Retail Markup
The simplest method of generating an income is to buy products from Amway at their base wholesale price, add a markup, and sell them directly to a consumer. In general, Amway Business Owners (ABO) have the right to sell Amway-sourced products at whichever price they choose. The recommended markup on Amway manufactured products varies from 20-35%. In many markets Amway also makes available products from third-party manufacturers. There are a number of exceptions to this, including XS Energy drinks and Emma Page Jewellery, Omaha Steaks and hundreds more.
Volume rebates
In most product based businesses, the more volume you buy from your supplier, the cheaper per-unit price you receive. This means when you resell the product your potential markup (and thus profit) is higher. The same applies for Amway, however it occurs in a slightly different manner. and yoIn traditional distribution you would be required to purchase large inventories up-front and you would receive an upfront discount on the purchase price. With Amway, all authorized representatives make their initial purchase at the same price, no matter the volume. At the end of the month the total volume of products purchased through that ABO is added up, and the volume discount paid as a rebate, typically on or about the 13th of the following month. In addition, the volume is based on all products purchased, so you don't need to buy large inventory of one product to receive a discount, as is often the case in traditional distribution.
Because of the international nature of the business, the wide variety of products available, and the differing amounts of markup available to be shared on Amway manufactured products compared to third-party manufactured products, volume is calculated using a points system rather than per unit or purchasing cost. The scales varies slightly between different markets (see below). Every product is allocated a Point Value (PV) and a Business Volume (BV). The PV is used to calculate the rebate percentage earned. For most core line products (ie those manufactured by Amway), the BV is usually close to the wholesale price of the product less any sales tax. The rebate paid is calculated by multiplying the PV rebate percentage by the total BV.
Increasing Sales Volume
An ABO's sales volume consists of three components - products purchased for personal use, products sold at retail to personal clients, and products sold at wholesale to other ABOs whom they introduce to the business ("sponsor"). Increasing any of these three areas increases an ABOs total sales volume. Products sold through sponsored ABOs result in smaller profit margins than products sold directly to consumers, however the increased sales volume would normally make up for the smaller margins. This is analogous to a retail store situation where the store owner may employee additional sales people (an expense) in the hope that the increase in sales volume will offset this and lead to overall greater profits. An ABO will invest time in finding and training new ABOs as well as retail clients because the new ABOs will eventually be able to create sales volume without their sponsor's input.
North American Rebate Scale
| PV | Rebate (% of BV) |
|---|---|
| 7,500+ | 25% |
| 6,000 | 23% |
| 4,000 | 21% |
| 2,500 | 18% |
| 1,500 | 15% |
| 1,000 | 12% |
| 600 | 9% |
| 300 | 6% |
| 100 | 3% |
This to me is the really cool part. My family buys shampoo, toothpaste, trash bags, and other household products, my relatives buy many products online, so I spend about $150.00 bucks a month on household stuff, things I used to buy at Wal-Mart, my family and friends do the same thing and get paid on about $1500.00. This doesn't include the 8 customers for Double X I have.
4% leadership bonus
In traditional distribution there can come a point where one of your wholesale customers is purchasing so much volume than they'd be better of dealing directly with the wholesaler or manufacturer themselves. At this point you would generally lose them as a customer, and thus lose the associated profit. By contrast, Amway incentivises people help their downline reach this point. Historically, when a downline reached the top of the volume rebate scale, they would "break away" from their sponsoring distributor and begin dealing directly with Amway - become a "direct distributor". Rather than the sponsoring IBO losing income however, Amway would continue to pay them a 4% leadership bonus on the volume of sales generated by the "break-away" group. Even though today all IBOs may deal directly with Amway, the same principle applies. To qualify for the full 4% bonus, an upline IBO needs to have a certain amount of volume outside of the breakaway leg (typically set around the 12%-15% volume level) or at least 2 breakaway legs. If an IBO does not have this qualifying volume than some or all of the bonus will be passed upline to the first IBO who qualifies.
There are many other reward levels, and many other reasons to take a look at this opportunity. It is not for everyone, if you are looking to make some money on a part time basis, or ready to start your own company and go full time, we have something for you. If you are interested in talking more call me at (803)289-8190 or e-mail me at gandymnsc@yahoo.com
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