The 2 up MLM pay plan (also known as the Australian 2-up) can be quite lucrative, but it comes at a price. This kind of compensation model requires such a big investment, that it is really important that you fully understand what it will take to be successful before you take that leap and join one of these companies.

Why is it called a “2-up” MLM?
The 2-up MLM is unique in that it is not truly multi-level marketing. These are direct selling companies that use a network marketing model. One person makes one commission from one sale. The network marketing piece comes in when you look at who makes that commission. When you join one of these companies you need to make usually five training sales before you are qualified to earn commissions. If you buy the product yourself it usually counts as three of your training sales, mean you only have to make two more sales to other people to qualify (thus passing two commissions up. These initial two (or five) sales commissions go directly to the person who trained you, the person who brought you into the company.

The products are usually very high ticket items, and the first product is almost always an information product. The high price of the product (often between $1500 and $2000) means that there is a very generous commission, usually around $1000. And this is the most attractive part of the 2-up MLM. You can make $1000 on a single sale. And as you get good at sales, these customers may move on to buy the higher-priced products (usually 3 to 5 day conferences) earning you many thousands more per customer.

These companies usually attract people because they can make huge commissions on sales, but also because they collect sales commissions on the initial sales of any of their recruits. Sounds great right? Well, let’s dig in further.

The Challenges of the 2-up MLM model
It is easy to get sucked into believing this type of company is the one for you, because it sounds really easy to make a lot of money fast. But let’s look at this deeper.

The 2-up MLM will bring you nothing unless you can sell. Now if you are an excellent sales-person you are probably making money on commission already. If you are an average person trying to start a new business online, then learning to become a great salesman can be a really uphill battle.

After you make a sale, you have to actually train your new recruits. They will be bringing you their prospective customers for three-way calls trying to get you to close their sales for them. They will expect you to help them learn to market, learn to sell, etc. They expect more from you than recruits in your average MLM company as they have forked over a lot of money as an initial investment and they want to recoup it quickly.

In order to take advantage of the compensation plan you have to invest yourself, and heavily. To really make the big commissions you need to have bought even the higher level products yourself. This could mean an initial investment of over $20k. The average person needs to borrow to come up with this kind of money, leaving them almost no money left over to advertise their business. Cashflow problems put more people out of money in network marketing than anything else, and a 2-up MLM makes people run out of money even faster than your average MLM.

The final challenge I have with this kind of compensation plan is the lack of a residual income. You start your business by earning nothing on your first couple of sales. When you finally reach success and have lots of people under you in the business, you still have to work hard. You still have to support the people under you. You never get to be free from your business. The ultimate MLM dream is to build up a huge downline so you can semi-retire and allow your downline to keep bringing in checks for you month after month with minimal input from you. In a 2-up MLM if you stop working, your money stops coming in.

So yes, you can make a ton of money in a 2-up MLM, and yes you can make it quickly. But at a price. You will always be a slave to your business, and you run the risk of running out of cash before you ever earn that first paycheck. You need to consider if you have access to enough funds to get through the initial learning curve and become successful (or if you can use a good funded proposal system to help you earn extra cashflow while you learn); and you have to be sure you are ready to sell, sell, sell for as long as you want to keep your business going. If you can address these two issues, than you can absolutely make a killing with a 2-up MLM.

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