MLM calculators - The need for a simulator & its necessity!

MLM calculators - The need for a simulator & its necessity!

Nikhil Ravindran
04 Nov, 2019

“It’s always a fancy decision to burn your instincts and come out with flying colors. It was challenging and hard to calculate the profit margin. We need to join the system by choosing a package, then complex commission calculation, etc.

You never understand how much profit you get by means of compensation, etc.It's not easy to calculate a system in a piece of paper or software unless they provide a simulator."

We always need to consult an expert to analyze the financial side. Well, 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 is always obsessed with this marketing model. But unable to find the best source for initial financial assistance. Even the experienced people in the industry faces 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 such vital results without consulting any dedicated experts? Are there any such possibilities?

Yes, there are options apart from finding an expert opinion. The best solution is finding free MLM simulators or MLM calculators. Give the inputs, and simulate the required output!

We will see the importance of a simulator. Also, how it helps direct selling entrepreneurs or an organization with its advantages!

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 they have it’s own unique working rules.

Understanding them all is also a tough call and might need a plan consulting team to get a clear idea! Yet, even after understanding the marketing plan, it’s very much important to know the financial funnel process.

What is this financial drilling funnel process? We will explain in the next section of this article. One must understand such terminologies to know deep about the financial side of a business.

After understanding the plan and its implementation, the next factor one must consider is - "Financial funnel process". 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 usually, 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 structure:

Compensation is the fuel that keeps the distributors attracted to 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 is compensation capping.

The organization can set a capping value to limit the distribution of business volume. It makes 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!

Miscellaneous expenses:

The final stage of the financial side will be setting the extra expenses of a business. Here the applicable taxes, business charges, admin fees, etc. included for finding a final output!

These three stages are to consider on the financial side and known as the ‘financial funnel process’. The financial side of the direct selling business funneled down to three stages.

An MLM calculator is well developed based on this process. It keeps the business team to have a very good idea about the financial side of the business before starting a product business.

MLM calculators - A proper guideline about it!

Considering the above factors, Epixel has developed a useful tool. Here the visitors need to provide the input and the calculator will simulate the output!

At present, calculators are available for three basic plans - Binary plan, matrix plan, and unilevel plan. We will now learn more about each calculator in detail, and the profit after the initial costs.

Binary MLM Calculator:

A binary plan is a popular compensation plan and used by popular direct selling companies. The calculator looks like the below,

Binary Calculator

Like the funnel process mentioned above, three factors took into consideration. These factors used to analyze the business with proper input.

Let us explain the binary plan calculator using an example.

Greg is a business enthusiast and he got interested once he heard about direct selling industry facts & figures. But he was in a dilemma on how to start a direct selling business.

Yet, he managed to find the working and studied the industry very well following the FTC rules. But what about the financial side? What’s the profit in this deal?

I got a free software demo but what about the concerned details like compensations, tax, and much more? Where can I check out the financial elements other than the demo?

Now you may see how we helped Greg with the best available solution, we shared the calculator with him and boom! There you go! He was happy with the results, let’s take a look at the input and the corresponding simulated output!

The production cost for a single unit or a product is set to $35 and he calculated the results for 7 members. After paying the bonuses and other charges, he still manages to get a profit of $355.10.

Greg is too happy with the output and would never have calculated these details manually with ease. It took a few seconds to load the expected result and everything he desired is on the screen. It's like Thanos snapped the finger and half the species on the universe vanished or wiped in thin air!

The simplest way to explain the usage of MLM calculator!

For a profitable business, we recommend a binary plan. It maximizes the distributor efforts! Let’s take a look at the other two plan calculators and understand them!

Matrix MLM Calculator:

Like the binary compensation plan, a matrix plan is also considered as one of the basic plans with wide applicability. Henceforth, the demand for a dedicated simulator availability is high.

Here you go, a proper explanation & the guidance about the matrix plan provided in the next section.

Let’s take a user story to explain this scenario in the simplest way!

Annie owns a casino and business looks dull these days. She wasn’t happy with the present situation. So she decided to make improve marketing awareness. She was planning to provide customers with a new game with an attractive cash prize for the winners.

Her close friend Adam works for a direct selling company. And he gave her advice to implement a direct selling plan for her new idea. She found it amazing and made up the mind to make a try. The idea was successfully implemented and people began to become aware of the casino!

Annie got anxious, however, she made an impromptu decision and like to make things well organized. Adam with his experience in the industry suggested a plan simulator. He suggests it provides a quick idea about the probability of expenditure and its output!

He had heard that a matrix plan is the best compensation plan for this type of gaming business. Lots and lots of people find it attractive and join the business network. Adam shared the plan simulator website link - https://www.epixelmlmsoftware.com/matrix-mlm-calculator

Annie with her game idea filled out the details and the profit side looked amazing! The details she provided as input and it’s simulated looks like the below.

Matrix Calculator

The game was more like a lucky draw type and the initial cost is nothing! However, managing it manually was a difficult task, hence she has to automate the business.

Usually, a basic package is far enough for the managing part, say, $1500 for the package and it’s more like a long-term investment.

From the simulated output, the profit after finding 40 members is 3,160 USD. Annie will get an amount of 1,660 USD after deducting the software charges.

Now about the prize for the casino game, Annie is planning to provide free casino tokens to the winners and the draw is set for a particular day of the month. They get to roll the dice in the casino as well as win more tokens if lucky!

As more people join the casino game, the profit starts to race higher. There are no extra charges afterward, just the tokens that worth a good amount of deal. Matrix plan calculator is brilliant enough to analyze the business during every stage of business!

Unilevel MLM Calculator:

Yet another basic plan compensation calculator is the unilevel MLM calculator. Many direct selling companies use this plan.

We’ll explain the details about the calculator with a user story like we explained about the matrix plan.

Tim has been very busy lately with his teaching talent and he wasn’t getting enough penny for the efforts. So, he decided to give a try in digital learning or e-learning.

He has already prepared learning materials for different courses with video tutorials. And he contacts the LMS development team to develop a platform for providing e-courses for e-learners.

He launched his e-learning website with high hopes but things weren’t as pleasant as expected. A few signed up and started learning courses! He wasn’t happy with the results and heard of the opportunities in direct selling.

He studied the industry and come up with a decision to use the existing learners. And let them be an affiliate find more learners using a direct selling program.

For best results and brand awareness, he found the unilevel plan as a suitable compensation program. He would like to know what will be the final output of the program. So he surfed on the internet and came up with a unilevel plan calculator. The results after providing the input look like,

Unilevel Calculator

The information he entered here is basic data. If each learner refers their friends to the system then the profit will be high. Joining fee is the course fee and bonus provided for referring more people into the learning system.

The business profit looks good and getting attention from e-learners is the ultimate aim. With direct selling business, it can be easily achieved! More learners, more satisfaction, more business!

In short, the best way to create a financial statement in advance with proper input is having a plan simulator and things will become easier. Well, a plan simulator is not that easy to work well with your own methods. It does have particular formulae and conditions.

Here to find the desired results, we are using MLM calculators developed by Epixel MLM Software developers.

Benefits of using an MLM calculator

We have already discussed the need for having an MLM calculator. But there are other reasons for having one for your initial or later part of the direct selling business.

  • Manual pre-calculations are no more required
  • Business analysis can be perfectly carried out before starting your own business.
  • If you have any dilemma’s about the bonus or compensation calculators, then provide the input. The simulator does the remaining job.
  • Even in the mid-stages of direct selling business, a calculator can use to check the financial side of future
  • If someone likes to switch between the plans then they can use the availability of the simulator and match between the plans.
  • The probabilities of manual calculation errors are minimal.
  • The complexity of adding new bonus adds upon request to the team who developed the calculators.
  • Most of the advanced calculators are free of usage

It’s considered one of the best tools available. We hope you have understood the usage of an MLM calculator for your direct selling business.

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