“It’s always a fancy decision to burn your instincts and come out with flying colors. It was challenging and hard to know the profit margin after the initial cost, distributor compensations, and similar stuff. We always need to consult an expert to analyze the financial side and it’s a hard task to make a decision from such inferences.”
- by a young direct selling entrepreneur.
A normal or a beginner in the direct selling business must be obsessed with this marketing model but unable to find the best source for initial financial assistance. Even the experienced people in the industry may face difficulty while analyzing business calculations.
Calculations, direct selling business model in its core is full of such complex calculations and it’s an endgame if things go south. How to find these results without consulting any experts? Are there any such possibilities? The best solution is finding free MLM simulators or MLM calculators, give the inputs, and simulate the required output!
We shall see the importance of a MLM simulator and how can it help direct selling companies and entrepreneurs.
MLM Simulator - The need & advantages explained!
As we mentioned above there are many reasons and challenges that made developers come up with a brilliant idea - MLM calculators!
There exist many compensation plans and have it’s own working rules. Understanding them all is also a tough call and might need plan consulting team to get a clear idea! However, even after understanding the working of compensation plan, it’s very much important to know the financial drilling funnel process too. What is this financial drilling funnel process? We will explain in the next section of this article and one must understand about such terminologies to know deep about the financial side of a business.
Financial drilling funnel process is the primary factor to consider after understanding about the plan and its implementation into your product business. The process consists of three stages:
- Package details/Initial cost
- Compensation structure
- Miscellaneous/other expenses
Package details/Initial cost:
The primary concern of every organization will be the initial cost, this introductory detail initializes with the currency which the business operates. The compensations and rest of the money-related factors will be based on the selected currency. Secondly, the joining fee of distributors and finally, the product or service cost.
The package details are purely the organization charges levied from the new distributors as well as the product cost. The financial side of business triggers from this point - the initial step!
Compensation is the fuel that keeps the distributors attracted towards a business, an organization can decide and set the percentage of different bonus & commission values. The compensation structure varies from plan to plan and calculators are effective while making the decision. Apart from setting the compensations, the next factor one can set will be compensation capping.
The organization can set a capping value to limit the distribution of business volume to make sure the distributor efforts are not limited over a day and it spread out regularly. It brings steadiness in business and it’s best for hard performers!
The final stage of the financial side will be setting the extra expenses of a business. Mostly, here the applicable taxes, business charges, admin fees, etc.are included for finding a final output!
These three stages have to be considered on the financial side and this is known as ‘financial drilling funnel process’. The financial side of direct selling business is funneled and drilled down into three stages.
An MLM calculator is well developed based on this process and it keeps the business team to have a very good idea about the financial side of the business before directly starting a product business.
MLM calculators - A proper guidelines about it!
Considering the above factors, Epixel has developed a useful tool where visitors just need to provide the input and calculator will simulate the output!
At present, calculators are available for three basic plans - binary plan, matrix plan, and unilevel plan. We shall now learn more about each calculator in detail, and the profit after the initial costs.
Benefits of using an MLM calculator
We have already discussed the need of having an MLM calculator but there are certainly other reasons for having one for your initial or later part of direct selling business.
- Manual pre-calculations are no more required
- Business analysis can be done even before kick-starting your own business
- If you have any dilemma’s regarding the bonus or compensation calculators just provide the input and the simulator does the remaining job
- Even in the mid-stages of direct selling business, a calculator can be used to check the financial side of future
- If someone likes to switch between the plans then they can utilize the availability of the simulator and match between the plans accurately
- The probabilities of manual calculation errors are minimized
- The complexity of adding new bonus can be added upon request to the team who developed the calculators
- Most of the advanced calculators are absolutely free of usage
It’s considered as one of the best tools available & hope you have understood the usage of an MLM calculator for your direct selling business.