Top 3 Reasons Why MLM Products Are Expensive

In addition to complaining about never making any money in mlm, people often question why the products are so expensive, even at “wholesale”.

Because the products are expensive, it raises an automatic barrier to retail sales and people get the idea that the company is a pyramid because very few people are selling retail. That’s a whole other subject!

Here are the top 3 reasons (in my experience of over 40 years in MLM) why the products are expensive.

• Customer Base
• Quality
• Commissions

Small Customer Base

Being honest, every distributor in an MLM is a customer of the MLM company. Let’s have a look at some companies and their distributor bases:

Amway       3 million

Herbalife     3 million

Mary Kay   2.4 million

Melaleuca   150,000

Young Living        1.5 million

This covers the top 5 or so MLM’s in the USA. You may say there are millions in Amway, but compared to the population, it is a small fraction. This is the number of distributors and not necessarily the amount of distributors that buy on a regular basis.

Just for comparison, in 2014-2015, 40 million USA households used Tide Detergent. Even if all 3 million Amway people purchased detergent you cannot compete with the scale of 40 million. This leaves over 260 million for the other detergent makers!

I don’t think anyone could argue the point if I sold 40 million of anything vs 3 million, I could make it cheaper, sell it cheaper, and still make profit.

Quality

This is always an interesting subject as quality is in the eye of the beholder. In recent years, environmentally friendly products have hit the market and they are usually priced higher. Amway had that going on long before the rest of the world! Their SA-8 laundry detergent had no phosphates long before the rest decided it was cool.

The essential oil companies use quality the most. Young Living has their own farms and their own processes for making their oils. I’ve been using oils for many years and use Young Living, Doterra, and Melaleuca. I won’t get into all the crap between those three, but I can tell you they are all far superior to generic brands

Quality is a personal thing for sure. Some people love the $1 coffee at the 7-11 but others will pay $5.50 for a Starbucks. Go figure!

Commissions

Here is the dirty word. You have to pay all those commission in the pyramid! I get a kick out of some bloggers and Youtubers that say the people at the top are making money off the “backs” of the people at the bottom!

Personal story time. I was in court for a child support matter long time ago. I asked several friends who happened to be in Amway with me to testify. My ex’s lawyer got my one friend on the stand and painted a picture of how he would be not telling the truth because he was my “upline” in Amway. He went through this whole scenario and finally asked how much money he made “off of me” last year. My friend’s response was “about $3 bucks”. The lawyers face was priceless.

You see, it’s not like they make hundreds of dollars from one person. The distributor that has a large group started that group and helped attract customers that buy product. Why shouldn’t they get paid?

The company that sells Tide spend millions on advertising to get their customers. If I use Tide and tell my friend, I get nothing. I did their advertising for them.

The MLM company chooses to spend their advertising dollars on the people doing the work. I don’t see how that is wrong.

To this day, I still use Amway SA-8. Why? Because I like it and I hate the smell of other detergents. Personal preference and I am willing to pay the price.

The Unattainable Triangle

In marketing, there is a concept called the unattainable triangle. Picture below

The triangle has three points. Quality, Service, and price.

The idea is that you can only pick 2.

If you want high quality and good service, you cannot have low price

If you want low price and good service, you cannot have high quality

And so on. You get the point. Everything comes at a cost.

The MLM truth:

If you think the products are expensive – don’t buy them

If you think it’s a scam – don’t join

Cheers

Steve