Preliminary LIFE Compensation Plan Analysis
Brent Hansen has performed an initial analysis of the LIFE Compensation Plan.
It’s been mathematically proven that in the MonaVie compensation plan, the majority of people lose money while a miniscule minority make all the profits. Is this any different with LIFE?
From Brent’s analysis:
This indicates that the maximum success ratio from the network is 1 in 21 which would equal a maximum residual break even of 4.75% with a mathematical failure of 95.25%. No matter how large your group grows, the percentage of those losing will remain the same.
Note: Brent’s analysis only takes account of the residual sales aspect of the compensation plan; it does not take into account retail sales. Just as TEAM members have found it difficult to sell $40 bottles of juice, I think they will be hard-pressed to get people to spend $70/month on leadership materials.
So, like MonaVie, it looks like the odds are still heavily stacked against you. In the LIFE promotional videos, the narrator asks, “Is there a better way?” In my opinion, the answer is yes, but the answer is certainly not Orrin Woodward’s LIFE
Update: Brent posted a comment yesterday in which he goes into more detail about the mathematics of the LIFE compensation plan:
Speak, lets get down to the bottom line. I will not attempt to discuss whether or not Life will provide the highest quality leadership material, or the best price point. All of that is totally subjective, and I believe that you share the same opinion as I on that matter. I remember how DoubleX was the “best” vitamin, (which I have now found one better for one tenth the price) with no stomachache as well. Monavie was the “best” juice on the market, and I am totally sure that Life will have the “best” leadership materials available. Please allow me to define “best” for you. Best means hyper-inflated and not justifiable, but if we spin it right, we can feel good about it. Enough said?
Once you accept the fact that product based pyramid schemes are almost all internal consumption models, figuring out the scheme becomes quite easy. What? Internal consumption? That simply cannot be true! According to the DSA (and Dooly) most people join MLM to merely purchase the “best” products at a discount……..B.S.! Like I have said before, I have over 600 distributors in my MV downline as of several months ago, and 1 case of juice per month is being sold. If it is the “best” product, why are 599 people choosing not to purchase it every month. A friend of a friend has over 10,000 in her MV group, and she is down to 150 cases of juice a month. So that indicates that 1.5% of her group is in it for the juice. I would dare say that a lot of those will get off autoship once they figure out how to login and cancel it. Lets face the fact, THOSE INVOLVED ARE INVOLVED BECAUSE THEY WANT TO MAKE MONEY, THEY WANT A BUSINESS, THAT’S WHY THEY JOINED. With that thought in mind, lets base the rest of this post on the reality that most people want to join to own their own business, and turn a profit. OK?
The Life compensation plan is a stairstep plan with the same design as the A/Q plan. It pays from 5% up to 50% of Business Volume, which is dollar to dollar, and a override bonus similiar to the 4% money in A/Q. There is also talk of cash awards blah blah blah…but for this discussion lets talk about the part of the plan where 99% of the people involved will earn from, which is the stairstep, with 5% at $150 volume, graduated up to 50% at $15,000 volume.
A new trend in MLMs now is the 3 and its free program. Visalus started it, and now everyone else is jumping on the bandwagon. Think about it, it strengthens their legal foothold by focusing on the “retail” aspect a little bit more than they typically do. Even Monavie is announcing a 3 and its free coming right up. With Visalus it doesn’t matter whether your customers are purchasing retail or wholesale, either way you get and equivalent dollar value of product each month you have customers which are not participating in the compensation plan. In other words, if you have 3 customers at $100 (wholesale or retail), you can get $100 of product a month. Whatever average level those 3 are at you are given 1/3 of that volume. Visalus has done a great job with this, and they must, because the compensation plan from the network is still horrendous. Now, with Life, I was told that the 3 customers must be “retail” purchasers, meaning you must produce enough retail profits to cover you own basic $50 subscription. So, without anything in print, I am merely assuming that if you had 3 “retail” customers paying $70, that would give you $60 profit which is enough for your subscription plus tax and shipping. The three and its free programs are merely a way of trying to legitimize a product based pyramid scheme. It gives them a more legal foothold, just like the member/client volume reporting with A/Q did right? None of us ever cheated on the reporting, and I promise I had 100 pv of customers every month, wink, wink. Now this is all subjective, and the real question is, how many people do you think will stay on a subscription without the “dream” of their own business attached to it? Is the Life product “so good” that everyone will flock to it? Apparently General Motors is enrolling people like crazy on it…hahahaha….maybe Obama is subsidizing the GM executives with the Life training subscriptions. One pyramid supporting another pyramid, how novel. So lets throw all of this subjectivity out the window and take a look at Life for the sheer mathematics. EVERYTHING IN MLM IS SUBJECTIVE EXCEPT THIS PART. YOU CANNOT ARGUE WITH THE MATHEMATICS THAT ARE WRITTEN INTO A COMPENSATION PLAN. THEY ARE WHAT THEY ARE, PERIOD!
When I analyze a plan, there is one basic formula, that remains constant throughout a plan. You can forget the smoke, the mirrors, the trips, the cars, the blah blah blah, because the foundation sets the entire plan for the entire company. What is this foundational formula? Its simple, when you figure out what it takes for a brand new person to break even each month FROM THE NETWORK MARKETING ASPECT ALONE, this will not only give you a maximum success ratio (barring mitigating factors), it will also give you the formula for compensation dollar allocation. Does this make sense?
Since Life is a stairstep, that means you need to remain one bracket higher than your teams, otherwise all compensation dollars you would have received on those teams, will be paid out to those below you and you will simply earn on your own volume. So what does it take to break even from the Life network on a residual basis? To break even at the minimum subscription it takes 2 teams with 10 people in each leg on the minimum subscription of $50 a month. That is 21 people including yourself generating $1,050 worth of business for you to keep around $110.00. Now you might say that this is more than $60, which I agree it is, but if you do not reach the $1,000 dollar bracket (20%), you will be in the same bracket as your top partners in each leg, and you will be paid at the same bracket as they are thus resulting in a check to you of $5.00. So the graduated brackets in a stairstep force you to build width, which creates more profitability for the company. So, as I said earlier the basic foundational formula for this plan is a 21 to 1 ratio, meaning out of 21 involved no more than 1 may break even from the compensation plan. This means that a mere 4.75% of all of those involved can ever earn enough from the network to cover the cost of their monthly subscription. If 4.75% is the maximum success ratio, that would indicate that 95.25% of the network can never break even from the network. Trust me, 4.75% is the “maximum” success ratio, usually mitigating factors such as placement, overflow, teamwork etc. etc. can lower the actual ratio quite a bit. As a matter of fact the max ratio in MV is 3.2% but actual ratio with factors is .05%. So when you look at Life and say 4.75%, that is best case scenario.
The other thing we can learn from this ratio is allocation of compensation dollars. Since only 4.75% will ever make it to the $1000 pv level, which is sharing 20% of the volume, this tells us that the other 95.25% of everyone involved will never share in more than 10% of total volume company wide. This means that 2.68% of all compensation dollars payed out will be shared between the 95.25% of the network, and that 97.32 of available compensation will be shared by a mere 4.75% of the network. THESE FACTORS NEVER CHANGE, NO MATTER WHAT BONUSES ARE ADDED. If you have 10 partners that want to cover their subscription you all must bring in 210 people that cannot cover subscription. If 100 want to pay for their cds, you must bring in 2100 that cannot. If 1,000 people want to earn enough to cover their monthly package, you must all bring in 21,000 who cannot. This is the travesty of MLM. Almost every single company is built on failure rates of 95% plus of its entire distributor force, and Life is no different.
So Speak, I have said all of this to say this, I can show you a DOZEN companies with a better ratio than 21 to 1, without even researching. Meaning, there is no way that Life can be the “best” compensation plan, or the “cheapest” network in the industry, I am sorry, but I would have to call B.S. on that one. An even sadder fact about this particualr plan is the fact that production costs are much lower than a case of juice, or a box of soap. A CD? You can duplicate these for under 25 cents a copy, thus making a 50% payout on $50 a total and complete joke. The company is making big bucks off of this one, I guarantee it. And after overhead, where is the remainder of the $25 going to? This is going to be great, cannot wait to see how it all unfolds.