Making Money with dōTERRA – Compensation Plan

Making money with dōTERRA

According to the official dōTERRA compensation plan, advocates make profits on the dōTERRA items sold to retail customers or preferred members. Profits are the amount sold over wholesale costs. Additionally, advocates can make money on bonuses paid based on the wholesale purchase volume of the advocates and teams they sponsor.

The compensation plan is based on sponsor bonuses rank level achievements

To participate in the bonus program an advocate must at least:

  • A qualified LRP (Loyalty Rewards Program) order for $100
    • This means purchasing inventory even if you haven’t sold inventory that month.
  • Maintain some number of personally sponsored qualified advocates or customers (at least 3 per “leg”)
    • To be “qualified” each of these customers/advocates must also be purchasing $100 each month
    • Often, this leads to sponsors encouraging advocates and wholesale customers to purchase month after month
  • Total amounts of team or organization volume sales
    • If the team is under the necessary amount, sponsors will encourage advocates to purchase extra inventory that month even if they cannot sell it

 

At higher bonus levels, there are bigger and bigger requirements to get the bonuses. It becomes harder to continue getting the bonuses each month, and most of the bonuses are based on sponsorship and team building.

An extremely small number of people (almost no one) will get to the highest bonus levels (leadership). People at the highest bones levels make a lot of money. dōTERRA’s own disclosures show that these top earners make up less than 0.5% of the members.

As a matter of fact, dōTERRA only paid bonuses to 25% of members. Most advocates didn’t make any commissions at all.

https://www.doterra.com/US/en/policy-manual-compensation-plan

http://media.doterra.com/us/en/flyers/opportunity-and-earning-disclosure-summary.pdf

 

Consider the following questions:

  • Is your sponsor pressuring you to make purchases you can’t afford?
  • Have you reviewed the dōTERRA disclosures as well as the compensation plan?
  • Are you comfortable with the required investments, risks, and returns you’ve had with dōTERRA? (Ask this question weekly)
  • Are customers ready to buy the products that you’ve purchased wholesale? Can you afford it if no one purchases those products? (Ask these questions with each purchase)

 

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Who’s Making Money With LuLaRoe?

Who is getting paid and how? Details!

Consultants (bottom level) pay up front costs to sell products and get initial inventory. They then try to sell that inventory (and more) to get back the initial money they spent, and make more. They make less money if the products sell for less money.

Sponsors (next level) are eligible to make up to 5% of the orders by the consultants they sponsor (the consultants they recruited to sell Lularoe), BUT in order to receive the bonus sponsors must purchase 175 pieces during the month for which that bonus is calculated.

Most people are at these two levels

LuLaRoe provides an income disclosure statement[1] which shows the percentage of consultants at the different levels in the company (see pie chart). Using this we can start to get a handle on the number of people rising to higher ranks. Reportedly LuLaRoe added around 33,000 consultants in a year[2]. This would mean we could estimate around 6 would be mentors, and less than 200 would be trainers.

And many more complicated levels At each level higher the compensation gets more complicated. Each higher level is even more difficult to reach, requires even more inventory purchase by consultants in the downlines, and as we know from the disclosures very few consultants reach those levels. However, it’s at these highest levels where the biggest bonuses are paid.

trainer pyramid

Digging into the Income Disclosure Statement

The income disclosure statement from LuLaRoe’s website tells us a bit more about bonuses. However it only tells part of the story. This statement does not include any information about earnings or losses based on selling the products. It also doesn’t account for any expenses. Therefore, while these are called bonuses, really consultants could earn a bonus but still end up losing money in the end because of expenses or unsold inventory.

Most people earn no bonuses

This means they most rely on the sale of the product to earn back the money they have spent to purchase inventory, cover expenses, etc. This can be difficult because of a variety of factors and can result in consultants ultimately losing money.

Bonus structure encourages buying and stockpiling

In order for everyone involved at the various levels to make more money, everyone — consultants, trainers, and coaches need to buy more wholesale inventory and encourage others to buy more inventory even when the inventory they already have is not selling

Consultants (bottom level) are required to purchase a substantial amount of inventory to get started. Sponsors (next level) must purchase additional inventory to get their bonuses. In order for trainers (higher levels) to earn bonuses on their downline — both trainers AND their downline must buy more wholesale inventory. 

This can lead to people feeling like they should buy more one month in order to get their bonus, thinking they will be able to sell it later. This can lead to a really bad cycle. Too much inventory and a lack of sales leads to debt, a feeling that you must buy to get bonuses and maintain status with the company to get out of debt, only to have it start again next month.

LuLaRoe doesn’t publish it’s compensation plan on it’s website, but it is available from LuLaRoe consultants who will share it as part of recruitment. Here are two examples:
lulashoppe.com/lularoe-compensation-plan
llrteamuplift.com/lularoe-compensation-plan

See Also: Is LuLaRoe a Pyramid Scheme? 

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