Friday, April 13, 2012

Amway And Tool Money?

I have been reading some ongoing debates about whether the system income for higher pins is more than their Amway bonuses. I believe the systems such as BWW, WWDB, N21 or LTD, does generate more profit for upline than the sale of Amway products. How the system income is divided though, is still a mystery as it doesn't appear that there are bonafide written contracts explaining how tools income is split up among the higher pins.

But it's very easy to determine that more income is made from the system than from Amway. If you move $100 worth of Amway products, Amway will pay about $33 back in the form of bonuses. These bonuses will be split among the Amway IBOs (middlemen), depending on your level. On the other hand, if your group bought say 20 cds at $5.00each, the system will profit about $90 as cds cost about 50 cents each to produce in bulk. Some Amway apologists will cite the fact that some groups sell cds for $2.50 or $3.00. While this is true, there is a "member's fee" which must be paid. And when you add in the member's fee, the profit for the system is the same or possibly higher!

If you buy a major function ticket for $100, the cost of that function might be in the neighborhood of $25 to $30 per attendee, so the system may generate $70 profit on a $100 sale. I believe the smaller functions such as open meetings, books and voicemail have smaller profit margins, but still overall, it's easy to conclue that the profit from the system is greater than profits generated by moving Amway products.

The only question is how much each individual earns. I have "heard" that platinums get a discount on the sale of standing orders and cds, but I have never heard of a platinum sharing any profit for functions, voicemail, or any of the other materials. This is puzzling to me as I believe the platinums do the most work in the system.

So for the lower level IBOs, if you move $300 in Amway sales (Approximately 100 PV), you will receive about $10 or 3% while upline enjoys the rest of the $90+ in bonuses from Amway. And then when you purchase and move tools volume, you receive nothing and some of your uplines enjoy all of the profit. While I don't see any problem in upline making a profit for selling training materials, I see a problem in the fact that the tools don't work. So few IBOs progress to levels where an actual profit is earned. Amway supporters will point out the new platinums emerging each year, but do not mention the platinums who do not re-qualify.

Based on my observations, I can only conclude (quite easily) that there is substantially more profit from the sale of support materials for upline to enjoy, and I can also conclude that the support materials are ineffective in training downline IBOs so they can progress to higher levels of the business. I welcome opposing views on this issue.

7 comments:

Anonymous said...

Dude,

Porkchopjim@hotmail.com

Hit me up - I've been out of the fight for awhile.

Anonymous said...

I think it is a diSgrace that money is made on tools. This makes the business concept a fraud if the people have no choice but to buy these tools. These costs will make a loss for the high majority of drop outs. At least if these drop outs only had product costs then they could experience the business but not lose money or not much

Anonymous said...

makes too much sense...

Anonymous said...

I believe the uk diamond who in fact was one of the first people spnosored in the uk started the tools / spceial pRograms activity after abbout ten years as a diamond. His business seems to have collapsed afterwards. If so there is some justice

Anonymous said...

I think the tools are a waste of time and money. This is just a slick way to drag money from these poor new recruits who know nothing and contribute to upline pockets hoping they will see the magic answer. In this business only a certain type of person will be sucessful. Being grredy, disrespectful of others is probably key ingredients of anyone at diamond and above. I dont agree with the tools system. Neither do i agree this is a poor business opportunity. I think you can make good money if you do what is needed to be done. But not many are like those who make it. So for me the low sucess rate is not really a reflection of the business. It is more to do with people not being greedy enough to work at it. There will be thousands of people recruited over the coming years so recruiting is not a problem. Cold contacting works apparently so you can never run out of prospects. There will be billions of dollars of products moved so products nor prices are not a problem either. It is just a question of do you want this type of business. By that i mean the reel business not the dressed up one

Jonathan Brand said...

An interesting note is that MLM companies like Amway and Herbalife already meet the criteria for illegal pyramid schemes. The 1979 FTC ruling in favor of Amway rationalized its existence and legality in part, by finding that Amway was not in business to sell business opportunities through endless chains of recruitment. The opposite is true. Anyone who visits an Amway website knows this. Anyone who can read or think can easily determine that Amway falls under the title of "Pyramid Scheme." Amway is a product-based pyramid scheme. The hard facts have been collected by top expert, Jon M. Taylor at mlm-thetruth.com and statistics showing 99.8+% of participants lose everything beg the following question: Who is protecting US taxpayers from this form of financial fraud and deception? The answer: No one. According to Taylor and other pyramid scheme experts, FTC regulators have been taking political contributions from the DSA or Direct Sellers' Association for years. Our kids and their kids will remain completely unprotected from pyramid scheme fraud so long as the FTC acts as a gatekeeper for pyramid fraud.

Joecool said...

Great post. Thanks for the comment!