If you're interested in trying out network marketing, the first thing you should learn about is the different ways a company can compensate your efforts. Take the time to understand how each compensation method works before making your choice.

Binary Plans

Network marketing companies using a binary compensation plan often have two types of product lines or businesses to offer. The general aim of binary plans is to ensure that each leg achieves the minimum quota for sales. If only one of the leg reaches the minimum quota, youíll actually lose money because of it.

In most cases, one branch is referred to as the power leg while the other one is called the profit leg. In power legs, there's an automated system that determines where new members get placed. In profit legs, however, the person responsible for having the new members enrolled reserve the right to determine where they get placed.

Stair Step and Breakaway Plans

Although these are two different plans, they are usually combined by today's network marketing companies. With the stair step structure, new members start off as distributors and get to climb up the networking ladder according to how much they're able to sell. Naturally, every promotion offers more benefits. With breakaway plans, a member that reaches a certain level can break away from his current network and start one of his own.

Labels used for various ranks in this type of compensation plan differ from one company to another. Stair step and breakaway plans are driven by performance and volume rather than the sheer number of recruits you have. Tupperware and Amway are just a few of many established network marketing companies making use of this plan.

Matrix Plans

People have varying opinions about what matrix compensation plans are. For some, this is a compensation plan in which a computer program is utilized for deciding a new memberís placement and position. This decision may, however, be overruled.

For others, matrix plans are those that restrict the width of every level in a distributor's tree, similar to how things in binary plans work. Lastly, some people consider matrix plans and matrix schemes to be one and the same. Also known as escalator, elevator, and ladder schemes and matrix sites, a matrix scheme is where products may be exchanged for money together with a side bonus of being waitlisted for better products. This last definition is considered unsustainable by the UK's Office of Fair Trading.

Uni-Level Plans

Unlike binary or matrix plans, there are no promotions to work for and there are no limits to the width of the levels that make up your group. On the other hand, you can only expect a fixed percentage for each level, regardless of whether you went past or met the minimum sales quota.

Differential Pay Scales

In this type of compensation plan, you can expect to get higher commissions or overrides if, for instance, you have a higher pay level compared to those occupying legs above you.

Last but not the least, network marketing companies also hand out bonuses to distributors or managers with exceptional performances. People who display impressive leadership qualities and those who able to successfully train members of their group are usually given cash and non-cash incentives. What do you think then? Have you chosen which network marketing compensation plan is ideal for you?

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