This article will not go down well with people in the MLM industry and if you have something to rebuke, I welcome you to leave your comment but do show some guts and leave behind at least your name and contact email.
MLM or network marketing in its simplest form is only a form of referral marketing. It is in fact just another channel which company can try to structure the less tangible "word of mouth" marketing into.
However I want to remind all that for a product not to be "excessively overly priced" and yet allow MLM distributors to achieve "high income levels in short time" is just not plain possible.
However almost all of MLM companies will price their products excessively high or risk not being able to recruit any distributor at all. cause for the whole system to work, the company have to pay multi-layers of commission and the comission amount for a certain level must be substantial enough to "lure" or motivate the greed in people to join as an distrubutor.
On top of the commission structure, the company has to account for fixed cost like rental, logistics,admin, operations, utilities cost as well as most important of all the company own profit margin. Suppose the total commission payout to all levels is 30%(be careful in calculating as some companies will use points system or currency trick to portray higher commission payout) and for a reasonable established MLM company, the fixed cost is about 5-10% of the product price. The company will take about 30-60% for its own profit.
if you doubt what I say picture this. You have found a "good" product and started an MLM company to market this product. You are bearing the risk of paying upfront for all the products in your warehouse. You are bearing all the fixed cost per month for you admin staff salary and electrical bills which can come up to hundred of thousands. WOULD YOU PAY YOURSELF LESS THAN WHAT YOU PAY YOUR DISTRIBUTORS?
If an MLM company tell you that the boss is a good man and he believes in helping people instead of excessive profits so he only keep keep a small portion of the profit and YOU believe them, my only advice is you might need more life experiences.
To know if a product is priced too high, check for its counterpart in the open market. A retail store is a good guage as shelf space is valuable and the product plus its pricing must be reflective of market demand. Most MLM company would choose products not available for retail so that there is no basis for comparision. health products are especially popular cause they can argue that health is priceless and thus wellness products are worth whatever they are priced.
If your company products are not available for retail, check out online auction sites like ebay. practically, non-perishables put on auction can be transacted from 30% to 80% of its original retail price. Find the HIGHEST "transacted" price for a smiliar product on auction sites and mulitply it be 2-3 times. This price will be roughly be a fair value of what consumers are willing to pay for in an open market environment.
