So what is "breakage" and why is it important to consider?
If you can avoid it, you should not get into a company with "breakage."  That is another reason why I chose XanGo.  Really, if you are looking at a new company don't you dare move until you understand what "breakage" means.

So what is it?
Breakage is the dirty little secret of MLM companies.  According to some, it is how they raid their own field and take money away from their own qualified distributors.  In the original idea of networking, if someone dropped out, their income and people would move up to the next person.  Ha.  We used to pray that our downline would drop out and his three big legs would move up to join our three legs and we would have six.

But over the years most companies changed the rules so that when someone drops out or is kicked out, the line is broken.  The "position" they had stays in place and the money keeps coming but instead of going upline it is going to the company, who now owns the vacated position.  Neat huh?

 This is what happened when a major company. in a major country, kicked out its own. fully compensate leader and took over his income, actually from several countries, and milked it for awhile before finally selling it to the upline.  Interesting isn't it?  The upline had to buy his own group.

And you don't do that?
There is no reason for the company to be tempted to kick someone out  for money because there is no breakage.  The company would not make any money.  XanGo will surely kick someone out who is unethical or does things illegally but it makes no money off of it.  The money just passes on to everyone else,as networking originally did.  XanGo still pays out 50%, there is no raiding of the field.

And let me warn you.  One company, operating in Russia, had "hidden breakage."  Its distributors openly revolted and forced the company to change its rules but in my opinion, they never recovered in the USA.

Why would any networking leaders put up with that?
Well, in some companies, for a long time the distributors  didn't care, they became lax, because they weren't really making much money off of their compensation plans anyway.  They made their real money off of the sales of CD's (or back then tapes,) and functions.  So it didn't matter.  Now, as some companies have started to take away that money too, it is more of a concern.

Believe me, there are many other ways that "breakage" works against you.  If you are not yet in a networking company, don't get in one that has it.  You don't need to have that problem.

Doug,

Good job but there are a couple of other areas of breakage that would be very instructive for people and give them and idea of how powerful the XanGo pay plan really is.

The examples you give are related to many of the older companies, such as Amway, and are "hidden" to the average networker who does not know those pay plans.

Two prime examples of breakage in most modern MLM pay plans today:   

1) The difference in PV and BV which you talk about in your section on split pricing. (This is one of the big reasons I left Amway and would not go to MonaVie.  Incredible breakage there,) and

2) a person not qualifying for commissions because of structure.  In this case the company keeps the unpaid commissions instead of, like XanGo, paying them to an upline through compression.  This is one of the most powerful features of our pay plan.

I know that this is hard for the average person to understand but ignorance of such issues allowed for much abuse.  The field is getting smarter and new companies like XanGo have responded.

Kudo's to you and John.  I love this website.

Ron Brice