MLM/Pyramid Scheme Population Calculator Walk-Through Example and Guide

MLM Pyramid Scheme

This guide will help you use our MLM/Pyramid Scheme Population Calculator. You should find this tool useful in exposing the fallacy and absurdity of Multi-Level Marketing and pyramid schemes. In particular, it may be useful to protect our loved ones from these fraudulent and unethical schemes. Let us know if you have any feedback or suggestions.

Multi-Level Marketing is a marketing scheme where the participant is rewarded not only for their own sales, but also for the sales of the other people that they recruit to join the scheme (who may/will also recruit others) resulting in multiple levels of commission.

Though there are some technical differences between MLM and pyramid schemes, both are similar in many respects, in particular the fact that the only real and primary source of income is to recruit others.

They both suffer from an inherent mathematical flaw. This is a HUGE flaw which makes the entire scheme fraudulent and extremely defective in nature. This tool can help you prove this to convince a family member/friend/colleague not to join the latest MLM or pyramid scheme.

An example

Let's take a fictitious company NMN representative of your typical MLM company. On each level of the scheme, it has 3 recruits under each member. In their compensation plan, they mention rewards for 10 levels, so the assumption is that this is achievable for any single new recruit.

Select the current (estimated) number of levels

Here, you'd select the estimated current number of levels in the MLM or pyramid scheme. Sometimes, this can be difficult to ascertain as MLM companies are notoriously opaque. However, they may sometimes give an indication of the number of members. Say, for example, in our example company NMN, they claim to have approx. 7,000 which (when divided by 3 a number of times) is at the 8th level.

Often, this number will be a lot higher. However, our example is based on a fairly new company to make the figures even more eye-opening.

Choose number of people at each level

As stated in our example, each member has only 3 recruits. Usually, this number is higher and not fixed. In that case, give an estimate or the average number that each participant is expected to recruit.

Select the number of levels for the recruit (optional)

In the compensation plan for NMN, they show rewards and commissions up to 10 levels. This is part of any presentation to recruit new members, therefore the company or its representative is effectively saying that at least one of the new recruits should be able to eventually achieve this level.

How likely is this? This is a key question and will be the deciding factor in determining legitimacy. If it's impossible or practically impossible to achieve, that makes the recruitment process fraudulent and deceptive.

This field is optional. If you leave it blank, we will assume the same number of levels as the scheme has currently reached.

Basic options

With these 3 options for NMN, we now have the following:

Advanced options

These are all optional. If you leave them blank, they'll be ignored or, in the case of the last option, assume the same number as other levels. For now, we'll ignore these and come back to them after we see the results of applying the basic options.


After selecting your options, you're now ready to submit.

When the page is reloaded with the results, you will notice that the Basic Options and Advanced Options are both "hidden". You only need to click either heading to display the form to change your options.

Let's now look at what figures we have. The results of the calculation are split into 2: Current number of people in MLM/Pyramid Scheme and Number of people/population required for potential/new recruit to reach chosen level.

Looking at the current state of the company (the 1st section), it doesn't look too bad (but we'll come back to this later). However, when we look at the 2nd section which looks at what kind of numbers are required for our new recruit to achieve the success promised in the brochure/presentation, the numbers quickly expand beyond any norms, exceeding populations of entire countries.

Remember too, that this is ignoring any of the advanced options which we'll look at next. These numbers are only those who have joined and are still participating in the scheme. The largest companies in the world would pale in comparison if these numbers were ever achieved.

Select the percent rate of people churn/turnover at each level

People churn/turnover (also known as attrition) is the number of people who join and then leave or become inactive. In these kinds of schemes, many people leave after becoming despondent on their failed "investment" and others are roped into joining to take up their place. We call this "people churn" or turnover.

This figure can be as high as 70% and sometimes as high as 100%. Again, this figure can be difficult to obtain because of the lack of transparency from MLM companies. A reasonable figure may be 50%, but to highlight just how absurd these schemes are, we'll choose an artificially low number of 5%. This will apply at each level, so can have a large impact.

Select the average number of people required to recruit one person

This option is important. Not everyone marketed to will join. In fact, the majority do not. Look beyond your warm market and the rate of recruitment can be extremely low. For the sake of argument, we'll say that the number of people required to recruit one person is 5. In reality, this figure will be much higher.

Choose number of people at the first level

One final option. You may have a scheme with only one founder, so more for accuracy or better modelling than anything else, you can set the exact number at the top of the structure.

Let's now look at the result with these additional options to give a more realistic result:

Oops! I guess that means that new recruit of ours isn't going to be achieve that dream lifestyle after all. On a more serious note though, people need to be warned about the dangers and deception of these schemes. Showing actual numbers can be very useful in convincing people of the scam.

If you have any feedback or notice any issues, please get in touch.

And Allâh knows best.

Access the MLM/Pyramid Scheme Population Calculator


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