“It’s always a fancy decision to burn your instincts and come out with flying colors. It was challenging and hard to know the profit margin after the initial cost, distributor compensations, and similar stuff. We always need to consult an expert to analyze the financial side and it’s a hard task to make a decision from such inferences.”
- by a young direct selling entrepreneur.
Let’s dive right in.
A normal or a beginner in the direct selling business must be obsessed with this marketing model but unable to find the best source for initial financial assistance. Even the experienced people in the industry may face difficulty while analyzing business calculations.
Calculations, direct selling business model in its core is full of such complex calculations and it’s an endgame if things go south. How to find these results without consulting any experts? Are there any such possibilities? The best solution is finding free MLM simulators or MLM calculators, give the inputs, and simulate the required output!
We shall see the importance of an MLM simulator and how can it help direct selling companies and entrepreneurs.
MLM Simulator - The need & advantages explained!
As we mentioned above there are many reasons and challenges that made developers come up with a brilliant idea - MLM calculators!
There exist many compensation plans and have it’s own working rules. Understanding them all is also a tough call and might need plan consulting team to get a clear idea! However, even after understanding the working of compensation plan, it’s very much important to know the financial drilling funnel process too. What is this financial drilling funnel process? We will explain in the next section of this article and one must understand about such terminologies to know deep about the financial side of a business.
Financial drilling funnel process is the primary factor to consider after understanding about the plan and its implementation into your product business. The process consists of three stages:
- Package details/Initial cost
- Compensation structure
- Miscellaneous/other expenses
Package details/Initial cost:
The primary concern of every organization will be the initial cost, this introductory detail initializes with the currency which the business operates. The compensations and rest of the money-related factors will be based on the selected currency. Secondly, the joining fee of distributors and finally, the product or service cost.
The package details are purely the organization charges levied from the new distributors as well as the product cost. The financial side of business triggers from this point - the initial step!
Compensation structure:
Compensation is the fuel that keeps the distributors attracted towards a business, an organization can decide and set the percentage of different bonus & commission values. The compensation structure varies from plan to plan and calculators are effective while making the decision. Apart from setting the compensations, the next factor one can set will be compensation capping.
The organization can set a capping value to limit the distribution of business volume to make sure the distributor efforts are not limited over a day and it spread out regularly. It brings steadiness in business and it’s best for hard performers!
Miscellaneous expenses:
The final stage of the financial side will be setting the extra expenses of a business. Mostly, here the applicable taxes, business charges, admin fees, etc.are included for finding a final output!
These three stages have to be considered on the financial side and this is known as ‘financial drilling funnel process’. The financial side of direct selling business is funneled and drilled down into three stages.
An MLM calculator is well developed based on this process and it keeps the business team to have a very good idea about the financial side of the business before directly starting a product business.
MLM calculators - A proper guidelines about it!
Considering the above factors, Epixel has developed a useful tool where visitors just need to provide the input and calculator will simulate the output!
At present, calculators are available for three basic plans - binary plan, matrix plan, and unilevel plan. We shall now learn more about each calculator in detail, and the profit after the initial costs.
Binary MLM Calculator:
Many binary MLM companies choose this plan for its simplicity which makes it easier for the distributors to understand the whole compensation. Distributors can use binary compensation calculator to analyze their profits and expenses. The calculator looks like the below,
Just like the funnel process mentioned above, three factors are considered and used to analyze the business with proper input.
Let us explain the binary plan calculator using an example.
Greg is a business enthusiast and he got interested once he heard about direct selling industry facts and figures. But he was in a dilemma on how to start a direct selling business. However, he managed to find the working and studied the industry very well following the FTC rules. But what about the financial side? What’s the profit in this deal? I got a free software demo but what about the concerned details like compensations, tax, and much more? Where can I try it out other than the demo?
Now you may see how we helped Greg with the best available solution, we shared the calculator with him and boom! There you go! He is happy with the results, let’s take a look at the input and the corresponding simulated output!
His production cost for a product is $35 and he calculated the results for 7 members. After paying the bonuses and other charges he still manages to get a profit of $355.10. Greg is too happy with the output and would never have calculated these details manually with such ease. It just took a few seconds to load the expected result and everything he desired is on the screen just like Thanos snapped the finger and half the species on universe vanished or wiped in the air!
The simplest way to explain the usage of MLM calculator!
Binary plan is recommended for a profitable business and an MLM binary software helps to maximize the efforts of the distributor and bring in more profits.
Matrix MLM Calculator:
Just like the binary compensation plan, matrix plan is also considered as one of the basic plans with wide applicability. A Matrix MLM Software brings all the advantages of the matrix plan under one roof. As the applicability of the plan is higher the demand for a dedicated simulator availability is also high. Here you go, a proper explanation & the guidance about the matrix plan is provided in the next section.
Let’s take a user story to explain the scenario in the simplest way!
Annie owns a casino and business looks dull these days. She was thinking to increase awareness and was planning a new game with an attractive cash prize for the winners. Her close friend Adam works for a direct selling company and he gave her advice to implement a direct selling plan for her new idea. She found it amazing and made up the mind to make a try. The idea was successfully implemented and people began to become aware of the casino!
Annie got anxious, however, she made an impromptu decision and like to make things well organized. Adam with his experience in the industry suggested a plan simulator to grab a quick idea about the probability of expenditure and its output!
He had heard that matrix plan is the best compensation plan for this type of gaming business were lots and lots of people find it attractive and join the business network. Adam shared the following plan simulator website link - https://www.epixelmlmsoftware.com/matrix-mlm-calculator
Annie with her game idea carefully filled out the details and the profit side looked amazing! The details she provided as input and it’s simulated looks like the below.
A rough analysis is done and let’s break it down. The game is more like a lucky draw and the initial cost is purely nothing! However, managing it manually is a difficult task, hence need to automate the business. Usually, a basic package is well enough for the managing part, say, $1500 for the package and it’s more like a long-term investment.
From the simulated output, the profit after finding 40 members is 3,160 USD. Annie will get an amount of 1660 USD after deducting the software charges. Now about the prize for the casino game, Annie is planning to provide free casino tokens to the winner and set for a particular day of the month. They get to roll the dice in the casino as well as win more tokens if lucky!
As more people join the casino game, the profit starts to race higher as there are no additional charges afterward just the tokens that are worth a good amount of deal. Matrix plan calculator is brilliant enough to analyze the business during every stage of business!
Unilevel MLM Calculator:
Yet another basic plan compensation calculator is unilevel MLM calculator and is used by many direct selling organizations. We’ll explain the details about the calculator again with a user story.
Tim has been very busy lately with his teaching talent and he wasn’t getting enough penny for the efforts. So, he decided to give a try in digital learning or e-learning. He has already prepared learning materials for different courses with video tutorials and he contacted the LMS development team to have a platform for providing e-courses to online learners.
He launched his e-learning website with high hopes but things weren’t as pleasant as expected. Just a few signed up and started learning courses! He wasn’t happy with the results and heard of the opportunities in direct selling. He studied the industry carefully and come up with a decision to use the existing learners to find more learners using a direct selling program.
For best results and brand awareness, he found the Unilevel marketing plan as a suitable compensation program. He would like to know what will be the final output of the program so he found a unilevel plan calculator integrated into a Unilevel MLM plan software. The results after providing the input look like,
The information he entered here is a basic data and if each learners refer their friends to the system then the profit will be high. Joining fee is the course fee and bonus will be provided for referring a greater number of people into the learning system.
The business profit looks good and getting attention from e-learners is the ultimate aim. With direct selling business, it can be easily achieved! More learners, more satisfaction, more business!
In short, the best way to create a financial statement in advance with proper input is having a plan simulator and things will become easier. Well, a plan simulator is not that easy to work out by your own methods, it does have particular formulae and conditions. Here the MLM calculators provided from Epixel MLM Software developers are used to find the results.
Benefits of using an MLM calculator
We have already discussed the need of having an MLM calculator but there are certainly other reasons for having one for your initial or later part of direct selling business.
- Manual pre-calculations are no more required
- Business analysis can be done even before kick-starting your own business
- If you have any dilemma’s regarding the bonus or compensation calculators just provide the input and the simulator does the remaining job
- Even in the mid-stages of direct selling business, a calculator can be used to check the financial side of future
- If someone likes to switch between the plans then they can utilize the availability of the simulator and match between the plans accurately
- The probabilities of manual calculation errors are minimized
- The complexity of adding new bonus can be added upon request to the team who developed the calculators
- Most of the advanced calculators are absolutely free of usage
It’s considered as one of the best tools available & hope you have understood the usage of an MLM calculator for your direct selling business.
Leave your comment
Fill up and remark your valuable comment.