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MLM Software - Is your product suitable for MLM?

Permalink 05/10/04 13:32, by admin, Categories: MLM Software


Product Selection Matters! Even the best MLM Software on the planet can't save you if your product is ill suited to MLM or Network Marketing.

Not all products can be successfully sold through the MLM channel. Anything can be attempted but long term viability needs careful consideration.

Typically a rule of thumb for qualification of a product being sold by MLM is the profit margin. 8x - 10x markup is a safe acid test to see if your product can successfully sustain a network marketing commission payout.

What this means is if you can buy or manufacture the product for $3, then you need to retail it for $24 -$30. Does this sound outrageous? Don't let it scare you, let me break it down.

How much does a glass of Coca Cola sell for at the restaurant? About $1.50? Great, how much does it cost Cocal Cola to manufacture the syrup to make that one glass of Coca Cola? 3 cents? 5 cents? How much does the restaurant pay for it? Maybe 25 cents? So lets see, from 5 cents x 8x is 40 cents, 5 cents x 10x is 50 cents. So Coca Cola could MLM its syrup very nicely!

What about cans? What does it cost Coca Cola to make one can of Coke? 25 cents? so 8x cost would be $2.00, that would just about work. There are restaurants that get $2.00 for a can of Coca Cola.

The next consideration would be how much is it going to cost to ship your product. At this stage, Coca Cola's syrup may work ok for MLM as it is heavily concentrated and the user mixes it with their own water. As can's, the shipping cost of a case of Coca Cola could make it prohibitive for others to buy so it may not work as an MLM product.

So today we have looked at how to deal with products and a simple rule of thumb to see if your product may work for MLM. I will try to talk a bit more about this tomorrow. This topic could take a few days to get through!

Stay tuned!

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