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Calculate commission to pay in a multi-level marketing system: How to calculate the commission to pay in a mlm system

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Calculate commission to pay in a multi-level marketing system

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Picture of manish by manish - 6 days ago (2016-02-07)

How to calculate the commission to pay in a mlm system

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Lets say I have a MLM system with the following structure of users. How do I calculate the commissions to pay to each user?

                  A
    A1.           A2.           A3.
B1. B2. B3.   C1. C2. C3.   D1. D2. D3

  • 1 Clarification request

  • 1. Picture of Dave Smith by Dave Smith - 6 days ago (2016-02-08) Reply

    MLM commission sharing programs are fairly complicated. In the United States, they have to avoid being labeled a pyramid scheme, which is illegal and will get the founders thrown in prison.

    Legitimate MLM's accomplish this by only paying commissions on products and not memberships. A member is rewarded for signing up new members with perks, like discounts on their purchases. With a discount, the member gets immediate earnings on anything they resell or savings on anything they consume without those earnings/savings entering the commission line.

    How commissions are calculated vary quite a bit from program to program. A common system is that the member earns a set percentage from the total sales from each level in their downline, with the percentage getting smaller the further down the level.

    Using your example, A3 gets the same percentage of total sales from D1, D2 and D2 that A gets from A1, A2 and A3. A also gets a lower percentage from all sales of B1 through D3.

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