Tuesday, July 29, 2014

The Real Amway Business?

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. There is also the debate of whether diamonds themselves or their "corporations" receive the profit, which is laughable as a defense.

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! Even when you factor in the system employees, you can easily see the math and determine where the real money is made.

If you buy a major function ticket for $125, the cost of that function might be in the neighborhood of $25 to $30 per attendee, so the system may generate $100 profit on a $125 sale. I believe the smaller functions such as open meetings, books and voicemail have smaller profit margins, but still overall, it's easy to conclude that the profit from the system is greater than profits generated by moving Amway products. I might add that the sales on these functions are often made in cash, thus who knows if the diamonds are even paying the IRS taxes on these sales.

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, helping downlines.

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 that the use of tools cannot be justified. 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. But as PT Barnum once said, a sucker is born every minute.

11 comments:

Anonymous said...

A friend of mines is a ex emerald in BWW. Told me the tool profits has shrunk substantially like 66% of a diamonds income is from tools. That's why we see many pins jumping to other mlms. Nowadays only the east Indian diamonds or Asian in north america get huge dollars from tools.

Anonymous said...

Hey there Joecool,

I used to be an IBO and eventually confronted my upline about the tool system. I came armed with this website:

http://www.cocs.com/jhoagland/tools.html

To their credit, they did not deny anything nor did they tried to lie. They admitted every gold producer and above were profiting from the sale of tools in accordance with the system presented in the website cited above. So yeah... selling "educational" material is WAY more profitable than selling Amway products.

Have a nice day,

~Osuwariboy

Joecool said...

So what happened after they admitted everything? Were they lying by omission prior to your questioning?

Joecool said...

Wow, that is interesting.

Anonymous said...

Well, they never did mention anything about profit from tools before I actually asked them about it. When I asked them about this specific omission, they merely said that they did not want to overload prospects with "unnecessary information" when they showed the plan.

After being presented with this big load of crap, I wisely decided to quit and let them find some other idiot to sell their crap to.

~Osuwariboy

Joecool said...

Thanks for your comment. Sadly, many people believe the lies because they want to believe you can do this part time and retire in 2-5 years.

Anonymous said...

I showed my friend website and was also armed. Basically they did the websites critics aren't credible. Then my friend became hostile telling me I have no life and a loser lol.

Joecool said...

Funny story. The critics have nothing to gain by exposing the truth. In fact, that's a good defense. Ask what on the website is not truthful. You'll often get silence.

Anonymous said...

Some of the stuff we point out are very obvious. Like function cost,communke,and low % of ibo making any $. Has nothing to do with credibility. Unless you're their cult leader they think nobody else has any credibility.

Anonymous said...

The interesting thing was br getting into amway and the AMO i became more interested in politics due to the leaders being staunchly conservative.

This led me to more research into tactics used by both parties and how they demonized people when they had a losing argument. This is EXACTLY what is done to IBOs regarding anyone critical of the business. It's very similar to how groups of people won't even entertain certain facts based solely on what particular news organization it came from. If Amway leaders had the winning argument, they would welcome the criticism.

Joecool said...

Yes, the winning argument by leaders. When you are in Amway, you often believe but once you snap out of it, you see right through it. It's all on your perspective. Isn't that almost funny?