Beauty Counter Income Disclosure Analysis
Beauty Counter is a multi-level marketing company which sells makeup and skin care. Consultants can sell via parties, one-on-one sales, or online. Beauty Counter also has retail stores in three cities which compete with Beauty Counter consultants.
Below, we analyze the income disclosure statement from Beauty Counter to learn more about the opportunity.
Costs and Expenses
Beauty Counter has a required starter kit for $98. This includes a few business items and two products. From there, consultants need to purchase between $285 and $760 dollars for a starter set of products. Each year, there is an additional $50 business builder renewal fee that is charged automatically.
In order to stay active and be eligible for rewards consultants must buy or sell 1,200 in Qualifying Volume every six months.
The income disclosure statement does not reflect any costs or business expenses. Generally, when we think of income or earnings we think of it in the traditional sense of take-home pay. The disclosure statement discusses what Beauty Counter pays in checks to consultants. However, in order to calculate take-home pay or profit we’d need to know consultant costs and expenses. Profit is revenue minus expenses.
Who is getting paid?
The majority of participants discussed in the income disclosure are registered consultants, active consultants, and senior consultants. Together they make up over 86% of the participants whose payments are in the disclosure.
This does not include consultants who didn’t meet the requirement to be included in ‘registered.’ Registered consultant participants had a personal order or a sale in 2017. We have no idea how many participants were received nothing – they are categorized as ‘members’ by the compensation plan and are not captured here.
Most participants are consultants. Let’s look at the earnings per rank to help understand which ranks are earning the bulk of the money.
What this shows is that consultants don’t make get paid very much of the cash. The bulk of payouts from Beauty Counter go to the higher levels – which make up less than 14% of the participants.
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 $0.01 to more than $600 monthly, with an average of $80. Without more information from Beauty Counter, we can’t know how many affiliates receive the ‘average’ amount.
To better understand what this average mean, let’s look at one possibility. If there are only 2 “consultants” and one is making the maximum ($614) and one is making the minimum ($0.01) the “average” would be about $307. In order to get to the average with only one person making the maximum, there would need to be at least seven people earning $0.01. This means a lot of people are earning less than average commissions.
The wide ranges make the averages pretty misleading, making it look like a participant can earn a lot. These ranges help us understand most people are making a lot less than the average.
“Annual income statistics are determined by adding the average incomes for each Title in each calendar month of the year.” This means that if a consultant changes rank — the annual income does not reflect the consultant’s actual average. The data implies that consultant remains at the same rank the entire year.
This disclosure does not say how long it takes to reach various ranks, and the amount of time that consultants stay in those ranks. It’s important to note that Beauty Counter certainly has this data. They could provide more accurate averages, that reflect actual consultant’s income.
Beauty Counter’s income disclosure statement doesn’t quite tell the whole story. It would be useful to have information like the actual average payments to consultants. To get a better idea of take-home pay it’s necessary to understand actual consultant expenses and costs. These costs don’t just include the product and startup fees – but also costs associated with parties, travel, business expenses and more. Similar companies have disclosed these types of expenses to be in the thousands of dollars.
When learning more about the earning potential of the Beauty Counter opportunity be sure to ask about real expenses data, how long it takes to reach each rank, and other important missing information. The disclosure statement doesn’t quite tell the whole story.