MLM Product Point Value

In a Multi-Level Marketing (MLM) company, a point value refers to a numerical value assigned to a product which is used to determine commission payout and bonuses to members. The point value assigned to a product often reflects its perceived value, popularity, or profitability to the company. The amount of commission or bonuses a member receives is often determined by the total number of points they have accumulated through product sales.

How to set the point value?

The point value for a product in an MLM company is typically set by the company itself. The process of setting a point value usually involves considering various factors such as the cost of production, the perceived value of the product to the customer, market demand, and competition. Additionally, the company may also consider their profit margins and the overall goals of their compensation plan when determining the point value of a product.

It is important to note that the point value system is a key component of an MLM company’s compensation plan and can have a significant impact on member motivation and satisfaction.

why some point value is high or low for certain products?

Higher point values are often assigned to products that have a higher profit margin for the company. On the other hand, lower point values may be assigned to products with a lower profit margin.

For example:
Product A, which costs $25 and retails for $100 (with 80 pv), and Product B cost priced at $30 and also selling for $100 (with 70pv).

Despite their different point values and costings, both products yield the same profit when factoring in the compensation plan’s assuming a full payout at 60%.

Product A: $100 – (80pv x 60%) – $25 = $27.00
Product B: $100 – (70pv x 60%) – $30 = $28.00

Thus, despite their disparate point values, both products generate equivalent profits.

Additionally, the company may also consider other factors such as the cost of production, market competition, and the overall goals of their compensation plan when determining the point value of a product. For example, a company may assign a higher point value to a premium product in order to incentivize members to sell more of it, while assigning a lower point value to a lower-end product in order to make it more accessible to customers and increase overall sales.

In summary, the point value assigned to a product in an MLM company is a reflection of its perceived value, popularity, profitability, and the company’s goals and objectives.

As such, companies often consult with their financial advisors to ensure that their point value system is fair, transparent, and in compliance with all applicable laws and regulations.