How Does the Unilevel
Compensation Plan Work?
The primary feature of a unilevel compensation plan is the payment of a level commission to all qualifying distributors. All distributors are paid the same percentage of commission on their downline sales.
With this plan, everyone is a distributor regardless of performance. There are no ranks.
The plan uses only one commission type, the level commission.
Generally the percentage is 5% of downline sales volume.
With this plan, you can build as wide as you want. It has limited depth though. The depth of the levels varies from company to company, and can be anything from four levels deep.
This limitation in depth encourages distributors to build wide.
The disadvantage of building too wide is that support to new recruits thins out more quickly as sponsors divert their focus to new recruits. So if you are not a go-getter type of person, joining a company using the unilevel plan may be to your disadvantage.
A major advantage of this compensation plan is that it is easy for distributors to explain to their prospects.
You will not find a company using this compensation plan in its purest form these days. Most of what are called unilevel compensation plans are actually a mix of various compensation plans - called hybrid-level plans.
In such instances the unilevel plan serves as the base commission type, and other commission types are added to this base.
Typical additions to a pure unilevel compensation plan are:
- Fast start commission
- Pool bonuses
- Infinity commissions
Once it becomes a hybrid-level plan, it may not be that easy to explain to the next person. This is where most distributors fall short.
There is virtually no limit as to how far a company may structure its hybrid-level compensation plan. Instances of companies giving cars, paid holidays, etc. can be found.
Fast start commission
A fast start commission is paid for a specific amount of product a new distributor sells in the first few months, or as a once off predetermined amount per new recruit.
For example, for household and health products, the fast start commission is usually a percentage of product sold by the new recruit in his/her first few months. This percentange is paid in addition to the unilevel percentage.
On the other hand, for subscription products like insurance, the fast start commission is usually paid as a once off fixed amount per new recruit.
The aim of the fast start commission is to pay a higher sales commission on first new sales of new recruits or the successful signing up of a new client.
If you are strong in selling, the fast start commission might come in handy for you. But if you are not strong in selling, you may consider joining a company that uses a forced matrix compensation plan because the matrix plan has the benefit of spillover.
In addition, a company may set aside a pool of money and divide this among distributors who meet a certain qualification standard. This is referred to as a pool bonus. The percentage of the pool commission is typically very small compared to the level commission.
For example, a company may set aside one percent of turnover every month and divide this among qualifying distributors.
Typicall these would be distributors who are at higher ranks in the organisation.
An infinity commission is a commission paid on all volume in a distributor’s organization up to a point where another distributor in the distributor's organization is the same rank as the distributor.
The structure of a unilevel plan could be one of the contibutors to what makes network marketing attractive to some people. It is particularly suitable for a consumer type of distributor.