Compensations in binary MLM plan

Compensations in binary MLM plan

Updated on 26 October 2021
3 min read

More about Binary MLM Plan

Binary MLM Plan, a network marketing compensation plan is the simplest, most popular and one of the most successful MLM plan launched by many Multi-Level Marketing Software companies. As the name implies it is characterized by having two legs, where new joiners are introduced into Binary Genealogy Tree structure, i.e. one on left and another on right sub-tree. Binary MLM Software from Epixel offers the best platform for successfully managing an MLM network.


In each sub-tree of a binary scheme, there are only two legs, the left, and the right. The two legs can grow on the inside and the outside referred to as the inside leg or profit leg and the outside leg or power leg. The power leg benefits from an automatic placement of new distributors when recruited not only from the current recruiter as well as from the previous recruiters (upline). This ‘spillover’ to available spaces in downline's power leg allows for the profits from gaining a new member to be shared between uplines, regardless of who recruited them. In contrast in profit leg, there will be no ‘spillover’ because profit leg will only grow with the individually sponsored down-lines.


The concept of every Binary MLM plan is based on two distinct sub-trees - a left sub-tree and a right sub-tree. In binary compensation plan commissions pay on the smaller leg (sub-tree) that has less volume, in other words, which sub-trees makes the least amount of money is termed ‘pay leg’ or ‘weak leg’. On a concept known as a balanced volume which is typically used in MLM Binary Compensation Plans, the challenge is that of balancing the two legs such that the maximum possible commission is paid out. Thus, recruiters decide to minimize the difference between the more profitable and the ‘pay leg’ through "balancing the legs" by introducing new distributors into ‘pay legs’. Since the plan pays on the pay leg, if required balance is not met all the points accumulated and the commission is lost, a process is known as ‘flushing’.

Commission Calculation and Payments

In the binary plan, commission calculations are carried out based on business volume points, not levels. The commission is based on a formula which business volume points in the left leg matching up with business volume points in the right leg. The payable commission is equal to a percentage of the lesser of the two sales volumes. Such complex commission calculations can be performed using the advanced MLM commission software that can incorporate configuration modules for customized commissions and bonuses. If you wish to analyze the strengths and flaws of your binary compensation structure, a binary MLM calculator can help you do just that.

Benefits of Binary MLM Compensation

There are several Benefits associated with the binary compensation plan.

  • The plan easy to understand for new MLM joiners and easy to explain by the binary MLM companies for their customers or members.
  • Rapid expansion is available as everybody only needs to sponsor 2 distributors.
  • Spillover makes the binary plan larger without much effort.
  • Unlimited depth allows building deep and earning a lot of money as binary plan ignores levels.
  • The plan is entirely volume-based pay structure. In a binary plan, distributors who bring orders are guaranteed to be paid more for them which says few distributors who can generate big volumes and thus still make big money.
  • The plan fosters teamwork. Inherent need to balance the business volume help them to strengthen their sub-trees thereby building a team unity and cooperative energy which plays an important role in success.

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