Ha! I was listening to yesterday's Dave Ramsey podcast; a guy called in to say that his wife was grossing $200k+ from selling Lularoe and he was wondering if it was a good idea for him to quit his $50k/year job as a mechanic to help her with her business.
My eyebrows climbed up my forehead. Run! Run away from Lularoe!!
Dave expressed, you guessed it, guarded skepticism, led the guy through some standard questioning, and then at the end, finally said--that's a multi-level marketing scheme, I wouldn't quit my day job yet. You said how much she's grossing--what's her net profit? Sounds like you guys are caught up in hype.
The guy started stammering about how it's not really an MLM and Dave shut him down. Just admit it! It's an MLM.
Aaaand that's why I'm an english teacher and Dave Ramsey is a radio personality. I wouldn't even be able to entertain the call for three seconds.
I saw a breakdown video of how the commissions worked for LLR yesterday..
In addition to your own 100 - 150 - 175 - 250 minimum item purchase per month (the lower level of 100 units are the numbers if you have 3 direct downlines buying their minimums), that you should be selling and making profit on, 12% of your gross sales (or 24% of the money you pay for inventory) goes to various upline commissions.
I estimate that consultant make 28% margin on their own sales, assuming discarded inventory and costs for returning inventory that does not sell. The last 60% would go to purchase of goods and company and consultant overhead expenses.
How much does a consultant make.?
The DR caller that grosses sales over $200k per year (which means selling over 500 units per month personally) would be netting about $4600/month (at 28% margin)
--> But I doubt it, more statistically likely this $200k/yr gross retail is across the entire 12 person downline, so would be netting only $1150 per month... as some of the sales are only at 5% and 1% upline commissions.
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MATH rough estimates and general assumptions (worst case /conservative)
Wholesale prices are $13-$30 per unit. Advertised retail is 2x wholesale, and suggested retail prices items are actually sold for are a bit less. Assume that a person with an active downline still needs to buy 150 units per month x $15 each = $2250 per month plus $25 shipping = $2275 out of pocket, minimum.
They sell 50 units at advertised price, 50 units at markdown ($22), 25 are returned at 80% wholesale minus shipping costs and 25 units are given away because you opened the package, they are ugly and did not sell. = $2885 per month.
Net is $635/month of personal sales, plus your 5% direct downline $450, plus your second level downlines at 1%:$300
So, a
person with 12 people under them of which half pull in their minimums, and directly selling over 100 units per month personally, would earn: $1385/month, conservatively