What is a Binary Compensation Plan? This type of compensation plan pays its distributors based on a fixed percentage of the total amount of sales. Traditionally, binaries pay a commission to each downline member once a week, though some continue to pay monthly. Binary compensation plans also require distributors to balance downline sales volume between their legs. Asea Pyramid Scheme will earn a plus commission if they can achieve these goals.
Although a binary compensation plan is a great way to make money online, it is not for everyone. It is a unique compensation model that is customizable. There are two types of Binary Plans: the Strong Leg and the Weak Leg. The Strong Leg is where most potential leaders are located. The Strong Leg is where builders are not rewarded for developing leaders, and the fewer leaders develop in Binary Plans the higher the failure rates.
While binary compensation plans are based on volume, they are also highly dependent on the individual sponsor. Because they don’t work by level, a Sponsor can choose where the volume is pushed. The inside leg placement is not recommended, as it will increase payout costs and the likelihood of plan manipulation from the field. As a result, a binary compensation plan is best for people who want to earn money without much experience in a network marketing company.
A binary compensation plan usually has two legs or frontline associates. One leg is the distributor’s payline. The other leg is his or her downline. In the latter leg, the distributor will earn commissions if their downline reaches a certain threshold. If the two legs do not meet, additional volume in that leg will carry over to the next commission payout period. A binary compensation plan can encourage group participation in the organization.
A binary compensation plan can also contain a payout cap. The payout cap protects the company from overpaying distributors. Typically, the payout cap is set at 40-50%. If a distributor’s income exceeds this limit, he or she is considered to have hit the cap, which will lower the commission amount. However, most binary plans have caps that can be reached without exceeding the cap. These limits are typically based on the amount of personal volume that a distributor has made.
When choosing between a binary plan and a multilevel compensation plan, it is important to consider the unique aspects of both types. For instance, a binary compensation plan is more flexible than most other types of compensation plans, and its inherent uncontrollable flexibility can cause it to stack in unilevel and multilevel situations. Despite its flaws, a Binary Compensation Plan can be highly rewarding for salespeople who can effectively manage the risks and rewards of a multilevel business.
A binary compensation plan is an MLM company’s preferred model. The company offers a system that is easy to understand and implement. It limits a distributor’s first-level recruits to two members. After that, a distributor can only have two legs in his organization. The second level will be the distributor’s downline. If a distributor recruits more than two people, he or she is considered to be a “spillover” – the sales volume from the first-level distributors is added to the second level.
Unlike many multi-level marketing companies, a binary compensation plan only offers two spots on its first level. This means that representatives who build a large tree of enrolling members will automatically earn bonuses. It is impossible to balance the two legs and build a high-quality business if one leg is weak. So it’s important to ensure that your sponsoring is strong enough to allow for spillover. Otherwise, you risk being a “spillover” and not achieving the same level.
In MLM, the system is designed to reward active distributors and make it easy for them to recruit more members. In the example above, distributor X introduces two new members on his left and right. Member B is then sponsored by Y. And so on. The new members in his downline are called spillovers. In this model, a member recruits two people on his or her first level and gets a commission on that downline’s sales.
A binary MLM compensation plan is based on the concept of “two legs” instead of three. The new members who are sponsored by the distributor are placed on the left leg of the tree while those introduced by the distributors join the right leg. The process continues until the entire marketplace is targeted. But it’s not quite that easy. To make it easy, there are intelligent MLM software programs that automate many back office functions.
