MLM Product Profit Margins a Rip Off

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Why do Suitable MLM Products need such a High Profit Margin? Is it really a rip-off?

Ok, so we talked a little bit about the percentage of margin you need in your MLM product to form a successful MLM company regardless of the MLM Software you choose in a previous MLM Software blog post.

Lets add a bit to that in first explaining why you need such a huge margin for an MLM Product or MLM Service, and how it differs from traditional marketing business. Well in our Coca Cola example where does all the money go between the 25 cents and $2.00 retail price?

Advertising and Distribution. A lot of household products have about 80% of the final price you pay tied up in Advertising and Distribution. The advertising budgets of Coca Cola, Pepsi Cola, Tide, and Crest and other Proctor and Gamble products are enormous. All you have to do is learn how expensive TV advertising can be and you will quickly come to this realization.

MLM companies typically have no advertising expenses. They sell their MLM products through word of mouth and the MLM commission plan is generally considered the MLM company advertising budget.

The other biggy? Distribution. Why can Costco sell stuff so cheap? They eliminate all the middle men. They buy direct from the manufacturer and sell direct to the consumer (oh alright, we will play the game, they sell to the small busines owner)

MLM also eliminates the middle people. The company sells direct to the distributor who either uses the MLM product or sells to someone else. In a lot of newer MLM's the retailing is done on the MLM Replicated website, and the company is shipping direct to the MLM Retail Customer, and paying the MLM Distributor the difference between wholesale and retail on their next MLM Commission check. This means more and more MLM Distributors are not needing to stock product, just order it and have it drop shipped to the MLM Retail Customer.

All MLM (Multi-Level-Marketing) does is take that 80% and generally split it up two different ways. Usually about 50% of wholesale price goes into the MLM Commission plan. The remaining 30% typically goes into the MLM product quality. This is mostly true for legitimate Network Marketing companies and their MLM Products and MLM Services.

Careful, just because a product is being sold by an MLM company, doesn't mean its product quality is superb, you still need to do your due diligence.

Hope this is helping to clarify what it takes to have a successful MLM product in MLM.

In a later Blog posting we will cover off another MLM Product concern, consumability.

Remember when you have a superb MLM product that fits, the next step is infrastructure for your company cause if your MLM product is great your MLM company could go crazy! Good MLM Software is a key to not having your growth stutter on the way to the top!

INS can certainly help with MLM Consulting and MLM Software should you need help with yours. We have a generous Share in the risk plan on MLM commission plan design available to all our MLM Software clients.

Contact us today to learn more about INS MLM Software or our other MLM related services or request pricing by Clicking Here.

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