The sales pitch sounded simple. Sell these great products to others and make serious money! It’s so easy – the products sell themselves! A lot of people find themselves in a position to sell healthcare, beauty or any number of other products on behalf of a company, and more than a few realize that perhaps the sales opportunity is not all that they had hoped for.
If you’re thinking about selling products for a company, go in with your eyes wide open.
Multi-Level Marketing Basics
The term “multi-level marketing” sounds innocent enough, but it has a rather negative connotation and with good reason. Multi-level marketing is much like a pyramid. The first person who starts a company gets others to help sell the product he’s created. He takes a nice percentage and the new salespeople keep the rest.
Those salespeople can then arrange new sellers under them where they get a nice percentage and the new sellers keep the rest. But the now-middle management has to also shell out a percentage to the guy on the top of the pyramid, so he takes a bit more from the new seller on the bottom. Multi-level marketing works by increasing the number of sellers on the bottom of the pyramid so that the funds from those sales continue to travel up to the top again.
Ultimately only the individuals at the bottom of the pyramid are actually selling products. Everyone else is selling the idea of the products to individuals looking to make some easy money. Unfortunately, the easiest money of all is made by the folks at the top of the pyramid taking a cut from everyone else.
Making Money with Multi-Level Marketing
There are countless opportunities for this sort of business. Just about any work-at-home company selling products of some type in “parties” or online events follows this scheme to a certain degree. But for the new seller there are additional costs to factor in as well.
After the big sales pitch your head may be swimming with ideas about the money you’ll be earning and the car you might be awarded for being a great seller. You probably are convinced that selling with be simple and you’re ready to take the next step. For many companies, this next step is a big one – often bringing a price tag of hundreds or even thousands of dollars.
When you buy in to the company, you may be asked to spend $500 or $1500 on a “starter kit” or a list of resources. You’ll be convinced you’ll sell these products easily and make your money back, but that may or may not be true. Many would-be sellers find themselves the proud owner of $500 worth of stuff they don’t really want and can’t use. And if you don’t want it, who does?
The Monthly Cost
Even if you do find a product that sells well and that you’re passionate about, check for monthly costs and fees. There are some companies that require you spend an additional $100 per month or more on new products in order to stay in the business. This can add up very quickly, especially if you haven’t managed to sell the $500 worth of stuff you started with and the $100 worth of stuff you were forced to buy last month (and the month before, and the month before…)
The Friend Cost
Finally, there is a hidden cost to multi-level marketing plans – the cost of friendship. You are encouraged to speak to your friends and family to sell the various products you’re now so passionate about. What they don’t tell you is your friends and family are going to be sick of hearing about your products, especially as you become more desperate to sell the stuff that is accumulating or required to stay in the program.
Social media barrages, parties complete with required purchases and advertisements and encouragement to join the company at every turn will most certainly turn your friends and family off – potentially damaging relationships.
A great deal can be said for some companies that promote the sell-at-home model, but others are little more than a pyramid scheme in carefully designed marketing materials. Think twice, or perhaps even a third time before you get involved in one.