Tuesday, August 5, 2014

The Amway 6-4-2 Plan?

Let’s break down the 6-4-2 plan (Re-print)

Basically, it’s a plan to go direct (platinum) and all you need to do is sponsor 6 of these direct groups and you’re a diamond and will retire early and life in luxury right?

Assumptions: 1PV = 2.5BV. 1PV costs about $2.70.

The 6-4-2 plan has the premise that you do 100 PV, and you sponsor 6 frontline who do 100 PV. Your six frontline in turn sponsor 4 (24 IBOs) each who do 100 PV. And each of these 4 IBOs sponsor two IBOs (48 IBOs).

So your direct empire looks like this:

1 platinum Sponsored 6 who sponsored 4 who sponsored 2
6 1300 PV groups Sponsored 4 who sponsored 2
24 300 PV groups Sponsored 2
48 100 PV IBOs

Total 7900 PV. 7900 PV = (1 PV = 2.5 BV) 19750 BV.
19,750 BV @25% = $4937.50 per month. Annualized = $59,250. Add Q12 bonus 69,250 (platinum group yearly income, not counting retail sales profit. Cost of product
(approximate) $21,300 per month or $255,960 per year to maintain 7900 PV.

The platinum must pay his 6 1300 PV groups. 6 frontline 1300 PV = 3250 BV = $390 per month, or $4680 per year. $4680 x 6 = 28,080.

The Platinum keeps 69,250 – 28,080 = 41,170 (net, but not including operating and system expenses, but this includes the Q 12 bonus)

Now, the 6 frontline must pay their 4 IBOs who sponsored two. 300 PV = 750 BV = $45
Per month, or $540 per year. Thus the 6 frontline earn $4680 per year but pay out $2160 downline for a net of $2520 per year, or $210 per month.

Ok, and then each of the IBOs who earn $45 per month or $540 per year must pay their downline (2 each) $7.50 per month, or $90 per year x 2 = $15 month or 180 per year.
Thus the 300 PV IBO earns $30 per month or $360 per year.

Let’s review:

1 platinum earns $3430 per month, or $41,170 per year
6 1300 PV IBOs earn $210 per month, or $2520 per year
24 300 PV IBOs earn $30 per month, or $360 per year
48 100 PV IBOs earn $7.50 per month, or $90 per year
This is before taxes and expenses, but also does not include retail profits, but hey, we teach buy from yourself right?

OK, let’s look at tools expenses. Let’s say only the platinum, the 6 frontline and the 4 each who sponsored others are on tools (Fair assessment?) That would be 31 IBOs out of a group of 79 IBOs on tools or 39% of the group, and remember that all of these IBOs do 100 PV every month.

Tools cost: KATE, Website, standing order, book of the month, open meetings, monthly functions, major functions (some IBOs have to fly to functions), gas, incidentals, babysitters. Let’s estimate these tools and other expenses to be $160 per month (Very very conservative). $160 per month = $1920 per year.
(My expenses as a single IBO were over $200 a month on average)

Now let’s review the group NET income.

1 platinum $3430 - $160 = $3270 per month, or $39,240 per year
6 frontline (1300 PV) $210 -$160 = $50 per month, or $600 per year
24 (300 PV) $30 - $160 = <$130> per month loss of $1560 per year
48 IBOs earn $7.50 per month or $90 per year.

Group income = $69,250.
Group Tools expenses = (31 x $160 = $4960 per month, or $59,520 per year)
Group profit = $9,730 for the year.

79 IBOs putting in 10 hours per week = 790 hours per week or 9480 hours per year.

These IBOs on average made a whopping $1.02 per hour for the year collectively.

Platinum made $78.48 per hour
6 frontline IBOs made $1.15 per hour
24 – 300 PV IBOs lost $3 per hour
48 100 PV IBOs made 17 cents per hour.


Anonymous said...

Great Article and this is likely as simple as the math gets, I can't imagine how any body / IBO can't follow it... or why anyone would want to overpay for generic products in the first place and frankly piss off your entire group of family & friends just to continue to be your only true customer.

Although the simple fact is those sheltered / brainwashed super gullible "business owners" are constantly told that success is around the corner and that they're "serving" one another, and it's a feel good (fake) love fest.

But the one thing you forgot to take into consideration, is the attrition rate of the "downline". I know the smart one's typically see this as a gigantic waste of time vs. income and my research has shown that around 50% of new "IBO's" bail in the first year. So that income assumes nobody leaves, which would be highly unlikely.

Lastly, un-related to this article, I really wish the NCAA picked a better sponsor for the Football Championship.. Sure Amway can likely pay the most becuase they are like a bad casino... taking all the money of those people who are likely to dim to understand that the system is so heavily rigged and while they show you the picture of the one "guy" who hit it big... it's draining the masses of their savings, time, etc.,

Now, with this Amway Sponsorship we will have to see / hear from the brainwashed masses how awesome and important this is and naturally every college football commercial break will certainly have an Amway plug showing a glorified ad depicting some person/ family supposidly so happy becuase they're an "Amway Business Owner"...Uggh, I'm not looking forward to that. NCAA please find someone new... I'd say give it to Coke/Pepsi/Gatorade/Nike/Rebok/Ford... I hope this sponsorship isn't a long one!!

Joecool said...

Thanks for your comments. It is very simple math. I was very conservative when considering business expenses. If more people were on the system, very likely the group as a whole would have a net loss instead of a tiny gain. And you're right, out of these 79 IBOs, half of them or more won't be around and will have to be replaced. If you drop below 7500 PV, you get less bonus money and you will have to work harder.

And yes, IBOs will be harping about the partnership between Amway and the NCAA. What people don't see is that this is unrelated to how an IBO fares in business.

Anonymous said...

So conservative too. Most plats won't have 6 legs to earn them that much income. Most will earn 1/3 of that and only have 3 legs.

Also, the expenses are way more when you include handout tools, gas, hotels, etc

Anonymous said...

Hey there Joecool,

It's funny that, when you subtract the 270$ necessary to actually get 100PV, everyone ends up in the red except the one at the very top of the organization. Also, in Canada, to get 100PV you have to spend around 325$, which makes the whole thing even worse.


Joecool said...

Very true, but this is how Amway is legal. A product is moved. In reality, many IBOs have no need for 100 PV's worth of products each month. That "quota" is artificially boosted by IBOs buying overpriced crap like double x and some other high PV products. Most people don't use 100 PV in 2-3 months. It's an artificial demand because you are taught to move 100 PV and you need to do so as an example for your downline.

Anonymous said...

We were taught and believed that:

We don't buy products, we buy PV. PV makes you rich. The products are a bonus.

True, and sad, story.

Joecool said...

I believe you. I can't prove it now, but my upline used to teach us how to "buy" 100 PV.

Joecool said...

Our upline gave us a list of high PV items to buy such as double x and other vitamin products because it was high PV. But it was also high price. One upline said you can bury the products in your yard but you need the PV so you can be an example to your downline. What a farce.