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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.
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Not a Charity/Non-Profit
The company is very upfront about this. However, they explain it as a motivation — women don’t want charity. Then, the company goes on to downplay profits. For all the language about helping and empowering women out of poverty, it is important to note that Trades of Hope is a for-profit company.
You can check out the company’s impact disclosures to learn more about how many artisans worked with the company. The personal stories are super impactful. Notably, there isn’t any concrete information about how much actual money gets into the hands of the artisans. It’s hard to tell what to think about this information without more context.
Condescending Savior Tone
In many places, the marketing is really unacceptable. Full stop.
For example, they play up the white savior angle.
“Over all, women in developing countries do not want charity. They want an opportunity. They want to feel the same pride we feel when they are able to take care of their families. And without an American women selling these products and raising awareness, our artisans would not have a sustainable income.”https://mytradesofhope.com
If you or someone you know is considering selling Trades of Hope, be sure to read about these cultural phenomena and understand the damage this thinking does.
They sometimes refer to the artisan women from other countries in ways that are unbelievable.
“…in their natural environment.” Nope. Nope. Nope. Who talks like that about human beings?!
These are not respectful ways to talk about global partners in business. There’s no way around this, and no excuse for it.
Fair Trade… Federation?
There are a number of Fair Trade organizations that companies can be certified by or be members of. They all have different requirements, values, and goals. Trades of Hope is a member of the Fair Trade Federation. This shouldn’t be confused with other the Fair Trade Certification.
Some of America’s most popular and respected brands are Fair Trade Certified. Companies like, Patagonia, Athleta, and Kashi, have been Fair Trade Certified by Fair Trade USA. Trades of Hope and their products do not have this certification.
Trades of Hope are instead members of the Fair Trade Federation. This organization is not affiliated with Fair Trade USA. Their values, requirements, and accountability are different. For example, Fair Trade Federation uses the same standards for food goods as well as handicrafts while Fair Trade Certification is specific to these different types. Fair Trade Federation is a membership rather than a certification. The requirements to join the Fair Trade Federation do not appear to be nearly as rigorous as those to be Fair Trade Certified.
Trades of Hope is a multi-level marketing company part of the Direct Sales Association. The FTC commissioned a while ago that concluded more than 90% of people will lose money participating in MLM companies. That’s something to keep in mind when considering joining a company with a multi-level or network sales business model.
Another thing that’s really striking about Trades of Hope is that you cannot see the compensation plan online without joining. This is a red flag. It’s important to be able to evaluate the plan to be able to estimate costs, expenses, revenues, and determine if the opportunity is right for you.
Based on the compensation plans we found, in order to reach the higher ranks with Trades of Hope you must recruit others to sell the products. This also requires those recruits to purchase starter packs and meet personal volume requirements. Sales commissions are “Compassionate Entrepreneurs” at lower ranks.
It is possible to earn money selling Trades of Hope. However, it is extremely difficult and unlikely to replace career level income. In order to comply with FTC regulations Trades of Hope should share how likely it is that you could earn “full time income” if someone is telling you that you can earn that much.
Recruiting tactics like talking about free vacations and quitting your job are scams. Ask the CE for real data to back up their claim.
Succeeding in Network Marketing is super challenging (99% of new members lose money*). We’re excited about any book that might have insight on how to actually make it work. We checked out this book that promises to help. We highly recommend using your local library […]
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Yes! Stella and Dot is a multi-level marketing company.
We first researched Stella & Dot back in 2016. They hadn’t yet launched the sister brands Keep and Ever. Back then, their compensation plan was more easily accessible and all around the company was a lot more transparent. Today, it’s a little tricky to get clear answers about the company.
It’s harder and harder to tell that Stella & Dot actually is a Multi-Level Marketing company. They’ve coined new terms including: social selling and peer-to-peer sales. They’ve replaced the traditional tupperware and makeup “parties” with “trunk shows” and “events.” However, at the core Stella & Dot is still very much multi-level marketing.
Stylists sell jewelry at trunk shows (parties) and online via their personal websites. In order to become a Stylist you must purchase a starter kit. There are volume requirements, uplines, teams, and bonuses. Stylists absolutely must recruit other folks to join Stella & Dot to reach the higher income levels. Finally, there are volume quotas to maintain ranks and eligibility. In all of these ways Stella & Dot is a pretty traditional MLM.
Also, Stella and Dot is a member of the Direct Sales Association. A “national trade organization” and lobbying group that represents most (if not all) of the biggest players in multi-level marketing, network selling, and direct sales.
Check out our analysis of their Income Disclosure Statement.
No affiliation with Stella & Dot. Please contact us with corrections, updates, or additional information. This post was prompted by a reader question! Send us with your own questions as a comment here or on twitter!
Analysis of the 2017 Income Disclosure Statement “The earnings represented herein are not necessarily representative of the income, if any, that an Independent Stylist can or will earn. There is no guarantee that any Independent Stylist will earn any income.” Stella & Dot 2017 Income […]