Binary compensation plans are characterized by having two legs, and only two legs. This makes them very simple. Most binary comp plans will pay you commissions on your weak leg only — the smaller leg that has less volume. This keeps most people focused on building their weak leg, which is also known as the pay leg in a binary compensation plan.
Sometimes a binary compensation plan will say it pays on both legs up to the balance point. In either case, here is what the structure looks like most of the time:.
This type of plan adds a unilevel or other type of plan in addition to the binary plan. Unfortunately, there are usually many hidden catches built in to the plan in order to qualify for the hybrid portion. Most people will get most of their commission from the binary part. The key advantage of a binary compensation plan is it pays based on volume. If you bring in orders, you get paid on them. There is no automatic cutoff beyond a certain number of levels as is the case in a unilevel plan or a forced matrix plan.
While no plan pays unlimited depth even though some claim to the binary comp plan comes the closest. As more reps claim commission on an order, the commission rate drops. Eventually the payout shrinks to zero — but it goes far deeper than in most other plans. Another key benefit of the binary comp plan is that, in theory, everybody only needs to sponsor 2 distributors. The average person sponsors about 2. Indeed, if everyone sponsors 2, then the plan works perfectly. While numbers are perfect, people unfortunately are not.
The main disadvantage of a binary comp plan is that because it only pays on the weak leg, it tends to favor super recruiters and heavy hitters.
Since binary comp plans only allow 2 legs, anyone sponsored beyond the first 2 people must be placed under other people. This is called spillover. A super recruiter will start building power legs — each one goes straight down with no branching. Everybody knows that you must — absolutely must — be in the power leg to maximize spillover from your upline. If you join a heavy hitter, you are guaranteed to be in a very strong power leg.
If you join an average or above average person, they are building their weak leg in the binary plan, so you will likely not end up in a strong power leg. There are two common variations that some plans use. Here are the two possible catches: The point here is to make sure you completely understand a compensation plan before you start building it. As described earlier, the most important thing to help you succeed is being in the power leg.
To do that, you must join a heavy hitter, super recruiter, or other strong builder. Be sure to tell them who your original sponsor was so they can place you under that person — but in the power leg. Building their weak leg? Even with their drawbacks, binary compensation plans have become very popular. In either case, here is what the structure looks like most of the time: Advantages of Binary Compensation Plans The key advantage of a binary compensation plan is it pays based on volume.
Disadvantages of Binary Compensation Plans The main disadvantage of a binary comp plan is that because it only pays on the weak leg, it tends to favor super recruiters and heavy hitters. To Succeed in a Binary Compensation Plan As described earlier, the most important thing to help you succeed is being in the power leg.More...