When you are contemplating on whether or not to start an MLM Business, it is important to know the difference between all the MLM compensation plans available. It is impossible to include all the types of compensation plans available and their slight differences. Only the most common plans will be covered here.

A popular compensation plan is called the Uni-level compensation plan. It is popular because it is the simplest to understand. You may have unlimited amount of distributors on your 1st level and probably 5 to 6 levels below you, with a percentage of sales paid to you on each level.

The matrix compensation plan takes the uni level plan to a different level. It does this by limiting the amount of reps a distributor can have on their 1st level. Once you sponsor more than the allotted amount on your 1st level, the rest go under you in the next available open slot. This is called spillover.

More and More recently the 1up and 2up MLM compensation has been used to create quick and large profits. A distributor can make ALL the commision on the product sold. There is no commission paid on levels which allows this. Once a person has qualified by making their 1st or 2nd sale and passing all that commission up to the next qualified person, they now make the whole commission for themselves on any subsequent personal sales and those unqualified beneath them. It is possible to be paid on infinite levels, however since there is no monthly requirement to order product, the system is reliant on bringingnew sales or distributors in.

Some very successful companies use the binary payplan. What happens is that you get 2 legs to build.....stacking people one on top of another. This seems great, using the concept of teamwork to the maximum. The problem lies in the fact that you generally get a lot of help from your upline to build the 1st leg......but NO help to build the 2nd. Since the legs must "balance" against each other; for instance 6 sales in leg 1 and 3 sales in leg 2 to get paid......you get a lot of sales in leg 1 and no sales in leg 2 which means NO money paid to you. You guessed it....a lot of people quit this quickly.

The author strongly despises one type of MLM compensation plan. That is the Straightline Powerline. It seems so enticing. You participate; and everyone who signs up after you goes under you. The only problem is that in order to get paid, you must meet some outrageous requirements and you make very little money.

The dinosaur of compensation plans is the stairstep breakaway plan. While most of the MLM Community shuns these type of plans, they have the potential for the largest payouts. Some people involved in these type of plans can literally make 100's of thousands of dollars monthly. You make a certain percentage of money based on your group volume......generally up to 25%, and then get paid in depth multiple levels deep based on your breakaway downliners ENTIRE group volumes. Some of these plans can pay breakaway or infinity bonuses 20, 30 or more levels in depth! This is where the security and big money comes from. I consider this the best MLM compensation plan.

I know sometimes it is difficult to decipher different MLM compensation plans. Use the information here as a primer to make your very important decision.