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Is Young Living a pyramid scheme?

Is Young Living a pyramid scheme?

Young Living sells essential oils and other health and lifestyle products. The company says that it is a ‘Multi Level Marketing’ plan. However, MLMs share lots of qualities with pyramid schemes so it can be difficult to tell the difference. The US Government’s Federal Trade […]

2018 Jeunesse Income Disclosure Statement

2018 Jeunesse Income Disclosure Statement

Income disclosure statements can help recruits evaluate the Jeunesse business opportunity. This disclosure report is very confusing and leaves out a lot of information. A lot more research is needed to understand what a participant can earn selling Jeunesse. Costs and Expenses The Income Disclosure […]

My Daily Choice aka  Hempworx Income Disclosure Analysis

My Daily Choice aka Hempworx Income Disclosure Analysis

Income disclosure statements can help you to evaluate the Hempworx business opportunity. An income disclosure analysis is just one piece of a big puzzle. 

Costs and Expenses

The My Daily Choice (aka Hempworx) disclosure statement gives a list of expected expenses and the results of a survey. This is useful in looking at what participants look at in terms of profit/loss.

The expenses an Affiliate can be several hundred or thousand dollars annually. You should factor in estimated expenses when projecting potential profits. Such operating expenses could include advertising and promotional expenses, product samples, training, travel, telephone and Internet costs, business equipment, and miscellaneous expenses. Based on a survey conducted by the company in 2018, the average annual expenses an affiliate incurred were $1,608.

My Daily Choice 2018 Income Disclosure

By the company’s own disclosures this leaves a big difference between the average income and the average expenses. Average annual income for all Affiliates was $580.08 and the medium income was $0. Even using the averages, this results in a loss of $1,028.92

Average earnings minus average expenses for people at each rank
Average earnings minus average expenses for people at each commision rank

What does average mean?

The table in the income disclosure shows the maximum, minimum, and average monthly and annual income. However, for each rank, the difference between minimum and maximum is big. Builders earn from $0.40 to more than $3k monthly, with an average of $10.22. There is no information like percentiles, and how many affiliates this data represents. It is impossible to know how many affiliates receive the ‘average’ amount.

To better understand what these numbers mean, let’s look at one possibility. For example, if there are only 2 distributors and one is making the maximum ($3k) and one is making the minimum ($0.40) the “average” would be about $1.5k. In order to get to the average (about $10) with only 1 person making $3k there would need to be ~310 people earning $0.40. This means a lot of people are earning less than average commissions.

The wide ranges make the averages pretty misleading. However, these ranges also help us understand most people are making a lot less than the average.

A bunch of Hempworx and MyDailyChoice products

Who is making money?

98.5% of affiliates are ranks which make on average less than $100 per month. This means these affiliates have average annual earnings significantly less than the average expenses MyDailyChoice (aka Hempworx) reported in the disclosures ($1608). As a result, these affiliates are spending more than they are making. Finally, most affiliates get a lot less. Buidlers and Directors earn less than $30 per month on average. .

A significant group of affiliates get no income at all and that’s not an average. MyDailyChoice reports that more than 24 thousand affiliates made “no income at all” during the year the report covers.

These disclosures include a lot of information about the number of affiliates but the statistics do not include affiliates not eligible to earn downline commissions. This means the statistics are reported for affiliates who have achieved a business volume requirement. It doesn’t say how many people don’t reach this level of success.

Annual versus monthly averages

We discovered that all of the annual averages are 12x the monthly averages. The annual number should not be the monthly number times twelve. People will change ranks throughout the year, leave, and join the program. You can even see this in the “time to each rank” row. This means either the annual average earnings or the monthly average earnings is calculated incorrectly and is not accurate. As a result, it’s not possible to determine which is inaccurate with the data given.

Conclusions

It’s helpful that MyDailyChoice includes information about survey information about average expenses. More accurate information would be based on actual expenses rather than affiliates estimating and saying their expenses in a survey. However, this information helps us to understand that even with these estimates it is very difficult to sell enough with MyDailyChoice  (aka Hempworx) to pay off expenses and earn a profit. On average, very few affiliates are able to earn profits. The disclosures also indicate it takes months or even years to reach the ranks where profit is more likely. Because of this, there may be many unprofitable months or even years for even the most successful affiliates.

Due to the expenses and small percentage of affiliates who make significant earnings, it seems that MyDailyChoice or Hempworx is not a great business opportunity for most people.

OnTheLevel is not affiliated with MyDailyChoice. Please contact us with feedback or corrections any time! We’d love to hear from you.
Sources: https://www.mydailychoice.com/htdocs/MDC_IDS_2018.pdf https://mydailychoice.com/htdocs/CompensationPlan.pdf https://www.mydailychoice.com/corp/opportunity

FTC Guidance: MLM Compensation Structures

FTC Guidance: MLM Compensation Structures

In January of 2018, the FTC released business practice guidance to multi-level marketing companies. As part of this guidance, the FTC described illegal mlm compensation structures. “Pyramid scheme” is another term for this type of illegal MLM. The “unlawful MLM structure” description comes from court […]

It Works! 2016 Income Disclosure Analysis

It Works! 2016 Income Disclosure Analysis

Income disclosure statements help explain how much money It Works pays people enrolled with the company as Distributors. These are released by the company, and don’t tell they whole story. However, they can give some important information to help evaluate the business opportunity. In October […]

Young Living Income Disclosure Statement

Young Living Income Disclosure Statement

Income disclosure statements also known as earnings disclosure statements help to understand the business opportunity selling Young Living. In 2017 Young Living released an income disclosure statement about the commissions and bonuses earned by Young Living members.

Usually, when people think about a good business opportunity, they are thinking about profit. Profit is money earned minus the expenses. The numbers throughout this disclosure don’t take into account any of the costs associated with selling Young Living. To get a better idea of profit we have to subtract any expenses for the year.

Note that the compensation paid to members summarized in this disclosure does not include expenses incurred by members in the operation or promotion of their business, which can vary widely and might include advertising or promotional expenses, product samples, training, rent, travel, telephone and internet costs, and miscellaneous expenses.

2017 Young Living Income Disclosure Statement

This means that if a member is making $0, or a very small amount of money it’s reasonable to assume that they are losing money selling Young Living. This is because their expenses for the above list would exceed their earnings. 

Who is making money?

The disclosure statement makes reference to the vast majority (89.5%) of members who are “preferred customers.” These members have not sponsored anyone. It implies these members are just buying oils, but that isn’t the whole story.

Young Living member “starter kit”

The best news for enrolling members is that choosing between becoming a Preferred Customer or a Business Builder doesn’t have to happen at enrollment! By purchasing a Premium Starter Kit (PSK) and enrolling as a wholesale member, you have 11 of our most popular essential oils to help you get started; your personal journey with Young Living will help you organically find your path as a Preferred Customer or a Business Builder. 

https://www.youngliving.com/en_US/opportunity

This really hides the number of people who are working to build a business (selling and recruiting), but didn’t make money in 2017. Instead, it characterizes them as customers. Anyone who has not sponsored someone falls into this group.

We should not assume that most are customers. In 2016, Young Living did not have this “preferred customer” category and their disclosure looked much different. In the 2016 disclosure, 94% of members made a median of $0, with an average income of $1 (not including expenses). This $0 average included distributors focused on selling products instead of recruiting. This change in categorization aligns with the difference in average earnings.

How about the higher ranks?

The 2017 disclosure statement really only describes those who have successfully enrolled another individual. This accounts for 10.5% of Young Living members. One third of those or 3.5% of all members, get paid a median of $15 per month. The next rank, “star,” or 4.7% of all members and they make a median of $58 per month. Finally, the “senior star” rank has a median monthly income of $198 and makes up a little over 1% of all members.

2017 Income Disclosures – Young Living

We looked at medians because the averages indicate that a smaller number of high-commissions are driving the averages up. Medians are a better indicator of what more people are earning for this rank. 

Business building ranks also have requirements though including a 50-100 personal volume requirement. This corresponds to $50-$100 or more in purchase requirements. Some of the “income” in this report really is earnings on these purchases (not sales). Check out the Young Living compensation plan for more information on the rankings.

The annualized average income is misleading because a distributor’s rank can change over the year, a distributor can join or become inactive during the year. In all of those cases the annual earnings are lower.

Conclusion

Young Living’s characterization of some business builders as “preferred customers” and excluding them from disclosures is misleading and hide the whole story. This income disclosure statement only gives an idea of income for those distributors who have already enrolled someone and does not include costs and expenses. Young Living gives a list of expenses that are important to consider.

% of 2017 Young Living ranks and their median “income”

Looking at the 2017 and 2016 disclosures it’s clear most Young Living distributors do not receive income. This is true even without considering the numerous expenses Young Living describes. By and large, distributors and those working hard to sell Young Living are not profitable.

No affiliation with YoungLiving. Please contact us with corrections or questions.
Source: https://static.youngliving.com/en-US/PDFS/IDSOnlineVersion_PDF_US.pdf

Debt and Multi-level Marketing

Debt and Multi-level Marketing

Stories about participants in MLMs getting into debt are pretty common. We took a look and found lots of information. We learned how common debt is for MLM participants, why people turn to borrowing, and that it’s not a good idea. In a survey of […]

FTC Guidance on Business Opportunity Claims

FTC Guidance on Business Opportunity Claims

In January of 2018, the Federal Trade Commission of the United States released guidance on how multi-level marketing companies and participants should talk about business opportunities. The FTC is one of the government agencies which regulates all kinds of businesses, including multi-level marketing companies. Why […]

Real Costs of Selling Paparazzi

Real Costs of Selling Paparazzi

Costs to Get Started

To get started a new consultant needs to purchase a starter kit. These include marketing materials, 35-200 pieces of jewelry, and “business tools.” The lowest priced kit is $99.

Inventory Costs

The Paparazzi model encourages buying inventory for you to sell. The goal is to sell the purchased inventory at a profit. This is can be risky. What if you can’t sell it?

Paparazzi’s return policy is extremely limited. It only allows returns within 3 days for defects and damage. If a consultant can repair the jewelry isn’t eligible for return. End customers (not consultants) have 10 days to return damaged products. An inventory buyback is available to consultants (for less than the purchase price) but there are many strict rules.

Purchasing lots of inventory upfront is risky. Certainly a better option is to eliminate the need for consultants to purchase inventory up front. Eventually, this is an option for consultants. It is possible to sell jewelry directly through a consultant’s individual website. However, all consultants must buy upfront inventory via a starter pack in order to become a Paparazzi participant.

Maintaining Status as an Active Consultant

You must purchase 50 units of personal volume each month to maintain active status. In order to show up on the website in the consultant finder, to be eligible for commission checks, and other benefits, you must be an active consultant.

Also, Director levels (and up) must meet their “organizational requirements” by personally sponsoring 3+ active consultants. Sponsors may tell consultants to purchase additional inventory. Pressure to buy additional inventory can be confusing and cause inventory loading.

Paparazzi compensation plan - personal volume requirements

Costs of Doing Business

Running a business is expensive. It’s important to look at all of the expenses. Here are a few expenses that can really add up:

  • Tax preparation, money management, accounting
  • Event, event planning, parties, food, drinks, decorations
  • Admission/booth space at fairs, markets, or storefront locations
  • Stuff for selling online (camera, lights, software, backdrops)
  • Shipping, packaging, cards, pens, supplies

Finally, an often overlooked expense the time you spend selling. Though it can be fun, selling Paparazzi takes many hours and is a big investment of your time. A question you should ask yourself: is this the most effective way to spend your time? Is the return on your time enough that you wouldn’t be better of spending time on another job or opportunity? These questions are hard to answer without data on how much sellers earn. To date, the company hasn’t released anything like an earnings disclosure statement.

No affiliation with PaparazziAccessories. Please contact us with corrections, updates, or questions.
Source: https://paparazziaccessories.com/join/

dōTERRA 2017 Earning Disclosure Statement

dōTERRA 2017 Earning Disclosure Statement

No affiliation with dōTERRA. Please contact us with corrections or questions. Source: https://media.doterra.com/us/en/flyers/opportunity-and-earning-disclosure-summary.pdf Income disclosure statements also known as earnings disclosure statements help explain how much money people make selling DoTerra. They also explain which levels make money. The statement doesn’t reference any of the […]