Network Marketing Pyramid Scheme Page 2

Recognizing Pyramid Schemes Continued

Is Network Marketing a Pyramid Scheme?

Network Marketing Business Model Pyramid Scheme

Next we will look at a typical network marketing business model. Unlike the standard business model, when people first see how a Network Marketing compensation plan is defined, they do not know and understand how it works. These unknowns instigate feelings of fear and uncertainty, coupled with the shape of the organization and thus we are thinking pyramid schemes. So let's compare the image below to the standard business model:

For this we start with the most important person, you. Do not think about who is above you or how they will factor into your business at this moment. We are going to keep this very simple and focus on how the network marketing business model effects you.

Below you will be your frontline distributors / associates. These will be the individuals that you personally sponsor. They in turn will start to sponsor individuals just as you have. However when they sponsor a new distributor / associate it is their frontline distributor / associate and your downline. As there are more people below you this will benefit you from leverage and duplication.

As you progress down each level there will be more people in each level. Similar to that of the standard business model, the lower levels with the larger amounts of people will generate income for the upper levels. The key is, that anyone can be at the upper level. There is no restrictions and no limitations to your income.

When thinking of a network marketing business model, you must eliminate the thoughts of promotions to progress up the levels of the organization. When an individual wants to earn more money, they simply sponsor more people and build depth into their group. Harnessing the efforts of others means that you can accomplish more and therefore earn more.

Shape of the Organization

The example that was shown above was just that of a standard business model compared to a network marketing business model. Almost every organization that exists today, has this similar shape.

Everything from governments, to corporations, to churches even to sports franchises have this pyramid shape. There is always one position at the top and with more people below. If the simple shape to the organization makes this illegal, this would make every organization on the planet illegal. When said in those terms it makes the question of "Is Network Marketing a Pyramid Scheme" seem ridiculous.

For more information on the definition of a Pyramid Scheme and how to spot one, you can read about it here.

For more information on Network Marketing, you can select one the following: The History of Network Marketing, What is Network Marketing, Why Network Marketing.

*Examples in these materials are not to be interpreted as a promise or guarantee of earnings. Earning potential is entirely dependant on the person using the products, ideas, techniques and efforts put forth on Engineered Lifestyles. For our full earnings disclaimer click here.

Personal Economics

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This is why you must inform yourself of the possibilities which exist all around you to achieve your desired lifestyle. Information is key, then taking action is vital to your success.

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