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How Network Marketing Companies Use Front End Breakage to Make Huge Profits!

“Breakage” is money taken by the MLM company that could otherwise be paid to distributors in the field. Why should companies look to distributors and make as much money as possible? Because MLM companies are nothing without their distributors. Keep that in mind as you read this.

In the network marketing world, there is the front end hack and there is the back end hack or what is commonly referred to as the compensation plan hack. For this article, let’s look at the front end break. Front end breaking is actually built into the business model and here’s how it works…

There are thousands of MLM companies in all kinds of industries. Most of them are in the health and wellness industry and they sell consumer products such as shampoos and creams, vitamins, weight loss formula and super forest juice, etc.

Most of these companies say that they produce their own products. But this is only a half-truth. The whole truth is that there are nine or ten manufacturing companies that make all the products for thousands of network marketing companies in the health and wellness field. Some companies make their own products, but it is very rare. However, companies define their own specific formula for each product they manufacture.

Now let’s say an MLM company contracts one of these manufacturing companies to make juice for them. And let’s say the cost to the company to buy the product from the manufacturer is two dollars ($2).

Typically, the company will sell the product to its distributors for, say, fifteen dollars ($15). All distributors are compensated fairly according to the pay plan and everyone is happy.

But let’s say these companies and their royal distributors are a little greedy and they want to get a little more money from the distributors who work hard to build their business in the field.

So what they do is set up a marketing company or marketing division to buy the juice from the manufacturer at the same retail price of two dollars ($2). They then sell the juice to the real MLM company for four dollars ($4).

They have only made a hundred percent (100%) profit, which is two dollars ($2), even before the product reaches the distributors. And now the company and the royal shooter distributor can now split the profits 50-50 and they can laugh all the way to the bank.

The MLM company still sells the juice for $15 to its distributors, so now it has two dollars ($2) less. This means, the company pays the field less because that commission is stolen by the break created in the business model.

So this is how front end hacking works and there are MLM companies that do this.

Just how much money can a company make with this kind of break? Well, if a company sells about 250,000 bottles of drinking water per month, that means that the royal hot shot distributor and the company owners who put this crack in place are making an extra $500,000 per month! That’s $500,000 that hasn’t been paid to hard-working distributors in the field.

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