Multi-Level Marketing (MLM) and pyramid schemes suffer from an inherent mathematical flaw. This tool can help you prove this to convince a family member/friend/colleague not to join the latest MLM or pyramid scheme.
If you factor in the number who will never join, then the numbers will be even larger. Don't forget people churn/turnover - see advanced options.
There are some assumptions made in order to make the calculations. However, the sheer numbers should make the mathematical impossibility quite clear.
Multi-level marketing (MLM) is a marketing scheme where the participant/sales person is compensated not only for sales, but also for the sales of the other people that they recruit to join the scheme. These recruits can provide multiple levels of compensation as each recruit can/will recruit even more people and so on. MLM salespeople not only sell the company's products but also encourage others to join the company as a distributor. [1]
See image below which shows the multiple levels for a single individual giving an idea of the structure of an MLM:
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.
[1] See this link for more details
For help and guidance in using this calculator, please see the Multi-Level Marketing/Pyramid Scheme Population Calculator Walk-Through Example and Guide. If you need further help or wish to give feedback, please contact us.
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