The Herbalife compensation plan is a stair step breakaway comp plan similar to Amway. When you sign up with Herbalife there are several types of income that are possible: retail, wholesale, royalty and bonuses.
As a Herbalife distributor theoretically you’re able to earn a 25% Retail Profit when you sell Herbalife products. I say theoretically because if you look on eBay you will see products being sold way below Herbalife suggested retail prices.
The first status level in the Herbalife comp plan is a Distributor, this status is followed up by Senior Consultant, Supervisor, World Team, Active World Team, Get Team, Millionaire Team, President’s Team, Chairman’s Club and Founder’s Circle.
Once a Distributor reaches 2500 volume points 2 months in a row or 4000 volume points in a calendar month they then advanced to Supervisor status. As a Supervisor they qualify to earn a 50% Retail Profit, Wholesale Profits and Royalty Income.
As a Herbalife Distributor you have the right to sign up other Distributors to sell the products. Because these people are in your downline their sales volume counts toward your personal sales volume. So the more distributors you have selling the faster you can get to the 2500 in volume 2 months in a row or the 4000 volume in one month to advance to the Supervisor status level.
One of the reasons the Herbalife compensation plan is considered a breakaway plan is because of what happens when the people in your downline advance. Let’s use an example. Let’s say you’re in a Herbalife Supervisor and you have five Distributors under you and each of them with 500 in volume per month. So what happens? Their combined volume qualifies you to earn the full 5% Royalty Income on your downline Supervisors without you even having sell anything yourself.
Let’s say one of those five Distributors takes off and ends up doing 4000 and volume for next month and is a new Supervisor at your same level. So now you can no longer use his volume to help you achieve the 2500 in Personal Volume necessary to earn your Royalty Income because he broke away from your Personal Volume and now he only counts for Organizational Volume. So next month you must replace the Personal Volume you lost if you’re to continue to earn your full Royalty Income.
To advance in status a Supervisor needs to do 10,000 in Personal Volume to achieve World Team. To advance to Get Team the volume requirement is 20,000 Organizational Volume 3 months in a row. As a Get Team member you are now qualified to earn 2% Bonuses on the downline organization, down to the next person earning a Production Bonus.
This is where the next breakaway can happen. Let’s say you’re a Get Team member with 25,000 in Organizational Volume. In this case you would earn $500 in Bonus Income. Let’s complicate this example by having one of your Supervisors who just completed his third month of 20,000 in Organizational Volume and is now qualified to earn Bonuses next month. What happens? Let’s say the volume stays the same… you have 25,000 in Organizational Volume and he has 20,000 in Organizational Volume. He will now earn $400 in Bonuses and you now only earn $100 in Bonus Income. This can happen at any level, Get, Millionaire, President and so on. This clearly illustrates how developing leadership can have a negative impact on you financially in a breakaway compensation model.