How Network Marketing Companies Use Front End Breaking For Huge Profits!

“Breakage” is money that stays with the MLM company that could otherwise have been given to distributors in the field. Why should companies take care of distributors and give as much money as possible? Because MLM companies are nothing without their distributors. Keep that in mind as you read this.

In the world of network marketing, there is the initial break and the final break or what is commonly known as a compensation plan break. For this article, let’s take a look at the front break. Front breaking is actually built into the business model and that’s how it works…

There are thousands of MLM companies in all kinds of industries. Most of them are in the health and wellness industry and sell consumable products like shampoos and creams, vitamins, weight loss formulas and super jungle juices etc etc etc.

Most of these companies say that they produce their own products. But that is only a half truth. The whole truth is that there are nine or ten manufacturing companies that make all the products for the thousands of network marketing companies in the field of health and wellness. Some companies make their own products, but that is very rare. However, companies specify their own special formula for each of the products manufactured.

Now let’s say an MLM company hires one of these manufacturing companies to produce a juice for them. And let’s say the cost to the company of buying the product from the manufacturer is two dollars ($2).

Normally, the company would sell that product to its distributors for, say, fifteen dollars ($15). All distributors are fairly compensated according to the pay plan and everyone is happy.

But let’s just say that this company and its highly successful distributors are a bit greedy and want to take a little more money from distributors who work hard to build their business in the field.

So what they do is set up a marketing company or a marketing division that buys the juice from the manufacturer at the same wholesale price of two dollars ($2). They then sell the juice to the real MLM company for four dollars ($4).

They have just created a hundred percent (100%) profit, which is two dollars ($2), even before the product reaches the hands of the distributors. And now the company and the hot shot distributor can split the profits 50-50 and can laugh all the way to the bank.

The MLM company still sells the juice to its distributors for $15, so there is now two dollars ($2) less margin. That means the company pays less in compensation to the field because that commission has been stolen by breaking what is built into the business model.

This is how frontal breakout works and there are MLM companies that do this.

How much money can a company make from this form of breakout? Well, if a business moves about 250,000 bottles of juice per month, that means the main distributor and business owners who run this breakout are making an additional $500,000 in profit each month. That’s $500,000 that hasn’t been paid to distributors who work hard in the field.