Payout management with point system (PV) in MLM software
Payout management with point system (PV) in MLM software.
Bonus Volume (BV)/ Point Volume (PV)/Commission Value (CV) or any other point system can be named in any network marketing company in the market but what are those? Why is point value implemented at the first place? Are there any practical purpose for this or is just another gimmick?
Compensation plan can come in any form in MLM/network marketing industry with the purpose of motivating sales force to boost the sales and income. But there’s often a myth in PV and it seems to be difficult to understand even for business owners, here we’ll explain the core principle of point system associated with product and why is necessary for MLM.
Speaking about MLM, compensation plan structured are often universally implemented in each company regardless of product price being sold. But there’s one problem with it, product margin and costing is different, how can it be implemented on a universal plan?
For example, a direct sponsor rewards of 50% is promised as rewards for each sale. The main question should be, 50% of what? Let’s look at the comparison table below:
| Product | A | B |
| Selling Price (MYR) | 100 | 100 |
| Product Cost (MYR) | 30 | 60 |
| Commissions (MYR) 50% on Selling Price |
50 | 50 |
| Company Profit/Loss (MYR) | 20 | -10 |
Product costing for the same product price is affecting the company P&L badly. There goes the introduction of point system:
| Product | A | B |
| Selling Price (MYR) | 100 | 100 |
| Product Cost (MYR) | 30 | 60 |
| Point Volume (PV) | 100 | 40 |
| Commissions (MYR) 50% on PV |
50 | 20 |
| Company Profit/Loss (MYR) | 20 | 20 |
Assume other variables remain constant, implementation of product point is flexible to fit into the universal compensation plan structure without hurting the company’s P&L.
Want to know more about how PVs will affect your reward plan ? Connect with MLM Software Malaysia – Flexondata, we’re here to help you figure out how you can make use of our solutions to implement point volume to your next MLM/Direct selling business venture.
