Dollars/People

$.01

$.02

.$04

$.08

$.16

$.32

$.64

$1.28

$2.56

$5.12

$10.24

$20.48

$40.96

$81.92

$163.84

$327.68

$655.36

$1,310.72

$2,621.44

$5,242.88

$10,485.76

$20,971.52

$41,943.04

$83,386.08

$167,772.16

$335,544.32

$671,088.64

$1,342,177.28

$2,684,354.56

$5,368,709.12

 Lesson from the Pyramids
Why Nearly Everyone Loses Money in MLM, but So Many Keep Trying

What few people realize about "duplication" in MLM sales schemes (Recruiting other distributors who recruit other distributors, who recruit others, and so on) is that it places the vast majority of enrollees always at the bottom levels. This is where nearly all the members permanently are who pay the money that goes to the top.

The doubling of the penny each day for just 30 days illustrates the mathematical trick that MLM companies perpetrate on the new recruits

A penny doubled every day for 30 days amounts to over $5 million. However, note that it takes 25 days (levels) before it amounts to just one hundred thousand dollars. Then, in the last 5 days, it soars to over 5 million.

Such is the pattern of "duplication." Like MLM, most of the money is at the end of the chain. The source of that money is the newest enrollees who make up the vast majority of the entire chain.

The big numbers are at the deepest level of the "downline", but many levels must be assembled and maintained long before the numbers starting adding up. In MLM, only a few can ever achieve this. This is mathematically predetermined from the start by the MLM pay plan.

The trick of the trade is to cover up this reality and to guilefully convince each and every enrollee that he/she can succeed. Recruits are told that the program is a formula for wealth, even though it is mathematically impossible for any but a few to succeed.

The way the mathematical trick works itself out is in the pattern of dropouts. Facing the mathematical impossibility of building a dowline of thousands of new people, the people entering at the bottom levels soon quit or the ones they have recently enrolled quit. Effectively the pyramid is continually collapsing in the lower ranks and rebuilding when new hopefuls are found to replace the recent "losers." In this way, MLMs don't totally saturate areas with members quickly because most people quit within a year. All MLMs experience a 50-90% annual dropout rate.

But during the brief time that people in the bottom levels pursue their futile quest, they are also continuously paying money to the MLM for products and training as well as incurring other business expenses -- and thereby supplying money to those in the top ranks.

On each "sale" or enrollment, the MLM pay plans specify that the highest percentage of bonus money goes to the top ranks. The doomed efforts of the new recruits pump nearly all of the bonus payments to those few people in the top ranks. The bottom levels, where the vast majority of members are, become a revolving door with new people cycling in and out every month.

"Success" of the few at the top is based on the losses of nearly all they enroll. Also, it involves continuous recruiting in order to keep replacing those "losers."

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