Your cost of goods is calculated as your acquisition or manufacturing cost. The more frequent question we come across relates to pricing. Most MLM experts agree that you must have adequate margins to pay commissions and to make a profit. Different products and services carry different profit margins. In addition, smaller margins may be satisfactory with high-priced products because there is still room for profit. Most MLM companies are likely to pay total commissions equal to between 30 and 45 percent of the price sold to distributors for resale, or prices for which consumers buy directly from the company. A typical company will try to achieve a minimum 5-7 times markup to allow for commissions, overhead and profit. Typical markup for resale by distributors is 25% of their purchase price. A good place to visit this issue is at the MLM Startup Conference, offered by www.mlmlegal.com, where experts discuss margins, pricing, profit, proformas, and a whole lot more.

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The term “pay to play” is actually a negative term in the direct selling and MLM field. It is used to reference a program which encourages independent distributors to make purchases to qualify for commissions and rank advancement. Obviously, personal use is not unusual in the direct selling industry. However, programs in which distributors are driven to purchase product or service, more by the desire to qualify than by a genuine desire to use the product for personal use, are sometimes referred to as dominated by “pay to play” and this may suggest that the product or service does not stand on its own in the marketplace.

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Visit MLMLegal.com for more information on pyramid schemes and access to books, brochures and videos with all the information you need to know about the direct selling industry.

If you’ve decided that you’re right for network marketing, and that network marketing is right for you then it’s time to go out and find the best MLM company to join. Or, if you’ve already signed up with one, it’s time to make sure it’s worthy of your time and effort.

Choosing the right company is not a matter to take lightly. Due diligence will pay off. Being knowledgeable about the company you represent will help you to determine whether or not you want to join the company. Direct selling can bring you added financial security and many new friendships, but it’s important to be sure that you’re part of a legitimate opportunity.

If you are searching for a direct selling company to join, which you’ll be introducing to your friends and family, your credibility will be on the line. You want to make sure you are representing a company with credibility and with products that stand on their own in the marketplace.

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