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The Mary Kay Comp Plan is a stairstep breakaway, meaning you keep hitting new levels of total volume in your leg, and then when someone else gets to certain levels the whole thing breaks away and then you get a smaller override percentage. Its very tough to make residual income, and only the top leaders make real money. This also creates a situation where a member might try and buy a lot of product themselves to hit the next bonus percentage – but they end up with a lot of extra product. Inventory loading like that is a big problem with stairstep breakaways.
Here’s a pretty useful write up:
The Compensation Plan
“Easy to understand, maximizes retention and minimizes attrition by making sure that part-time people get paid early, fairly and often.” (96% of new associates will start part time)
Review: Compensation plan is a “stair-step breakaway.” This plan is easily confused and very hard to explain to others. In a nutshell, when a distributor reaches a certain point of qualification, he then breaks away from his original sponsor. The original sponsor will now only get a certain percentage of that breakaway groups volume.
Mary Kay reveals as little about the financial side of the company as it can. As a consequence, there is very little reliable information about actual earnings by consultants.
There are 2 ways to earn money in Mary Kay: retail sales and recruiting. In both instances, the potential income is affected by the consultant turnover rate.
Many consultants are coming forward with stories of how they were encouraged to load up on products, (front end loading,) prior to actually having customers. Mary Kay offers a 90% product refund, (calculated on the basis of the lowest wholesale price offered over the previous 12 months,) minus shipping and stocking fees and cost of tools. Many claim that this model of “loading up on products” before they know what their customer will want, leaves them with many unsold items.
eBay lists (tens of thousands) of Mary Kay products up for sale, a strong indication of product “front end loading,” forcing distributors to unload their unsold products elsewhere to make room for more. There is also numerous sites dedicated to liquidating MK products at reduced prices, bought from former distributors. MK tried to sue Touch of Pink and lost.
10k Question: How many distributors to earn you 10K/mo. commission?
Answer: estimated to be higher than 3,000 people since most money is earned from recruiting rather than product consumption and the turnover rate is very high.
As for creating a “Walk Away” retirement income… There Is NONE. Individuals who qualified as National Director, prior to the age of sixty, are given the status of National Director Emeritus at age sixty five. This status entitles them to a retirement income that is equal to 60% of the average of the best three of the last five years prior to retirement. That monthly is paid to the retiree or their surviving family for (Only 15 years.) There is no retirement plan for other consultants.
Aside from that, the market is way to saturated with health and wellness companies and the timing is just too late.