Multilevel marketing is a booming industry and a majority of the companies that have stake use Unilevel or Binary MLM plans to run their business. One of the prime reasons for this is the financial freedom and massive growth rate offered by these two popular MLM Plans.

Instead of a traditional distribution channel, MLM companies sell their products directly to the customers. As a happy customer and later distributors, Binary and Unilevel Compensation plans allow you to earn a commission depending on the sales you generate in a more systematic way. When your customers become distributors, you can earn additional team commissions on that, as well.

What Exactly is a Compensation Plan for Multilevel Marketing Business?

You might have heard from different MLM companies how they offer the best compensation plan or the highest payouts to their team. So, what exactly is a compensation plan? A compensation plan is the structure of the MLM company and how it compensates its customers. It usually consists of different sets of rules that determine how and when the team members can earn commission, bonuses, overrides, and other compensations. One of the reasons why MLM business is gaining popularity is because of its lucrative compensation plans. The MLM compensation plans followed by MLM companies differ significantly. When you choose an MLM company to represent, the compensation plan is an important factor to consider because it is the plan that will lead to your business success.

Unilevel Vs. Binary Compensation Plan

The two common types of compensation plans in the MLM business are Binary MLM Plan and Unilevel MLM Plan. Both of these plans are the widely used methods of compensation in the MLM industry and have unique properties. Both of these have their own set of advantages, disadvantages, strengths, and weaknesses. But it is up to the company to select which would be best for their business and the customers.

Binary MLM Plan

Structure – Binary MLM compensation plan involves two legs – the left leg (Power Leg) and the right leg (Profit Leg). Depending on the position of the new team member, the new member can be on either leg. Every team member would be responsible for hiring more team members to their downline and place them on each of the legs. If a member recruits more than two members, they will put the person on the power leg. Everyone on that upline will share any profits made by that member.

Compensation – In Binary MLM plans, the compensation usually varies between 8%-10% of the total business volume done on the weaker leg. Thus, it is essential to maintain a good balance between the two legs.

Advantages of Binary Plan– The benefits of Binary MLM plan are –

• Higher returns as your compensation will depend on the success of your upline.
• There is no limit to the amount of compensation you can get.
• It is a team-based system where all team members need to work together for the downline to grow.
• The upline offers greater support to build the other leg, and thus the expansion is quite fast.

Disadvantages of Binary Plan – Some of the major disadvantages are –

• You can only make profits from the downline on one of the legs and not all of them.
• The downline structure may take some time to understand.
• If one of the legs is not as strong or active as the other leg, it can result in monetary and time losses.

Unilevel Plan

Structure – In a unilevel MLM plan, there is only one line of distribution. It means that every new recruit will be on your forehead. There is no limit to the number of recruits, and the commission will be based on the level depth. Every member can recruit as many members in their downline. This kind of plan allows for a stronger and unlimited network of members.

Compensation – In Unilevel MLM plans, the compensation is calculated anywhere from 3 to 10% of the total business volume of a specified level (usually from 5 to 8 levels).

Advantages of Unilevel Plan– The benefits of the implementing Unilevel compensation plan includes –

• It is easy to implement as the structure is easy to understand.
• If there are good leaders in the downline, the compensation can be quite high.
• You can enjoy faster bonuses and higher residual income.

Disadvantages of Unilevel Plan– The disadvantages of Unilevel MLM plan are–

• Such a plan does not pay up to unlimited levels. There are certain limitations.
• You cannot increase the volume of your downline expects for the first level. If you do not have strong leadership in the downline, your compensation might greatly be affected.
• The rapid growth of the downline is not possible.
• No spillover or checkmatch possible.

When you compare Binary and Unilevel MLM plans, you will notice that both have their own sets of advantages and disadvantages. One plan is not better than the other in general. Different companies choose one based on their business policies, the products, and services they are selling, their targets, and others. You need to pick the MLM company you want to represent based on what you feel will suit your needs and the effort that you can put into your MLM business. Thus, make sure to study the compensation plan clearly, so you know how each plan works and what you stand to gain.

Checkout what MB30 Dynasty Says About Binary Vs. Unilevel MLM Plan