid in the 12 months were less than $30,000.  In other words people who put in the time and effort required to reach Premier Pro 5 might have qualified for a new business center, but on average they could make more money if they worked a regular job.

According to the table, 75% of US distributors were paid less than a full time income in the 12 months to June 30 2017.  An additional 23.02% earned nothing at all.  This means that a total of 98.02% of Lifevantage distributors are not earning a full time income.

As a publicly traded company (NASD:LFVN) Lifevantage is required to release their financials to the public. To get an idea of how much Lifevantage distributors are earning globally, we looked at the Lifevantage 2017 4th quarter fiscal results. 

We saw that for the year ending June 30 2017, Lifevantage say they paid a total in commission and incentives of $96.7 Milliion.  They also tell us that globally they ended the year with 64,000 active consultants.  We once more rely on our math skill and find that on average Lifevantage distributors earned $1,510.94 for the year.  

The figures in the financial report include all Lifevantage distributors at all ranks.  While the top 1.98% in the hierarchy might be earning more than $30,000 per year, most are not.  What we can see is that the expected income from the Lifevantage business opportunity is less than $1,511 per year.

 Why is it Difficult to Make Money With Lifevantage

We believe that the problem is not unique to Lifevantage.  It is common to any opportunity which uses the MLM business model.   The problem with network marketing is that it's designed to promote and sell products.  It is not designed to help you make money.  Companies use MLM because they can generate a profit for themselves, they do not use it to share the wealth.

The generous compensation plans offered by MLMs are part of the problem.  Lifevantage pays ongoing commissions which add up to a total of 59.9%.  The problem is that these are all included in the 'wholesale price' they charge their distributors.  If you are a new Lifevantage distributor then 59.9% of what you pay will be paid as commission to people above you in the MLM

In their financial report, Lifevantage showed that commission and incentives represented 48.5% of their revenue for the 12 months to June 30 2017.  While it's not the full 59.9% which would be possible if all sales qualified for all commissions, it's still a lot. 

The remaining 51.5% is kept by Lifevantage.  This covers the costs of production and includes their own profit.  This would be the amount traditional companies earned from producing products and selling them to the wholesale market.  The price paid by distributors is close to double the traditional wholesale price.

 Is Lifevantage an Illegal Pyramid Scam

Multi-level marketing may look just like a pyramid scam, but it is not illegal  as long as there is a product or service attached.  This means that opportunities such as Lifevantage are legal, but this does not mean that they are ethical.  

MLM creates an environment where there is a danger of over consumption.  People start buying products because they think it's their path to financial freedom.  They are not buying products which they otherwise would have spent money on.

The buying frenzy is intensified by the levels in the compensation plan.  The system is designed so that people all the way up to the top of the pyramid will earn more money if you spend more.  When they 'encourage' you to keep buying product is it because you are on the path to freedom, or is it because your ongoing purchases will make them money?

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Can You Build an Organization with LIfevantage

If you want to build a network marketing downline organization, you will need to be constantly recruiting new members.  The videos and other promotional material make it sound as simple as sharing the opportunity with a few friends, then have them do the same.  Theoretically your organization will soon be growing on it's own with you collecting residuals.  In reality building a MLM team is very difficult

As we saw in the Lifevantage financial results, they had 64,000 active distributors at the end of June 2017.  This may sound good, but they also show us that at the end of June 2016, they had 69,000 active distributors.  In other over the 12 months to June 2017, Lifevantage had a decline of 5,000 active distributors.  Even with new recruits, the total number of Lifevantage active distributors shrank by 7.25% in 12 months.

You should expect to experience similar results when trying to build your own Lifevantage organization.  It's possible that in any given year, you won't recruit enough new distributors to replace those who have quit.  Growing your organization will mean you need to recruit enough to keep ahead of the drop out rate.

LIfevantage is not alone in this.  All MLMs that we have looked at so far, suffer from a high attrition rate.  It is quite common for more than half the active distributors to quit in any given year. 

We believe that the high drop out rate is the reason for incentives such as the smart start bonus and the launch bonus.  These are designed to get new members to spend as much as possible as quickly as possible.  They will tell you that buying packs will help you get your business up and running.  You might hear all about 'being coachable', and why you need to 'duplicate' what others have done.  We think that these incentives are designed so that they can make as much money as possible from you before you quit.

 Should You Join Lifeventure

If you are looking for an opportunity to supplement or replace your current income, then we suggest you carefully examine all your options before deciding which is best for you.  If you are already a Lifevantage customer, and you love the products and believe you can sell them at full retail price then maybe you can make money with Lifeventure.

If you do decide to join Lifevantage, we would suggest that you only start with the $50 business builder starter kit.  You can then buy products at your own pace to try them out and see which ones you like.  You can even share samples with friends to start building a customer base and have them purchase from your free Lifevantage website.

As we saw in the video, your sponsor will tell you that the $1,250 platinum pack is the best way to join but there's also a $650, Gold pack and a $350 siliver pack.   While you might get some price discounts by buying the packs, we think there's a risk you will be paying for  a lot of products you don't want.

The platinum pack will be promoted as the 'best way to start your business'.  But we think it's the best way for the person who sponsored you to get a $400 smart start bonus. Then all the people in their upline who are also encouraging you to buy a large package might be influenced by their potential fast launch bonuses.  It's important to remember that when you buy product, the people above you in the MLM earn a commission.  They might be trying to help you, but earning commission from you is also a motivating factor.

 Our Final Thoughts

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Multi-level marketing is a great way to sell products and turn a profit if you are the manufacturer.  If you are a member of the network marketing system, then we believe it is unlikely that you will make money with any MLM.  

We assessed the Lifevantage opportunity using Dr Jon Tayolors 5 Step MLM evaluation. We found that it raised all 5 red flags.  According to Dr Tayolor, this would suggest that your chances of making money with Lifevantage are less than 1%.  

This has been our review of Lifevantage.  These are opinions we formed from reviewing the data that was available to us.  We'd love to hear your thoughts in the comments section below, especially if you can share your experiences with Lifevantage.

For more posts like this, look at our list of mlm reviews. 

[finance-guy]

Can You Make Money With WorldVentures

WorldVentures is a Texas based travel company which started in 2005. They are a members only program so you need to join before you can book any WorldVentures travel.  Active members  acquire points, which can be used to help them pay for a range of 'DreamTrips' luxury vacations at a 'discounted rate'.  WorldVentures memberships are currently being sold in almost 30 countries by an international network of representatives who have joined their multi-level marketing system.

Here at The Finance Guy, we believe you can't make money with MLM, but in this full review of WorldVentures, we'll give them a chance to prove us wrong.  We will take a look at their business opportunity, and find out if this is a legitimate money making opportunity, or just another MLM.

 What is Worldventures

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The official about Worldventures page describes them as a 'a community of fun, freedom and fulfillment'.  It goes on to explain that if you join their DREAMTRIPS club, you will have access to their 'curated' group vacations to the 'most sought-after locations'.  WorldVentures members also experience the 'transformative power of travel'.  It then talks about the benefits of starting a business and joining a team.

We wanted to know more about the vacations so we looked at the WorldVentures DreamTrips page.  We discovered they are offering 'more than just a vacation', it's a 'dream trip'.  There's a short video on the page with a collection of members filmed in various international locations.  They tell us how they like that the trips are planned for them. 

It's nice that WorldVentures plans trips for you.  Small issue is that the video only showed people standing near recognizable features, such as the Great Wall of China, The Washington Monument, The Sydney Harbour Bridge etc etc.  They also show a collection of generic adventure activities like white water rafting and paragliding.  There's nothing special about these regular vacations. The image below is a sample from the video:

As we can see, this member is speaking to us from some exotic location, possibly the Greek Islands.  When we see video of people in front of a static background, it never looks like it was made with special effects on a home computer.

To get an idea of how easy it might be to create fake travel footage, we decided to send the same member to Egypt.  Using nothing more than our beginners ability with photoshop,  we created the image below:

We only worked with still images, but video software on a home computer could produce similar footage. Even though the video could have been filmed with cheap actors in front of a green screen, we'll give them the benefit of the doubt.  We're willing to assume that these are real members on real DreamTrips vacations.

Ignoring the production quality of the video, we are still struggling to see what's so special about WorldVentures DreamTrips.  The Finance Guy has been to some of the locations shown in the video, and has done white water rafting and other adventurous activities.  All they've done is show us that they 'package' a vacation which we could easily arrange ourselves.

 What is WorldVentures DreamTrips

Feeling a little disappointed with the information on the official website, we went to youtube and found a this video:

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To save you around 18 minutes, we'll share what we found in the video.  Firstly we were happy to see that the video claims it was made without actors, instead they used WorldVentures members.  After all actors are only playing a role, members want to make money from you joining!

The video talks about a blue 'You Should Be Here!' sign, which they claim has 'gone viral'.  Not sure about you, but this is our first time seeing this 'viral' sign.  They purport that only their members can get those signs for the 'couldn't build it yourself vacations' through WorldVentures. The way to build your WorldVentures business is to share photos with the sign.  Well it appears that they haven't shared enough to reach us yet.

They go on to claim that their experiences are offered 'exclusively to their members', because the 'planning is done for you'.  Not sure about you, but they are sounding a lot like a regular travel agent.  Only difference is that travel agents plan the vacation we ask for rather than something put together by someone else.  

The video refers to their trips as ' one of a kind adventures', yet strangely they are only showing footage of people at regular hotels and resorts doing regular vacation activities.  After this they transition into the types of membership and how like a gym there are monthly fees. Basically you can pay a monthly fee and acquire points toward your next trip.  Wow imagine if there was some other way to put money aside for holidays.  Hey wait a savings account could do that, and you could even custom make your own vacations.

What do you get with DreamTrips

As far as we can see, WorldVentures DreamTrips membership charges a monthly fee for trips you could plan yourself or through a travel agent.   The only benefit we could find was in their price promise shown below:

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It's good to know that WorldVentures are confident that their trips are the cheapest.  If you can find the identical trip for cheaper, they'll give you a 100% refund.  That sounds good but maybe it's not.  For starters, would the refund include all the monthly membership fees we paid in order to access this 'exclusive offer'? 

What if we could arrange a trip to the same destination at the same time, with the same activities, but our trip was significantly cheaper? What if we flew on an airline which offered cheaper or more direct flights?   Is it possible we'd choose a cheaper room at the same hotel? We could create our own version of the same vacation at a cheaper cost but it wouldn't be identical so in our opinion, the DreamPrice Promise is worthless.

Another question we are left asking ourselves is how would we be able to find 'the exact same trip' if they are offering 'one of a kind vacations'. Maybe their pre-planned group get aways are less unique than they say they are.

 How do you Make Money With WorldVentures

To find out how the WorldVentures business opportunity works, we looked at the 2017 WorldVentures Compensation Plan.  This document explains how independent representatives can become financially free through the power of network marketing and simply sharing the WorldVentures opportunity.

The compensation plan wastes no time telling us that they encourage their representative to share WorldVentures with others.  They refer to this as 'social commerce'.  For us this is an early warning sign.   Endless recruitment is a red flag in Dr. Jon Taylors MLM evaluation system. He found that 99% of people will lose money in MLMs which encourage constant recruitment.

WorldVentures explain that the advantage of membership is that their DreapTrips, are simpler than booking it yourself online.  Once again, we are struggling to see the value in this service.  In the last 15 years, we've booked almost all our travel online ourselves.  It's really not a difficult or time consuming process.

We then see that WorldVentures pays commission based on a binary compensation system very similar to the one used by USANA.  We have already found that you can't make money with USANA, but maybe WorldVentures is different.

Like almost all MLM's you can not earn commission with WorldVentures unless you 'remain active'.  To do this you need to pay a once off upfront fee, then ongoing monthly fees, which they say covers the cost of business tools, including your very own WorldVentures website, and the back office support.  According to Dr. Taylor, this is known as the pay to play red flag.

It always makes us wonder when see companies charging fees for 'your own website'.  This is something we don't believe actually costs them anything.  All they are really do is giving you your own login and link to their generic marketing website.  It's no different to adding a new account in Gmail.  Does every new account cost Google extra monthly admin fees, or are they just part of how the system is designed?

What Commissions are Paid by WorldVentures

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In true network marketing tradition, WorldVentures offers an overly complicated compensation system with several ways to earn.  So far, in the MLMs we've looked at, most representatives don't end up earning much money, but maybe WorlVentures is different.

Direct Commission This is the equivalent of what other MLMs would call retail commission.  In other words, you can earn a margin by selling memberships directly to new members.  As always we believe that this is your best opportunity to make money with WorldVentures.  However just like all the others we've reviewed, it only gets a cameo mention in the compensation plan.

We did find something rare in the WorldVentures compensation, but rare isn't necessarily good.  We discovered that the weekly commission has an upper limit determined by rank, as shown below:

Monthly Residuals If you reach the rank of 'Senior Representative', or higher then you will qualify for monthly residuals.  There are all sorts of balancing rules with the binary pyramid, but if you have a big enough downline, you can earn this.  However, once again there is an upper limit on what you can earn as shown below:

To us, these maximum limits don't make sense.  Essentially what they are telling us, is that no matter how much business you generate, they aren't willing to pay more than these maximums. Punishing the top performers is not a good way to run a salesforce! To us it looks like WorldVentures would rather pay themselves than their top salespeople.

There are a few other ways to earn with WorldVentures including 'Personal Sales Bonues', 'Trainingdollars', 'Traveldollars', 'Dreamcar Bonus', and 'Dreamhome bonus'.  The only way a representative can earn any of these is to sell a very substantial amount of DreamTrips memberships.  To access these, you need to first make your way up the hierarchy or WorldVentures MLM ranks. 

 How Much Are WorldVentures Representatives Earning

We found a copy of the 2015 WorldVentures Income Disclosure Statement.  If we focus on the paragraph below the table of higher earners, we'll note that: In 2015 77.76% of WorldVentures Representatives earned no commission at all.

If we do some math and add up the first three rows of their table, we see that 21.42% averaged less than $1,300 in commission for 2015.  If we include the 77.76% who earned absolutely nothing, we see that in 2015, only 0.82% of WorldVentures representatives earned more than $25 per week.  For the record, you could make more than double that amount per day if you were to create a blog...

When we look at the significant income, it's a familiar story, 0.26% of representatives are earning a full time income from WorldVentures.  In other words, your chances of earning a full time income with the WorldVentures business opportunity are less than 1 in 384!

 Is WorldVentures an Illegal Pyramid Scam

Network marketing companies are legal as long as they have a product or service attached to them.  There is a lot of other legalese terminology, which their lawyers successfully navigate.  What we are trying to say is that despite our opinion that MLMs are not ethical, but they are legal.

Even though they are legal, there is a lot of negative press and warnings about WorldVentures. The Australian press isn't alone in recommending caution with this 'business venture'.  We also found evidence that some members had unhappy experiences with WorldVentures.

Should You Join WorldVentures

WorldVentures has achieved a first!  This is the first time we've reviewed a network marketing company and have been unable to find a reason why you should join.  As far as we can see, you could book all the vacations yourself online, and if make some modifications, so that they're not 'exactly the same', then you'll probably get them at a better price.

If you would prefer not to go the effort of deciding the details of your own trip, then there are still some other options.  For example rather than paying a monthly fee, you might save for your vacations.  Maybe you want a pre-packaged tour to a popular destination with a group of like minded travelers.  If this is you then perhaps WorldVentures can be of value.  Then again, you might be better off saving your money and going on a Contiki Tour.

If WorldVentures wanted to offer added value to their DreamTrips, then they could put effort into offer truely unique experiences.  Rather than offering cut 'n' paste trips, they might want to try something different.  Being different would make them unique, and while it might not appeal to all, it would add value to a niche market.  We think Worldventures could learn a lot from the epic tours offered by the Thirsty Swagman.

As always this review is just our opinion.  Having said that, it is the opinion of someone who's used the internet to book some pretty amazing journeys.  It might be fun to join a group and go to an exotic location at the time they want you to go and stay at the hotel they book.  We'd love to hear your opinions in the comments section below, especially if you can share your experiences with WorldVentures

For more posts like this, look at our list of mlm reviews. 

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[finance-guy]

Can You Make Money With LegalShield

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Legalshield is an Oklahoma based network marketing company which sells pre-paid legal services.  The company was started in 1972, under the name 'Sportman's Motor Club.  In 1976 they changed their name to 'Pre-Paid Legal Services', and in 2011 it became known as Legalshield

Legalshield offers their services through a network of legal professionals across the USA and Canada.  Membership plans are promoted and sold by associates in their multi-level marketing system.  All members can become 'associates' and earn commission by promoting Legalshield plans to new members.

We believe that you can't make money with MLM, but we'll give them a chance to prove us wrong. In this full review of Legalshield. We'll find out if this is a legitimate money making opportunity, or just another network marketing company.

 What does Legalshield do

Legalshield's goal is to provide affordable legal care, for any situation, to all members.  The concept seems simple enough.  You pay a low monthly membership fee, and in return, get access to the legal assistance that could potentially cost several thousand dollars.

The Legalshield website explains that they cover issues related to; Landlord / Tenant Consurmer Finance Traffic Estate Planning Real Estate Employment Collection Family Law Civil Litigation Criminal

With personal plans starting at $17.95 per month, and small business plans at $39 a month, it certainly appears to be fairly extensive legal coverage!  There's also identity theft plans starting at $9.95 per month.  For just a few extra dollars per month, all plans can be upgraded to cover you and your loved ones.

Legalsheild is building a 'community of coverage' with their network of lawyers from all over the US and Canada.  This allows them to provide a local service no matter where you are.  Legalshield is keeping up with the times and also offers mobile apps for both iphone and Android, so that you can access their services at the touch of your screen.

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How do you Make Money With Legalshield

We looked at the Legalshield opportunity, and found out that you can achieve success in four easy steps: 1. Become a Member - Buy a Legalshield membership for yourself 2. Sign up as an associate -  Pay at least $99 and agree to be part of the MLM network 3. Sell to others - Get other people to join as members and associates 4. Get rewarded - Relax while the network marketing system makes you financially free.

The Legalshield compensation page, explains that you can earn money from personal sales and from building a team.  If your team gets large enough, then you'll eventually have residual income and will qualify for the 'performance club' which gives you additional riches.

We also looked at the four page Legalshield compensation plan.  This compensation plan is definitely the most vague of all the MLMs we've looked at so far.  Legalshield appear to have done their best to only provide minimal information. The lack of detail could be because they are lawyers and only give the legal minimum, or it could be that they don't want us to see how bad the opportunity really is.

Based on the limited information in their compensation plan, we can see that Legalshield is very similar to most network marketing companies.  You can earn commission for direct sales or from sales made by others you have recruited to the system.  The amount you can earn per sale increases as you grow your team and advance through the MLM ranks.  

When you first sign up as as 'associate' with Legalshield, you can earn $65.16 for direct sales and $13.04 override on sales made by those in your downline.  If you reach the top rank of 'Executive Director', then you will earn $182.46 for direct sales and up to $117.30 override from sales made in your downline.

 How Much are People Making With Legalshield

We found a copy of the 2015 Legalshield Income Disclosure.  The first thing we see is that only 2.5% of members are active associates.  This could be a good sign, after all that would suggest that 97.5% of the members are retail customers and not part of the MLM structure. It could also mean that a large number of associates drop out of the MLM but are still members.

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Legalshield has chosen to present the data in a rather unusual format. They have shown us earnings based on how many years associates have been with Legalshield, rather than by what rank they have reached.  Once again we assume that they have provided what is legally required, but could have chosen to present the data in a way that makes them look as good as possible.

The most important point we found in this document is that in 2015 83% of all Legalshield associates earned less than $1,000.  In other words, only 1 in 6 Legalshield associates earned more than $20 a week.

Let's not forget that income is not the same as profit.  As we saw in the compensation plan,  step 1 is to become a member, and that means paying monthly fees.  If we include the cost of Legalshield membership, and other costs of running and promoting your 'own business', we'd expect to find that most Legalshield associates are losing money.

 How is Legalshield being Promoted

To get an idea of how Legalshield is being promoted, we looked at an online copy of the Legalsheild business opportunity presentation.  This 45 page slide show is designed to recruit new associates to the Legalshield MLM.  This gave us some insights into how the business opportunity is being presented to new recruits.

The recruitment presentation tells us that Legalshield can teach us 'life-transforming skills', it hen goes on to tell us that Legalshield has a strong rating with Oklahoma business bureau. They also tell us that they have 5 Stars with Consumer Affairs.  It's true, the rating is 5 stars, but when we read the comments, we saw that all the negative comments had been removed by Legalshield.  It's almost as if they were using their network of lawyers to protect their image!

Next we see statistics stating that you are 'almost three times more likely to be in court than you are to be hospitalized'.   We feel that this might be a bit misleading, think about that for a moment.   When is the last time you or someone you know went to either court or was in hospital.  If you and your friends are anything like ours, you'll be able to recall a lot more hospitalizations than court visits.

While there could be more court cases than hospitalizations, a large portion of them occur at the corporate level and don't necessarily involve individuals.  We can't see specific details of the data collected for this statistic.  It's possible that Legalshield presented the statistics in a way that advertised a need for their services.

We then see a long list of services provided by Legalshield, all with the small print disclaimer, telling us that exclusions and limitations apply.  The presentation then shows that paying $20 per month for Legalshield can help you avoid paying $250 per hour for a lawyer.  For an extra $19.90 per month, you can also get ID shield to gain access to legal services related to identity theft.  When I think of all the fees I've never paid to lawyers over my life, I would rather save the $39.90 a month. 

 Will Legalshield Cover All Your Legal Needs

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As we saw in the presentation of the business opportunity, Legalshield does seem to offer a fairly extensive range of services.  We looked at the Legalshield plan details for California, and found that the cover might not be as extensive as we'd hope.  For example letters and phone calls made on your behalf are available 'at the discretion of the Provider Lawyer'. In other words it's an optional service for them.  They can decide not to do this for you.

We also noticed that the contract and document review service is limited to 15 pages per document.  Most contracts we've looked at over the years have been well over 15 pages.  Having only the first 15 pages reviewed might give us a partial idea, but we'd miss out on all the important information contained from pages 16 onward.

We found more details in a sample version of the Legalshield services agreement.  Under trial defense, we see that Legalshield will provide a fixed number of hours of service per year.  This would help if we have to appear in court.  However when we look at the list of exclusions, once again, the cover is less comprehensive than we might have hoped.

Criminal charges are not covered by Legalshield, neither are cases involving medications (even if prescribed).  It also appears that most family matters such as divorce and child custody etc are also not covered.  You might be more likely to go to court than to hospital, but to us it looks like some of the most likely reasons to go to court are not fully covered by Legalshield.

It does appear that you can still use Legalshield for these excluded matters, but instead of full coverage, you will get a 25% discount from their preferred provider.  Once again this is provided subject to their own judgment, and does not include an contingency matters.  The 25% discount also applies to the pages in documents which aren't included in the first 15.  

To us Legalshield looks more like discounted legal services than full pre-paid legal cover.  Having said that, a 25% discount could make the membership worthwhile.  The only concern we'd have is that there is no choice of attorney.  We have have to use the designated providers through Legalshield.  In some matters we might prefer a different lawyer who is more specialized in whatever it is that we need.  Another issue in regards to the pricing.  If we had a simple matter, we might be able to negotiate a better deal than the 25% discount to the full price of the designated providers.

 Should You Join Legalshield

If you think that the services they offer are worthwhile and you are happy to only use the legal providers they offer, then maybe Legalshield is right for you.  If you are joining because you are interested in the business opportunity and want to supplement or replace your income, then we suggest you do some very thorough research of all your options before making a decision.   

As we have seen from their own income disclosure, most Legalshield associates are not making much money.  Like most MLMs we believe you could do better if you put the same time and effort into something else.  Despite the promises of financial freedom, less than 1% of people who join MLM will ever make a significant income.

This has been our opinion on Legalshield, and whether or not you can make money with them.  We'd love to hear from you in the comments section below, specially if you can share your experiences with Legalshield.

For more posts like this, look at our list of mlm reviews. 

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[finance-guy]

Can You Make Money with Melaleuca

This review of Melaleuca comes at the request of one of our readers.  Based on our research so far, we believe that you can't make money with MLM.  That being said, we'll have a streetonomic look at Melaleuca.  We want to know if this is an opportunity for financial freedom, or just another network marketing company.

Melaleuca first launched in 1985, out of Idaho.  They now have annual sales of US $1.75 Billion from over 400 products.  Melaleuca report that they have purchases from over 1 million customers from all over the world every month.  There is no doubt that the company is very profitable.  What we want to know is:  Are people making money from network marketing with Melaleuca

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What Does Melaleuca Do

The range of Melaleuca products includes nutrition, personal care, home cleaning and cosmetics.  All Melaleuca products are made from natural ingredients and do not contain harmful chemicals.  This means that they are better for both your health and for the environment.

We like that the products are natural and do not cause any harm.  An online review of Melaleuca products, gave them an average score of 4.4 / 10.  The score is based on consumer feedback, and does not include much detail.   We assume that part of the reason for the  less than impressive score, is because of the price.  

 How Do You Make Money With Melaleuca

To find out how you earn money, we looked at the Melaleuca compensation plan.  This document explains how members of the MLM can earn commission.  Here we see that Melaleuca's mission, is to 'enhance lives', by 'helping people reach their goals'.  

The compensation plan describes Melaleuca as an 'opportunity for the average person to start a business with virtually no risk and unlimited upside potential'.  They go on to tell us that it's a 'proven system where people with virtually no financial investment', can dramatically improve their finances.  All they have to do is refer customers to Melaleuca.

We were initially impressed by the fact that Melaleuca has a focus on sales to customers.  We believe that the only way to make money from any MLM, is to build a substantial retail customer base.  We later found out that everyone signs up as a customer.  Customer is the first level of enrollment in the Melaleuca business opportunity.

 Melaleuca call their MLM members 'customers', not distributors.  Everyone joins as a customer, then has the opportunity to refer others and build a business.  In Melaleuca there is no difference between customers and members of the MLM.

The compensation plan claims that you'll never have to sell products because 'all products are sold directly by Melaleuca'.  We think this is only partially correct.  It is true that customers will place orders directly with Melaleuca.  So you won't have to process orders or deliver products.  Having said that, you have to find customers and convince them to buy products.

How much Commission does Melaleuca Pay

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Like most MLMs the commission you earn with Melaleuca is calculated from the 'product points', from your customers.  Every Melaleuca product has a point value assigned to it.  When customers you have referred buy product, you earn commission based on the point value of what they have ordered.  To qualify for commission you need to personally order at least 29 points worth of product per month.

The product points means that you will get the same commission regardless of what the customer pays.  For example customers who sign up for a monthly supply of Melaleuca will qualify for the 'preferred member price'.  Even though they are getting a discount, your commission will remain the same.  This can be seen in the US Melaleuca price list.

The amount of commission you are paid is calculated from a combination of the product points purchased and the number of customers you have personally enrolled.  The amount you can earn and the customers needed are shown in the table below:

You can also earn commission from customers enrolled by others in your Melaleuca marketing organization.  You can earn 7% commission on the points ordered by customers in your downline.  Depending on your 'status' you can earn this commission on between 2 and 7 generations.

In true network marketing fashion, there is also a variety of other ways to earn with Melaleuca.  These include; Advancement Bonuses - Paid when you qualify for a new status.  This doubles with the pacesetter bonus if you achieve rank advancement fast enough Mentoring Bonus - When people in your marketing organization advance, and get paid the advancement bonus, you get a mentoring bonus. Leadership Growth Bonus - Only available at the ranks of 'Senior Director' and above.  Paid based on leadership points Monthly Car Bonus - Senior directors and above can have a car leased for them by Melaleuca

How Much are People Earning With Melaleuca

We looked at the 2016 Melaleuca Annual Income Statistics.  We were not surprised to find that very few people are earning a substantial income from the Melaleuca business opportunity. The table below summarizes the commissions paid to each rank by Melaleuca in 2016:

As we can see from the above table, in 2016  99.58% of 'customers' earned less than $32,000 in commission from Melaleuca.  In other words only 0.42%, or 1 in 238 earned a full time income from Melaleuca.

Like all MLMs, Melaleuca explains these results with excuses.  First is the claim that 'the majority who join are only interested in being customers',  then there's the 'very few decide to build a business'.  These statements could be true, but they could also be an attempt to spin the truth and make the Maleleuca opportunity seem better than it really is.

For the sake of the review, we'll give Melaleuca the benefit of the doubt, and we are talking about a serious level of doubt!  We'll assume that 66% of active members in 2016 only joined to be customers.  With this adjustment, we now see that of those who joined Melaleuca to be more than just customers, only 1.23% earned a full time income.

Let's go a step further and believe that only the 12% who make it to the director levels are building a business.  Now things really improve as we can see that 3.5% of those who choose to build a business are earning a full time income.  We see that only 1 in 28 people are earning significant income from the proven system with virtually no risk and unlimited upside potential.

 Why is it Difficult to Make Money With Melaleuca

One of the main reasons it is difficult to make money with any MLM is that they claim you can be successful with 'duplication'.  Which is their way of telling you to follow their instructions without asking questions.  The problem is that it simply does not work.

If you join Melaleuca they'll tell you how much money you can earn by recruiting customers to buy through your personal link.  The internet makes is so easy that anyone can do it.  That means that all the existing Melaleuca members in the world can also share their own online link with all of your customers. 

When you try to sell Melaleuca, you are competing with the 'more than 1 million', existing customers who have already joined before you and also have their own referral links.  Let's not forget that you are also competing with the corporate website.  We discovered that it is possible to sign up with Melaleuca directly.  We assume that when customers join directly, they are placed in the MLM downlines of top Melaleuca performers.  This is part of the 'incentives' which are only paid to those near the top of the pyramid.

Another challenge is that the products are overpriced.  The reason for this is because all those generous commissions from the compensation plan are included in the price you pay for the products.

If we look at the 'preferred prices' of Melaleuca products, we can see that the relationship between price and product points is not as straight forward as we'd hope it would be. This is shown in the table below:

As we can see from our very limited sample, there is some difference in the points per dollar from different Melaleuca products.  This means that the commission you earn will be influenced by which products your 'customers' order.  We adjusted the table to show the maximum commissions:

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We looked at the 2017 US Melaleuca price list, and found that the adjusted personal customer commissions and organization commissions varied from product to product.  We found it interesting that the commission earned on the price paid is always less than the rate paid on the points.  Melaleuca says they'll pay up to 20% and 7% commissions, but this is based on points, not dollars.  This could be an honest mistake, or another attempt to make the Melaleuca opportunity look better than it really is

If we look at the commissions paid on Melaleuca products, we can see that there is a substantial mark up to finance the mlm compensation plan.  Keep in mind that there are 7 layers of organizational commission payable (totaling 49%), and customer commissions of up to 20%.  

These mark ups are based on product points, but they still represent a substantial portion of the 'preferred' price you pay for Melaleuca products.  This is shown below:

If you join Melaleuca and buy products at the 'preferred' price, then between 36% and 53% of the price you pay will go directly to the people in your upline.   This includes the person who directly introduced you to Melaleuca, and 7 levels of directors above them.  This does not include costs of production, Melaleuca profit, or any other incentives paid to top MLM members

MLMs use their compensation plans to lure members in with the dreams of financial freedom.  Unfortunately only a small fraction who join will ever climb the pyramid and earn all these incentives.  For everyone else, they are just an added cost.  We have found evidence that people have quit Melaleuca because of the inflated prices

 Should You Join Melaleuca

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We believe that Melaleuca products are free from harmful ingredients, and we applaud them for this.  Having said that, Melaleuca is not the only ethically responsible company in the industry.  Before you join Melaleuca, you should try some of their products and compare them to other environmentally friendly products being sold by competitors.

For years the Finance house has been using cleaning products by a company called Earth Choice.  In Australia these products are sold on supermarket shelves and are priced in line with their chemical based competitors.  Like all products, they even go on special from time to time so they can be cheaper than the harmful alternatives.  Being happy with these products, we have no incentive to change.

If you find that Melaleuca is better quality or better value than similar products, then maybe you can make money selling Melaleuca.  Remember at the end of the day you won't make money unless you make sales.  If you find that other products on the market offer the same environmental benefits but at a better price, then it's quite likely you'll have a hard time selling the products.  It's also important to remember that there are already over 1 million people trying to sell Melaleuca, you will be just another one.

 Our Final Say

Network marketing is a very profitable way for companies to sell products.  If you are considering joining Melaleuca, or any MLM, just remember that their goal is to sell you products, not to make you rich.  

We believe that that MLM is business model designed to turn you into a customer.  It is not designed to offer you a business opportunity.  This opinion is based, in part, from research by Dr Jon Taylor, of MLM The Truth.  He found that less than 1% of people who join any MLM will turn a profit.

These have been our opinions of Melaleuca, we'd love to hear about yours in the comments section below.  Please share your thoughts, especially if you have personal experiences with Melaleuca

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[finance-guy]

Can You Make Money With Forever Living

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Forever Living Products (FLP) was launched in 1978 out of Scottsdale Arizona.  Today it is an international company and is one of the world's largest manufacturers and distributors of Aloe Vera products.  There is now a wide range of FLP products which includes weight loss, nutrition, Bee products, essential oils and more.

Forever living sell their products through network marketing.  They have a network of around 9.3 Million 'business owners' selling their products in over 150 countries. With annual revenue of over US $2.5 Billion, there is no doubt that the company is very profitable.

 We aren't here to review the company, we want to know if everyday people can make money from the business opportunity.  We believe you can't make money with network marketing.  However we're happy to be proven wrong in this full review of Forever Living Products.

 What Is the Forever Living Business Opportunity

According to the Forever Living mareketing plan, making money as an FBO is simple.  All you have to do is share the products and business opportunity with others and you will make enough money to achieve 'financial freedom for life'.  They even offer a simple process for guaranteed success with FLP

The information on the FLP website is a bit vague.  We managed to find more detail in their 12 page explanation of the Forever Living business opportunity, or as they call it 'the greatest opportunity in the world'. We've heard others make that claim then turn out to be just another MLM.

According to the business opportunity, multi-level marketing 'allows you to achieve tremendous financial gains'.   All you need to do is recruit one person per month, and have them 'duplicate' the process.  In a little over a year you'd have a network of over 4,000 FBOs.  The commissions from their Forever Living purchases will give you 'financial rewards that you've never before dreamed possible'.

They imply that this opportunity is suitable for people with: Money Problems Little or no Formal Education Lack Opportunities Unhappy at Work

While helping these people may seem noble, we see this as a red flag!  Forever Living is targeting people who are quite possibly in financial distress, and probably have below average financial literacy.  In our opinion, they are focusing on people who would believe their claims without doing further research

   How do you Make Money With Forever Living

Like all MLMs, Forever Living has a complex compensation plan.  There are 10 ways to earn with FLP.  As you order more product and sponsor more people, you can qualify for more income.  This is explained in the video below:

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The first thing we notice is that 'all achievements are based on case credits'.  Each Forever Living product you buy will have a specific Case Credit (CC) value.  The video explains that 1 CC is equal to around US $140 worth of FLP products at wholesale price.

For example, when you first join, you will be able to buy products at 15% below the Suggested Retail Price (SRP).  If you purchase 2 CCs worth of product within 60 days, then you can qualify for wholesale pricing.  Wholesale prices are 30% below the SRP.  

To qualify for any commission, you must remain active and personally order at least 1 CC of product per month.  In other words you can't get paid unless you spend US $140 per month

Once you are 'wholesale qualified', you can earn 30% retail commission when customers order from your Forever Living FBO website.  You will also qualify for personal bonuses of 5-18%.  All you have to do is find customers!

Forever Living pays differential commission.  For example if you qualify for the full 48% to SRP discount, but someone you have sponsored only qualifies for 35%, then you get the 13% difference!

The earnings potential doesn't end at the 48% to SRP commissions.  If you continue to grow your FLP network and reach the level of 'manager', you will qualify for leadership bonuses.

Leadership bonuses are paid on any FBO's who reach the manager level in your down line.  These bonuses are paid on 3 generations of managers. You will earn 6% on 1st generation, 3% on 2nd and 2% on 3rd generation.  

If you continue to grow your Forever Living business, then you might qualify for some of the incentives which are reserved for the top performers.  These include: Car Plan Profit Sharing Fully Paid Vacations 'Special Promotions'

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Can You Make Money With Forever Living

Before you join Forever Living, you should make an effort to read the Candice Kiddle Forever Living experience.  Like millions of others, she signed up with the hopes of solving her financial problems, but it didn't take long for the dreams to turn into nightmares.

Candice joined as a single mum lured in by the possibility of earning some extra cash using nothing more than the internet.  Within a few months she realised that she'd made a horrible mistake. This was not her path to financial freedom. With Forever Living, she struggled to break even and was damaging friendships.

Candice's story is far from an isolated case, in fact there are some which are claiming that Forever Living is a Scam!

We applied Dr Jon Tayolors 5 Step MLM evaluation to Forever Living, and found that it raises all 5 red flags.  This would suggest that new FBOs have a less than 1% chance of turning a profit with Forever Living.   We'll look at each of the flags below:

Red Flag 1 - Constant Recruitment of New Members As we saw from the FLP marketing plan, you will achieve tremendous gains if you build a team that 'duplicates' your regular recruitment activities.

Red Flag 2 - Promotion Through Recruitment Your success in FLP is linked to the CC volume generated by you and those you recruit.  You can't reach the higher management ranks unless you have a large downline team

Red Flag 3 - Pay to Play If you don't buy 100 cc (US $140) worth of product per month, then you won't get paid any commission.  The 'remain active' requirement is a common strategy used by MLMs to ensure that you keep buying product even if you don't want to

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Red Flag 4 - Most of the Rewards go to your upline As we saw from the compensation plan video, there is a total of 59% of commissions included in the retail price of Forever Living products. This does not include any of the additional benefits paid to high performers such as cars, luxury holidays, and more.

Red Flag 5 - More than 5 levels in the payout plan Forever Living has done their best to be as vague as possible with the information we can see. However based on the depth of leadership bonuses paid, we are confident that they pay commission to more than 5 levels

We are not alone in our assessment.  Dr. Taylor's evaluation of Forever Living, estimates that less than 1% of FBO's turn a profit.

 How Good are Forever Living Products

The Forever Living business opportunity explains that the products 'bring the remarkable properties of Aloe to the whole body'.  It goes on to tell us that the 'health properties of aloe have been known for centuries', however the medical and nutritional industries ignored aloe.  FLP credit themselves with reintroducing Aloe to the world.  

On the Forever Living website, they tell us that aloe is the 'lifeblood of the company'.  It goes on to describe the 'magically soothing abilities' it provides, along with other 'proven health benefits'.

Forever Living does make good quality aloe products, and there are many claims about the  benefits of aloe vera.  FLP is making good quality products, but could be over priced. One review  of FLP products found that they were no different to cheaper products offered by their competitors.

A FLP review by one more cup of coffee, had similar findings.  They explain that the products are good, but are too expensive.  They go on to note that the business opportunity will turn you into an 'annoying aloe' person.  

Is Aloe Vera Really Good For You

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A study by the University of Maryland found that Aloe Vera is useful for treating skin conditions.  They do not recommend oral use because if ingested, Aloe Vera can cause severe side effects.  They go on to note that there is insufficient proof that Aloe Vera can help conditions such as diabetes

Another study by the National Centre for Integrative and Complimentary Health, had similar findings.  They were able to isolate chemicals in the plant which were responsible for causing intestinal tumors.  Fortunately these chemicals are already removed as part of the extraction process.  The NCICH study echoed the findings from Maryland.  They found that Aloe Vera is a laxative and can be helpful in treating skin conditions, but there is no scientific evidence that Aloe Vera is helpful for any of the other purposes it is used for.

 Is Forever Living an Illegal Pyramid Scam

Even though they closely resemble a pyramid system, MLMs are legal as long as there are products or services attached to them.  This does not mean that network marketing is an ethical way to sell products.  An investigative reporter in Sweden recorded her experiences from a Forever Living recruitment seminar.  She learned about using social media to share the 'Forever Living lifestyle'.

The presentation taught them about 'relationship capital' and how to see all your friends and family as 'opportunities for sales'.  There was even advice on how to promote the products without personally breaking the pharmaceutical laws.  Forever Living has been warned by the Swedish Medicines Agency that FBOs have made false claims about the health benefits of FLP products.

This would explain why Forever Living speaks vaguely of the 'magical' and 'proven benefits' of aloe, but doesn't really give us much detail.  It seems that most of the positive benefits of aloe are being shared by enthusiastic FBOs who are eager to make sales.  In their quest for commissions, they may overlook that fact that there is no scientific evidence to support their claims.

 Should You Join Forever Living

Before you sign up for Forever Living, or any MLM, we recommend that you do thorough research.  Make sure that you try the products yourself and compare them to competitors.  Try and find independent information about the products.  Remember active members will earn commission if you join.  Their incentive is make money, not to help you.

As we have seen there are lots of promises made about Forever Living products.  There is also no shortage of promises about the financial success you can achieve as an FBO.  The problem is that we have not found any evidence that either the products or the business opportunity actually work as promised.

 Final Thoughts

There's no such thing as a 'secret to success'.  We don't believe that you can make money by simply 'duplicating' what others have done.  No matter how successful someone has been, there is no guarantee that you will achieve any results even if you follow every step they took.

In our opinion, it is unlikely that you will make money from network marketing.  The main reason is because of saturation.  As more members join the system, they will be competing with existing members to make sales.  The internet makes it easy for you to reach people all over the world.  Unfortunately this also means that all the other Forever Living FBOs can also reach your target market.  Unless you are doing something unique, it's unlikely that you will make significant sales or generate any profit.

MLM is a structure designed to sell you products.  It's not designed as a franchise business opportunity.  The company doesn't care how many members join, to them it just means more products are being bought.  These are just our opinions, we'd love to hear what you think.  Let us know what you think in the comments section below, especially if you can share your experience with Forever Living

For more posts like this, look at our list of mlm reviews. 

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[finance-guy]

How to Trade Cryptocurrencies

People all over the world are talking about cryptocurrencies such as Bitcoin and the ever growing list of 'altcoins'.   Like many people we have read about huge amounts of money that have been made (and lost) in this exciting new market.

A few months ago we decided that we've spent enough time on the sidelines and wanted to have a go at trading Bitcoin.   Unlike foreign exchange, which is traded on one market (through several brokers), Bitcoin is traded on several separate exchanges.  To trade Bitcoin (or an altocoin) you need to deposit your cryptocurrency with an exchange.  You will then be able to trade with other members of that exchange for either cryptocurrency or normal 'fiat' money.

Because each exchange operates independently, there can be slight differences in the price of each coin on different exchanges.  We recently wrote about a company which helps investors profit from differences in the price of Bitcoin.  But arbitrage isn't the only way to make money from cryptocurrencies.  We were looking for ways to actively trade Bitcoin and cryptocurrency

The exchange you choose will influence the prices you can trade at, and will also determine which coins you can trade.   Most importantly the exchange will influence how secure your investment is.  Over the past couple of years we have read several stories of Bitcoin being stolen from exchanges.  Cryptocurrencies are not covered by the same laws or insurances as other markets.  This means that if your Bitcoin is stolen from the exchange, then it's lost forever.

Before we get into trading Bitcoin, we'll go over some of the basics.  we want to make sure that cover the cryptocurrency basics before we start placing buy and sell orders on any exchange.

What is Bitcoin

Bitcoin was first launched in 2009, by someone using the online name 'Satoshi Nakamoto'.  At that time the world was still suffering from the effects of the Global Financial Crisis (GFC).  Like many, Satoshi had lost faith in the financial system, governments and central banks which set interest rates and control the money supply.

His solution, was a peer to peer digital currency outlined in his original Bitcoin document.  Satoshi describes Bitcoin as 'electronic cash'.  It was designed so that people all over the world could pay each other without using financial institutions.  Just like cash, transfers are completely anonymous and like cash, it can be lost forever.

To prevent double spending, Satoshi envisioned that all transactions would be approved and recorded on a public ledger which is visible to the entire network.  This proof of work is a record of every Bitcoin transaction that has ever occured.  It is known as the blockchain.  

Bitcoin and the blockchain are an 'open source' software.  This means that the system isn't owned by anyone in particular.  Instead it is run and maintained through consensus by 'miners'.  In return for dedicating their computing power to keeping the network up and running, miners are rewarded with the chance to receive new Bitcoin as it is issued.

Your privacy is protected through an online security technology known as cryptography.  People trade bitcoin through virtual wallets.  These wallets are like numbered accounts, so even though transactions are recorded, nobody knows who owns each wallet.

The identity of who owns each wallet  is completely anonymous. Bitcoin wallets can only be accessed with the right combination passwords.  If you lose your wallet login details, you will lose any Bitcoin that was in that wallet.  There is no other way to access the cryptocurrency held in a digital wallet.

Bitcoin is a decentralized currency with a finite supply of 21 million. Once all 21 million Bitcoins have been 'mined', then the supply will stop growing.  It is thought that a finite supply would help avoid such scenarios as seen in the GFC when central banks were trying to stimulate their economies by printing more money.  

 How is Bitcoin Valued

Like foreign exchange, cryptocurrencies have exchange rates.  The price of each cryptocurrency is determined by buyers and sellers on the exchanges.  This makes it a system of supply and demand similar to most conventional markets.

Between 2009 and 2013, Bitcoin was relatively unknown, and this was reflected in the price, which spent most of that time below US $1, and briefly went over $20.  You could have bought Bitcoin in January 2013 for US $13, and sold it in November of the same year for over US $1,000.  Since then we have seen a highly volatile Bitcoin price.  

 How do you Invest in Bitcoin

If you sign up for a free bitcoin wallet, you can buy Bitcoin from one of the many exchanges and hold it in your wallet.  As long as you don't lose your access key, then it's like keeping the cryptocurrency in a safety deposit box.   It won't earn interest, but nobody can ever take it from you.  If the value of Bitcoin continues to fluctuate, then the value of the cryptocurrency held in your wallet will move with it.  It's important to understand that when you invest in cryptocurrency, the value of your holdings will change with exchange rates.

You can also invest in cryptocurrency through mining.  Bitcoin is now mined by very powerful computers designed to handle the 'increased difficulty' of a large cryptocurrency network.  While it is possible to dedicate your home computer to mining Bitcoin, it's best to invest through a mining pool.  

As the name suggests, these companies allow you to invest in a share of a 'pool' of hardware which is used to mine Bitcoin.  Any rewards are then divided among the investors.  Like exchanges, you need to be careful how much cryptocurrency you invest because there have been cases of fraudulent theft from mining pools.

We have invested a small amount of Bitcoin through a company called USI-Tech.  They actively trade Bitcoin and mine alt coins.  To manage the risk of losses, we regularly withdraw our Bitcoin earnings to an external wallet.  This way we control the amount that is at risk at any time. In some ways USI-Tech is similar to a mutual fund in that they invest on behalf of the account holders

 How Do You Trade Bitcoin

We have been trading Bitcoin using contracts for difference, which can also be used to trade a collection of other cryptocurrencies.  We have done this  through a company called plus500. CFDs enable individuals to gain leveraged exposure, to investments including stocks, commodities, forex and cryptocurrencies.  The use of leverage creates a substantial increase in financial risk,  and for this reason, CFDs are only suitable for sophisticated investors with very high risk tolerance levels.

Plus500 offers CFDs for cryptocurrency trading over 7 different digital coins. The cryptocurrencies which can be traded and their respective terms are shown in the table below:

Why We Like Plus500

Trade Long or Short

Trading is a little different from investing.  Our goal is not to buy and hold an asset.  We are looking to make profits from a short term change in the price.   If we believe that the price will go up, then we will buy the coin and 'go long' with CFDs.   If we believe that the price will fall, we will sell the coin and 'go short' with CFDs.  You can profit if the price goes up or down.

Leveraged Trading

The leverage ratio offered on each CFD multiplies the returns on your trade.  For example, the Bitcoin CFD offers leverage of 1:30.  This means that for every $1 you have on deposit with plus500, you can trade $30 worth of Bitcoin.  Leverage magnifies your ability to trade the underlying asset, and will also magnify your returns.  

It is important to understand that leverage increases your financial risk.  Even a small change in the price of the underlying asset can have a substantial impact on your deposit.  This is shown in the table below:

In the above table, we 'went long' on a Bitcoin CFD, which means we bought $3,000 worth of Bitcoin.  If the price of Bitcoin moves by 3.33%, this will generate a return of 100% on our deposit.  If the price goes up (as we expected on a long trade), we can double our funds.  If the price moves against our trade, we can lose our entire deposit.

 Plus500 Is Trustworthy

Plus500 is a publicly listed company traded on the London Stock Exchange, and the Stuttgart Stock Exchange.  This means that they are regulated in these regions and have provided fully audited financials.

Plus500 has set up several offices around the world, and holds official licenses to provide derivative investment securities in, the United Kingdom, Cyprus, Australia, New Zealand and South Africa.  This means that Plus500 is fully regulated and your deposited is legally protected against fraud.

The anonymity of Bitcoin is an important part of the ideology of cryptocurrency.  People don't want a governing body watching over their or controlling their transactions.  Unfortunately this feature has also attracted people with dishonest intentions.  

In the past we have seen many cases of 'bitcoin heists'.  This occurs when hackers successfully attack exchanges or mining pools. They transfer Bitcoin owned by customers to external wallets.  Once the Bitcoin is in an external wallet, only the people with the correct codes can access that Bitcoin.  In other words the thieves now own the your Bitcoin

As Bitcoin is not backed a government, and at this time is not regulated, clients who have their Bitcoin stolen, have very little they can do legally.  This is not the case with plus500. As a fully regulated broker, your trading funds with Plus500 are protected by the same laws and insurances that cover all investments in stocks, bonds, currencies and derivatives

Can You Make Money Trading Cryptocurrencies with Plus500

Like any leveraged investment, you can lose or make money fast with plus500 cryptocurrency CFDs. On August 18th 2017, with $100 on deposit, we decided to open a long trade on Bitcoin Cash.  We saw that the price had just broken a record so we decided to bet that it would keep going up.

Luck was on our side, and the price of Bitcoin Cash did indeed continue to go up.  As the price went up, we opened additional long trades.  We were able to do this because your available funds with Plus500 are based on the money you have deposited and the current gain/loss of all open trades.  We were extremely lucky and made over $300 on the day from our $100 deposit.  A screenshot of our trades is shown below:

As the price of Bitcoin Cash went up, we 'followed the market', and opened additional trades as our available funds grew.  As you can see, we managed to open several trades, and at one time had profits of over $400.  That's a gain of over 400% on our deposit in just one day.

 You Can Manage Your Losses with Plus500

At the peak of our Bitcoin Cash trading, we had turned our $100 into over $500.  Unfortunately we did not close our trades at the peak.  The price of Bitcoin cash turned and the upward market turned volatile.

Our trades closed leaving us with  $447.35 on deposit.  That's still 347.35% return for one day of trading.  When these trades closed, we made a withdrawal of $150.  We now have almost $300 on deposit, and a 50% gain in our bank account

Our trades automatically closed because we had placed trailing stop orders on them.  A trailing stop order allows you to automatically close your trades if the market moves against you by a certain amount.  Plus500 suggests the size of your trailing stops, but you can adjust them yourself.

Plus500 also allows you to place stop loss orders.  These will automatically close your trade if the market moves backward to a certain price.  They will suggest a price, but you can adjust it yourself.  You can use a combination of stop losses and trailing stop orders to manage your losses.  An example is shown below:

In the trade shown above, we have decided to sell Bitcoin and go short on a CFD.  We put up $43.29 of our own funds for this trade.  As the price of Bitcoin did in fact drop, the trade went into profit of $24.18 at the time of the screenshot (21/8/17 5:26pm AEDT)  That's a gain of 55.86% on our deposit

As we can't predict the future, we don't know if the price will keep falling or if it will turn around.  So we have placed a stop order at a price of US$4,080.  The buy price for Bitcoin at this time is $4048.63.  This means the market will need to go up by $33.37 for our trade to close

We are hoping the price of Bitcoin will drop further and give us more gains, but if we are wrong and the price goes back up to $4,080, then our trade will close at a profit of $13.11.  We will make a profit of 30.28% if the market moves against us.

As well as the stop loss, which sets the worst case outcome, we have also set a trailing stop of 7,500 points or $75.  Our trade is for 0.25 Bitcoin, so this represents a change of $23.67 on our deposit.  At this time the original stop loss will close our trade before the trailing stop.

If luck is on our side, and the price continues to fall, then the trailing stop will follow it down.  The $75 stop is set by the lowest price Bitcoin reaches while the trade is active.  The automatic closing price will drop if the price of Bitcoin keeps falling.

Using stops means that we do not need to spend all our time watching trading screens.  This trade might close at a profit of 30.28%, or it might follow the market for even better returns.  From this point we don't have to do anything.

 Our Final Say

Trading of any kind is risky.  Trading with leverage is especially risky.  If you decide to trade cryptocurrencies, or any other CFD with Plus500, then you should not deposit more funds than you are willing to lose.

The returns we experienced while researching this article were very good, but we were extremely lucky.  There is no guarantee that our luck will continue.... It is possible that on future trades we will make losses which may amount to our entire deposit.

Our experience should not be taken as a reflection of what you will achieve.  Your results will be based on the market conditions and directions of your own trades.  We are not endorsing Plus500 as a way to make money.  We are endorsing them as a way to trade.  The trading results are up to you

As always, we'd love to hear from your in the comments section below.  Please let us know what you think, especially if you can share your experiences trading cryptocurrencies or CFD's.

[finance-guy]

Can You Make Money With Scentsy

Scentsy is an Idaho based producer of fragrances which was founded in 2004.  The company sells their products through multi-level marketing.  Scentsy  products are sold by over 100,000 consultants in their international network marketing system.   In 2016 Scentsy generated revenue of $456 Million, which ranked them at 42 on the 2017 DSN Global 100 list.  

Scentsy say that they 'give aspiring entrepreneurs the opportunity to launch a business without making a huge financial investment'. Here at the Finance Guy, we  believe that you can't make money with network marketing, but we are happy to be proven wrong in our streetonomic review of Scentsy 

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What is the Scentsy Opportunity

The Scentsy website explains that this is an opportunity to do business your way.  You can start your Scentsy business with either a 'basic starter kit' for $99, or an 'enhanced starter kit' for $149.  Both kits come with 'everything you need' to get your Scentsy business up an running.

When you sign up with either kit, you'll get a range of product samples, (you get more products with the enhanced kit), a collection of business tools, and your first 3 months access to your very own Scentsy website.  If you want to continue selling Scentsy through your website after 3 months, it will cost you $10 per month.

Unlike other MLMs we have looked at,  Scentsy does not offer wholesale prices to their consultants.  When you order products from them, you will pay the full retail price.   Scentsy then pays you a commission each month on your Personal Retail Volume (PRV).  

Commission paid on your PRV starts at 20%, but will increase to 25% once you've made 1,000 PRV points worth of sales.  If you manage to make more than 2,000 PRV points worth of sales in any month, then you will get a bonus 5%.  This means that you can earn up to 30% commission selling Scentsy products.

Retail sales aren't the only way to make money with Scentsy.  The most successful consultants recruit others to join Scentsy as part of their downline.  The benefit to you, is that when people you have sponsored buy products, their orders will will help you qualify additional income as explained in the Scentsy Compensation Plan

Scentsy has only provided a one page compensation plan, but we've done our best to interpret the information.   This minimal information has meant that we have had to make a lot of assumptions, so we apologize if our explanation has any inaccuracies.

If you are personally ordering at least 500 PRV worth of Scentsy per month, and you have sponsored consultants who are also ordering product, then you might qualify for a rank with Scentsy which pays you a commission based on the wholesale value of all products ordered by you and your downline.  The wholesale commission paid at each rank is shown below:

If you someone in your 'frontline' is also qualified to earn wholesale commission, then you will earn a differential commission on their wholesale volume.  For example, if you are a star consultant, you are entitled to a maximum of 4% wholesale commission from each 'leg' in your downline.  

If someone you have directly sponsored in your 'frontline' reaches the the rank of 'Lead Consultant',  then they will qualify for 2% wholesale commission.  On this leg you will only earn the 2% difference between their rank and yours.

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Once you have reached the rank of Director (or above), you will qualify for the maximum 9% wholesale commission.  If others you have sponsored reach these ranks, then they will also qualify for 9%.   This means you will not get any wholesale commission from legs in your downline with a frontline consultant who is ranked director or above.

If you are at the rank of Director or above, you will now qualify for a directors bonus.  This is a commission paid on the wholesale volume of other directors in your downline.  This is not limited to directors in your frontline.  You can also earn directors bonuses on up to three generations of directors in your downline.

The bonuses paid at each rank and for each level in your downline are shown in the table below:

Based on our understanding of the 1 page Scentsy compensation plan, is is possible to make money with Scentsy.   If you can sell product, and recruit others who also make sales, then you can earn: - Up to 30% commission on retail sales - Up to 9% Wholesale commission from consultants you sponsor in your downline - Up to 5% Directors Bonus if you obtain the highest rank of 'Superstar Director'

 Are Scentsy Consultants Making Money

We looked at the U.S version of the 2015 Scentsy Income Disclosure Statement, which suggests that most Scentsy consultants in the U.S did not earn much money.  The information is shown in the table below:

As we can see from this table, only 0.55% of Scentsy consultants in the U.S earned an average income of more than $42,000 in 2015.  Unlike most mlms, Scentsy includes retail commission in their income disclosure.  This means that in 2015 99.45% of Scentsy consultants were not able to earn a full time income

These figures do not include expenses.  Running your Scentsy business will cost you time and money.  If  we were to include these costs, we'd find that the majority of Scentsy consultants lost money in 2015.

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Why is it Difficult to Make Money with Scentsy

If you attend a presentation promoting Scentsy, or any MLM, you'll hear all about what is possible.  All you have to do is use the products and convince others to do the same.  It's a simple enough theory which rarely works in practice.

To qualify as a 'lead consultant' with Scentsy, you need to personally order $500 worth of product per month, and have one 'active frontline consultant', who also orders $500 product per month.   We believe this will qualify you as a 'lead consultant' with 500 PRV and 1,000 Group Wholesale Volume (GWV).

To be a lead consultant you need to remain active and recruit one friend who also remains active.  This sounds pretty easy, until we look at the results.  The 2015 income disclosure shows that in 2015, less than 24% of Scentsy consultants achieved the rank of 'lead consultant' or higher'.  

It is possible to earn up to 9% in wholesale commission if you reach the rank of Director.  In 2015, only 1.81% of Scentsy consultants were ranked at the level of 'director' or higher. This means that less than 1 in 55 Scentsy consultants qualified for 9% wholesale commission

We evaluated the Scentsy opportunity using Dr Jon Tayolors 5 Step MLM evaluation.  This test is designed to find out if new recruits are likely to make any money from joining a network marketing opportunity.  We found that Scentsy raised all five  red flags in this assessment.   We will look at each of the red flags and why we believe they are a concern in more detail below

Red Flag 1 - Constant Recruitment of New Members We read through a copy of the Scentsy consultant guide, this document is like an instruction manual for new consultants.  There is advice about everything you need to do to achieve financial freedom with Scentsy.  In the business building section, they state 'There's no better way to grow your income than through building a team'.  

The compensation plan is designed for constant recruitment.  The only way for you to reach higher commissions is to grow a larger team.  The only way for your recruits to earn more, is to also recruit and build their own teams.

Red Flag 2 - Promotion Through Recruitment You will never need to personally purchase more than $500 per month worth of product to remain active with Scentsy.  To qualify for promotions, you will need to grow your wholesale volume and your active downline.  Recruiting is how you qualify for promotions with Scentsy

Red Flag 3 - Pay to Play To remain active, and maintain your rank with Scentsy, you need to buy $500 worth of product per month.  We believe that some consultants are ordering more product than they are selling, just so they can remain active. 

Dr Taylor warns that pay to play can lead to hyper-consumption resulting in members buying more product than they can consume or sell.  Eventually products start to get stockpiled as members fill their storage areas with unopened boxes of hopes and dreams.

Red Flag 4 - Most of the Rewards go to your upline We found wholesale bonuses of 9% and directors bonuses of 15%. These incentives are included in the price charged by Scentsy As a new consultant your upline will get 24% of every dollar you spend with Scentsy

The price you have to charge your customers will include these generous MLM mark up.  This means that the retail price will be expensive, making it more difficult for you to compete with all the alternate aromatherapy products in the market.

Red Flag 5 - More than 5 levels in the payout plan According to Dr. Taylor, once there are more than 5 levels in a compensation plan, then it becomes very difficult for new recruits to turn a profit.  He believes that at this point the system becomes 'an exploitative money transfer scheme, or product-based pyramid scheme'.

 How Good are Scentsy Products

Any salesperson will tell you that the best way to make money, is with quality products.  It doesn't matter how skilled the salesperson is, making money is easier with good products that are well priced.  As we have not purchased or used any Scentsy products, we have relied on the internet to see what others are saying about Scentsy products.

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Scented Wax Reviews, sampled several Scentsy bars.  We trust this review because they are a customer, not a consultant.  Unlike most reviews, they are not trying to sell us Scentsy or any other aromatherapy products.

This review found that when compared to other scented waxes, Scentsy is of very high quality.  They ranked well for scent and 'throw'.  Even though the products were of excellent quality, the review notes that she would not buy Scentsy again because they are too expensive.

P'd consumer currently gives Scentsy 2.4/5 stars, nobody appears to have a problem with the products, but the customer service and business opportunity have several complaints.  Most Former consultants say they were mislead about the income potential, while customers complain about products which have not been delivered (even though they paid months ago).

Based on your online findings, we believe that they are making good products, but Scentsy is overpriced and their customer service needs improvement.  

 Is Scentsy an Illegal Pyramid Scheme

Even though they closely resemble pyramid schemes, network marketing companies are legal as long as they are attached to  a product or service.  Having said that, there is a difference between legal and ethical.   Network marketing companies  don't just promote their produts, they also sell hopes and dreams of financial freedom.   This dangling carrot is why MLM companies sell to their members at above normal retail prices

 Should You Join Scentsy

If you join the Scentsy opportunity to make money then we suggest that you include this with other income making options.  In 2015, only 0.55% of Scentsy consultants in the U.S earned a full time income from their business.  Your chances of replacing full time income are less than 1 in 180

You should only join Scentsy if you have already tried their products, and know enough about aromatherapy to make money selling these products at their inflated retail prices.  In our opinion you'd have a hard time making money with Scentsy.  That's just our opinion, we'd love to hear from you.  What do you think about Scentsy?  let us know in the comments section below, especially if you can share your Scentsy experiences

For more posts like this, look at our list of mlm reviews. 

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[finance-guy]

Can You Make Money With Advocare

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Advocare is a Texas based company which was founded in 1993, they produce a variety of dietary supplements, which they sell through network marketing.  In 2016 Advocare had almost 600,000 distributors in their MLM system.  The company made a profit of US $586 Million, which placed them at no. 37 on the 2017 Direct Selling News Global 100 list

We decided it was time for a streetonomic review of Advocare.  We believe that you can't make money with network marketing, but will still give Advocare a chance to prove us wrong.  

We are not associated with Advocare, and have not purchased or tried any of their products.  Our review is based entirely on information which is publicly available on the internet.  We appologize if any of the information we relied on is out of date or inaccurate

 What is the Advocare Business Opportunity

If you've met an Advocare distributor, or a member of any MLM, then you have most likely heard how this could be a potentially life changing opportunity which could be your key to financial freedom.  While statements like this may be true, the same could be said about buying lottery tickets.  

On their website, they explain that there are 5 ways to earn with Advocare.  Like all MLMs, they explain that making sales isn't the only way to profit from Advocare. You can also generate income if you recruit others and build a downline.  The 5 ways to earn with Advocare are: 1. Retail Profits 2. Wholesale Commission 3. Overrides 4. Leadership Bonuses 5. Incentives

To find out more about how you can make money with Advocare, we read through the 2017 Advocare compensation plan. We will look at each of the 5 ways to earn in more detail below:

1. Retail Profit According to the compensation plan, 'retail sales are the simplest way to earn income with Advocare'.  Distributors can purchase products directly from Advocare at a price which is between 20% and 40% below the suggested retail price.  

All you have to do make a profit, is buy the products then find customers who are willing to buy them from you at the retail price.  Remember their retail price is just a suggestion so you can set your own prices and adjust this profit margin.

The strategy of adding a profit margin is a simple one.  It's been used for centuries by every salesperson who ever attempted with a career in sales.  We are willing to assume that salespeople have never had a 'stable income'.  It's the kind of job where some  earn a fortune, while the others (who might even be sitting at the desk right next to them), struggle to make ends meet.

2. Wholesale Commission This is the 'passive income' which Advocare will pay you when people in your downline buy Advocare products.  The amount you earn is based on the difference between your discount levels.  For example, if you qualify for a 30% discount, and your new recruit qualifies for a 20% discount, then Advocare will pay you this 10% difference on any products purchased by the recruit.  You will not earn any wholesale commission from members in your downline who are at at the same discount level as you.

Wholesale commission is also paid on any products ordered by your preferred customers.  A preferred customer has paid a small joining fee so they can buy products directly from Advocare at prices 20%-30% below the suggested retail price.

All new distributors and preferred customers automatically qualify for a 20% discount.  You can 'qualify' for larger discounts when you have generated enough Personal Volume (PV) on products you purchase or Group Volume (GV) on products purchased by your downline.  

Your combined PV/GV is the total recommended retail value of all Advocare products ordered by you and your downline.  As your PV/GV grows, you will qualify for larger discounts.  As the saying goes, you can save money when you buy in bulk.  

Your discount level is based on your cumulative PV/GVover up to 6 pay periods.  There are 24 pay periods per calendar year with Advocare.  Pay periods end on the fist and the third Tuesday of every month.  This means that your discount is based on the total PV/GV you have generated over three months.

The table below shows the current PV/GV qualification levels needed for each discount level:

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Once you have reached the 40% discount, you are at the 'advisor level'.  Preferred customers are not eligible for this level of discount.  Distributors can also qualify for the advisor level if they generate a total of $3,000 in PV/GV over 24 pay periods, or 1 full year.

 3. Override Earnings Once you have reached the advisor level, you can start earning override commissions.  This payment can be earned on the Business Volume (BV), generated by your downline.  You can earn overrides on up to 3 levels of advisors in your depth.  

Each product has an assigned value of Business Volume points (with the exception of sales aids and distributor kits).  Advocare states that the Business Volume is 'approximately 50% of the suggested retail price'.

Like the wholesale discount, you can qualify for a higher override if you generate enough PV/GV.  The main difference here is that it can't be accumulated.  You have to generate the qualifying PV/GV every pay period.  The potential overrides you can earn and the PV/GV required for each, are shown below:

4. Leadership Bonuses This is like a combination of wholesale and override commission.  Once you become a leader, you can earn a commission on the BV generated by your entire downline.  Your leadership bonuses grow as you advance through the 11 potential leadership levels.

Like the wholesale commission, you are paid the difference between your leadership bonus and any leadership bonuses earned in your downline.  The leadership bonus starts at the 'Silver' level which pays a 3% commission on all BV.  Once you reach the 'Triple Diamond' level in Advocare, you can earn 19.75% commission on all BV in your downline.

The leadership bonuses and their qualification criteria are shown below:

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5. Incentives Advocare rewards their top performers with what we'd call 'soft dollar benefits'.  This means you get paid with something which is not cash.  Like all MLMs fully paid 5 star vacations are a popular incentive used by Advocare.   

Advocare incentives can be created by either the company or by distributors who are at the leadership levels.  Each incentive is designed to motivate members at specific levels in the downline to perform extra well during the 'qualification period'.

Incentives can be anything that motivates people to push a little harder.  While the top leaders might be pushing for 5 Star vacations, new distributors might earn something like a new iPad if they sponsor enough new people and generate PV/GV in their first 90 days.

We did not find any specific details about current incentive offers, but we are assuming that incentives are still being used.

 How Much do Advocare Distributors Earn

We looked at the 2016 Advocare Income Disclosure Statement, it's no surprise Advocare made the Top 100  list.  With 570,289 individual distributors purchasing products in 2016, it must've been a very profitable year.  That figure does not include all the preferred customers who placed orders in 2016!

The year might not have been so great for distributors.  The same report shows that 72.31% of distributors did not earn any commission from Advocare in 2016.  They might have earned retail profit, but we can't be certain because Advocare doesn't track the retail profit made by their distributors

We believe that in 2016 over 410,000 people participated in the Advocare business opportunity and made no commission at all.  Advocare would argue with this point. In their disclosure statement, they claim that some people become Advocare distributors so that they can 'purchase products at a discounted price'

We see similar excuses in every MLM income disclaimer we look at, and we never believe it.  There are people who join Advocare just to get discounted products.  They sign up as 'preferred customers'.  If they had no intention of trying to make money, then they wouldn't join as distributors.  As we noted earlier, the income disclosure statement only looks at distributors, and does not include preferred customers.

Preferred customers and distributors would get the same discounts on personal purchases.  Preferred customers pay $19.95 to join Advocare.  Distributors join with a $59 'distributor kit', which includes some product samples along with a book of retail sales receipts and a magazine with stories about people who made money in Advocare.  We do not believe that anyone paid an extra $40 for sales tools they never planned to use.

The commissions earned by all Advocare distributors in 2016 is summarized in the table below:

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From this table we calculate that in 2016, 99.24% of Advocare distributors earned less than $100 commission per week.  We further see that only 0.11% earned what we consider a full time annual income ($50,000 and above).  We infer that only 1 in every 909 Advocare distributors was able to replace the money they could earn in a normal job.

Advocare defines active distributors as anyone who earned a commission in 2016.  This is supposed to make us think that only 27.69% were trying to make money.  The other 72.31% bought the sales tools so they could be preferred customers.

We decided to play along with the marketing spin and only look at the 'active distributors'.  We now see that 97.26% of active Advocare distributors earned less than $100 per week.  The real improvement is that 0.38% of active distributors were able to earn a full time income from Advocare.  The odds of replacing a full time job with Advocare have improved to 1 in 263

 Why is it Difficult to Make Money With Advocare

We applied Dr Jon Tayolors 5 Step MLM evaluation to the Advocare business opportunity.  We found that it raised all 5 red flags.  According to Dr Taylor, this would suggest that very few Advocare distributors ever tun a profit.

MLM is a way for companies to sell products without directly employing a sales force or using traditional marketing.  It's a system which is profitable for several companies, including Advocare.  MLMs exist because they generate corporate profits.

The problem for distributors, is that MLM is a marketing system, not a profit sharing system.  Their compensation plans can be very attractive when you look at what is possible.  They become less attractive when we look at what is probable.

The main reason why it's difficult to make money with all network marketing companies, is that most of the rewards go to your upline.  Of the 5 ways to earn with Advocare, 4 of them are earned from purchases made in your downline.  Your upline earns all this commission from your purchases.  These payments are included in the 'wholesale' price Advocare charges you.

The wholesale commissions are great if you qualify for the full 40% discount and have a large network of friends and family buying Advocare products in your downline.  As a new distributor you will start of with a 20% discount.  The remaining 20% is paid to your upline.  This means that when you spend $80 with Advocare, $20 will go to your upline as wholesale commission.  Your initial 'wholesale' price includes a 25% margin paid to your upline. 

Distributors who are at the 'advisor' level can earn an override of up to 7% on Business Volume. This is paid to up three layers of advisors, for grand total of 21%.  This payment is also included in your 'wholesale price'.  When we include the 19.75% BV paid in leadership bonuses, we see that BV payments of 40.75% . Are included in the 'wholesale' price paid by all Advocare distributors.

Advocare told us that BV is equal to around 50% of the suggested retail price.  We calculate that with a 20% discount, then 25.46% of your 'wholesale' price goes toward these BV payments to those near the top of the system.  This is on top of the wholesale commission you've already paid.  At this level 50.46% of the price you pay to Advocare goes to your upline.

Things get a little better if you qualify for the 40% advisor level discount.  At this point you won't pay any wholesale commission.  However your upline is still earning BV based payments from you.  We calculate that at this stage, 33.95% of the price you pay to Advocare is paid to your upline.

Retail profit might be the 'simplest way' to generate income, but that doesn't mean it will be easy. The 'suggested retail price' is just that, a suggestion.  There is no guarantee that you will be able to sell products at this price.  

A quick search on Amazon, will show you some distributors are offering products at a substantial discount to the retail price. Some of them might even offer them at prices below what you are paying Advocare for the same products.  If you want to earn retail profit, you will have to compete with the prices offered by other distributors.

The compensation plan is included in the price you pay.  This means that Advocare can only a maximum of 62.05% of what they charge you to produce the products, package them, ship them to you, and generate a $586 Million profit for themselves.  The only way to sustain this system is if the wholesale price of Advocare products is more expensive than most competitors retail prices.

 How Good Are Advocare Products 

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Any salesperson will tell you that the best way to make money is with good quality products.  The quality of the products will directly influence the price retail customers are willing to pay.  We did not purchase or use any Advocare products, so our product research is based entirely on third party internet reviews.

A writer for Spit That Out, put herself on a range of Advocare products.  She found that there were some possitive results (slight weight loss).  Some products gave her what she thought was an allergic reaction.  She also experience 'severe abdominal pain' from the detox products, but her upline told her that this was a normal reaction.

Diets in Review looked at the Advocare 24 Day Challenge.   This review found that 74% of consumers were unhappy with the product.  They further found that it contained several ingredients which could be harmful to your health.  We are not sure how much we trust their 'review' because they are trying to sell an alternate dietary system.

For a more trustworthy perspective, we looked at review of Advocare by a certified nutrition consultant at Ancestral Nutrition.  Some of the highlights from this review are that Advocare contains: Genetically Modified Ingredients Rancid Vegetable Oils Arificial Sweetners May cause a wide range of health problems

 Is Advocare an Illegal Pyramid Scam

Even though MLMs resemble illegal pyramid schemes, they are legal as long as there is a product or service attached to them.  We don't think that Advocare distributors are trying to scam their new recruits.  It's more likely that they themselves believe that the system will one day make them wealthy.

Some former distributors believe that Advocare is an illegal pyramid scheme.  In March 2017, they filed a federal class-action against Advocare which alleges that they are a pyramid scheme.  

It could be a coincidence, but found it interesting that the compensation plan we looked at was issued in the same month, and contained some interesting legal speak.  For example one of the requirements for earning overrides is that you submit a sales compliance form which 'must show that you have made at least five sales to at least five different customers / preferred customers during each pay period in which any overide, leadership commission or other bonus or incentive is earned.'

If you don't satisfy this requirement Advocare may find that you are in violation of their 'excessive purchase of inventory' policy.  The consequences could include loss of future payments, or even expulsion from Advocare.  We have found similar wording in several MLM documents.  

The paperwork is designed to protect the corporation from any illegal activity done by the distributors.  MLMs let their distributors promote their system, they set 'rules' in the paperwork, but enforcing the rules is very difficult.  When disgruntled former members cause legal problems, then the paperwork allows the corporation to blame the 'rogue distributors' who broke the rules.

Another common complaint is that MLM members make illegal and false claims about the quality of their products and the benefits they can achieve.  Advocare is not immune from this.  Truth in Advertising has a database of unsubstantiated health claims made by Advocare distributors.

 Should You Join Advocare

As with all business opportunities, you should take some time to get to know the products and their market before you sign any paperwork.  We suggest that you have a look at some products from competitors, read the ingredients and see what stores are charging.

If you find that the products are good value at full retail price, then you might be able to make money selling them.  Keep in mind that more than 99% of Advocare distributors aren't earning much money.  Perhaps this is a sign that you should consider other business opportunities before you decide whether or not Advocare is right for you.

As always we welcome your feedback in the comments section below, especially if you can share your own Advocare experiences.

For more posts like this, look at our list of mlm reviews. 

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