G E T S   R I D   O F   " B R E A K A G E "

Dynamic Compression

Dynamic Compression is a powerful feature of the Royalty Plan than can literally add thousands of extra dollars to your monthly income. This pay plan is the only one in the industry (as far as we know) that features full Dynamic Compression. (Not to be confused with ordinary roll-up and compression which most marketing plans include.) Dynamic Compression assures that ALL royalties are paid to IPCs. It completely eliminates the practice of "breakage"—a secret way that companies keep money for themselves. Because breakage happens in a way that cannot be easily detected, some companies easily keep up to half of the money that should be paid to its distributors. Although common, this is an extremely unfair and deceptive practice.

The following explanations about breakage and Dynamic Compression are, by the nature of the problem, somewhat complex. If you don't understand it all, don't worry. Dynamic Compression works for you in our Royalty Plan whether you understand it or not. The following information is presented simply to help you understand how and why it works.

Some Fundamentals

Every marketing plan has various leadership titles or qualifying positions. The title you hold determines how many rows (rows) of royalties you can collect. For purposes of illustration, we will use titles from our own pay plan. (Compare the information in Unilevel Royalties.) For reference, the following chart shows how many rows each qualifying title is entitled to receive—

This means, for instance, that if you hold the title of Coral, you are eligible to collect royalties on four rows of IPCs below you in your organization. If someone buys product on your fourth row, you get a royalty on that purchase. However, your ability to collect royalties stops at that row. For example, if someone on your fifth row buys product, then you would not be allowed to collect any royalties from that purchase because it's below your eligible rows.

Since a company is supposed to pay royalties on all rows shown in their marketing plan, they must set aside a certain amount of the purchase price to be used for royalties. For example, if a company were paying out on eight rows as shown below, they would need to set aside 45% of the product price to cover the royalties—

When a new IPC looks at these percentages, he assumes that the company is paying them—that is, he assumes that the company is paying out 45% of all money they are taking in from sales. That's 45% of all sales volume supposedly going to IPCs. But this can be a seriously wrong assumption.

"Breakage"—Secret Income Killer

Let's look at an illustration to see what the problem is. Let's suppose that somewhere down in your IPC organization someone purchases a case of product. Above this purchaser there are fourteen other IPCs, counting up fourteen rows (this could actually be any number of rows). These upline IPCs hold various positions from Coral to Diamond Pearl, as follows:

The question now is, what happens to the 45% that is supposed to be paid out on the purchase price of the product? Let's take a careful look.

At first there is no problem. The correct percentages are paid out to the first four upline Corals in accordance with the plan. The first Coral above collects 1% because the purchase is on his first row. The next Coral collects 5% because the purchase is on his second row, and so forth. So we have paid out 1%, 5%, 5%, and 6%, for a total of 17%.

What happens to the next 6%? Can the fifth Coral collect that royalty? Remember, a Coral can get paid on a maximum of four rows only. This means that the fifth Coral up cannot collect the royalty. Now the questions becomes, if he can't claim it, then who gets it?

Since the IPC who is five rows up doesn't qualify to collect the 6%, no one gets it. It "rolls over" to the company as breakage. The company keeps it.

What happens to the next 7%? Same thing. Again, a Coral cannot claim a 7% royalty. It also rolls over to the company, along with the next 7% (Coral doesn't qualify) and the 8% (again, Coral doesn't qualify)—

So, in essence, we have a plan where the royalties are not completely paid out on a purchase unless the qualifying upline titles happen to be in just the right place (which never happens). This means that instead of paying out 45%, the company in this example paid out only 17%. That's a huge difference.

What's more troubling is that IPCs have no way of knowing that this is happening. They are each getting what they are "entitled" to. It's just that someone would be making a lot more if the company were actually paying out all the royalties that they claim to pay.

A Shocking Comparison

Because of Dynamic Compression, our Royalty Plan does in fact pay out the full 45%. Our computer is programmed to find a way to pay it on every purchase.

For the first four Corals, the payout is the same as without Dynamic Compression. But starting with the fifth Coral, something very different happens.

The computer recognizes that a Coral cannot collect a royalty from a purchase five rows below. So the computer asks itself a simple question: Who can collect royalties on the fifth row? The answer, obviously, is that a Jade can. So the computer does the logical thing. It searches upline until it finds a Jade (or higher title), then it pays the 6% royalty to the first one it finds. The computer doesn't care how many rows up it must search. It's sole objective is to see that the royalty is paid to a qualified IPC.

Next, it goes through the same process for the 7% royalty paid from six rows down. Who is eligible? That's right—again, it's a Jade. A Jade can get paid on up to six rows. So the computer searches upline and pays the 7% to the second Jade it finds (since it already paid a royalty to the first upline Jade).

This process continues two more times, with the computer searching upline for a Pearl and a Diamond Pearl, until the full 45% is paid out. That's the difference with Dynamic Compression!

A Huge Difference in Royalties

At first you may not realize the profound advantage that Dynamic Compression can have on your income. Consider an example. Suppose that you are a Diamond Pearl who is eligible to get paid on eight rows. (Or you could be a Jade or Pearl—it still works the same way.) You have a lot of IPCs on your rows one through eight, and you are collecting your regular Unilevel Royalties on these eight rows. But suppose further that your organization has grown to the point that you have 1,000 IPCs below your eighth row. In other words, starting on Row 9, you have a huge monthly volume that is outside your eligible rows.

How does Dynamic Compression help you? Simply put, the computer will analyze how to pay each royalty percentage from each of the cases purchased below your eighth row. When it comes to the 8% royalty, it will begin to search upline for a Diamond Pearl (the only position eligible to collect 8%). Since you are the first upline Diamond Pearl, when it finds you (no matter how many rows it must search upward), it will pay the 8% to you. And it will do this on every case below your eighth row! If you had 1,000 cases volume below your eighth row, you would get more than $9,000 extra in your monthly income check—in addition to your regular royalties.

The key is to be the first person to achieve a leadership title in your organization. For example, if you are the first Pearl in your organization, then the 7% Pearl royalty will dynamically compress up to you from all purchases below your seventh row. When someone below you reaches the same leadership title that you hold, they will then collect the Dynamic Compression for their leg. For example, suppose you have three legs (or lines of IPCs) under you. If one of your IPCs also becomes a Pearl, then they will get the Dynamic Compression for their organization. You will still collect it from the other two legs. (Of course, the smart thing for you to do when this happens is to become a Diamond Pearl. Then you'll make even more!)

Roll-up and Compression

Our Royalty Plan also features roll-up and compression. Most marketing plans have some variation of this feature. Some companies mistakenly claim that they have Dynamic Compression when in reality they merely have roll-up and compression. Although roll-up and compression is wonderful, it is not nearly as powerful as Dynamic Compression.

Companies who do not have Dynamic Compression cannot change their marketing plans to include it (and most don't want to). They need the extra cash flow from the "breakage" in order to make ends meet. Because they are used to the cash flow afforded to them by breakage, if they try to eliminate breakage they will suffer serious financial problems almost immediately.

In a nutshell, roll-up and compression is a feature that allows you to get paid on all of your eligible rows when an IPC on one of your rows doesn't buy any product. For example, if you are a Jade, you can get royalties from six rows of IPCs below you. If all of the IPCs on all six rows by their product, that's great. You get paid on six rows. But what happens, for example, if two IPCs in one of your legs don't buy anything this month?

Without roll-up and compression, this would mean that you will be paid on only four rows. You would lose two royalties due to a non-purchase.

With roll-up and compression, the computer compresses IPCs upward. When this happens, the royalties roll up to the next row and you still get paid on all six rows. (This assumes, of course, that you have IPCs below your sixth row who have made purchases.) In this way, you don't lose royalties from any of your eligible rows.

Roll up and compression is a wonderful feature that will help you earn more income. It's a standard feature of our Royalty Plan.

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