Is MLM always a scam?

Today I want to discuss with you multi-level-marketing companies which are often also known as pyramid schemes. There are many different opinions about MLM and most of them are not very good. But in my opinion, MLM doesn’t have to be bad.

How does MLM work

In multi-level marketing, you earn money by referring products to customers. This works very similar to affiliate marketing. The difference to affiliate marketing is that you can also earn money by referring new affiliates to the company.

And for every product they are selling to customers you earn some commission. Also if they are referring a new affiliate you earn money for every sale this person makes.

I give you an example so it is easier to understand. You earn a 10% commission for every product you sell. For every product, you referred member is selling you get 8%. And for every member, they have been referring you get 6%. That’s why it called a pyramid scheme.

That’s why it called a pyramid scheme. Because for every product you sell, the member above you will earn money, too.

Advantages of MLM

If you refer new 5 members to the company and they sell a lot of products you earn passive money. In addition, if every one of your affiliates is referring 5 new members you have 25 additional people in your downline earning money for you.

As you can see this can be a very good opportunity to earn passive income. I read an article that says if you work hard around 5 years you can earn more than $10.000 per month. And since your downline is earning money for you, you don’t have to work much and earn money without working.

A MLM scheme can also be very helpful from the perspective of an entrepreneur. If you have a product you need to sell MLM is a very good way to save a lot of distribution costs. On this way, you and your seller will profit from your product.

Disadvantages of MLM

The reason why MLM has a bad reputation is, that there are many MLM scams out there. Especially if they promise to “Get rich quick” they are in most cases scams.

In many cases, you have to pay a fee to become a sale person followed by huge additional costs.

However, there are many MLM companies which are no scam and they sell legitimate products. One example for a legit MLM company is ViralUrl. In this network, you can earn money from every referral you make and every referral your referral is making.

How to detect scams

Sometimes it can be tough to detect a scam. I made the experience that if the company is more interested in referring new members than selling products it is in many cases a scam.

Also, have a look at their product. If they are selling a good product what offers value to the customers you are usually good to go!

You can also search the internet to get more information about the network before accessing one. Google is in most cases a good solution. I would recommend to read more than one review.

Conclusion

As you can see, not every MLM scheme has to be a scam. They can be a huge opportunity to leave your daily 9-5 job and to earn a lot of money. Also, you can earn most of the money passive.

Have you made any experience with MLM schemes? What has been your experience? I would love to hear from you so leave a comment below 🙂