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What is Generation Plan ?

Generation plan is one of the most important compensation plans for those MLM companies who are purely into product selling. Like other plans in MLM, Generation plan also has different names like gap commission plan or repurchase plan. This plan is useful for MLM companies who are into selling consumable goods (i.e. FMCG products) because this plan works on mouth publicity rather than commercial advertisement. It will help company saves all the advertisements expense, and they can distribute those expenses as a commission to distributors.

How Generation plan works ?

Generation plan is basically n*n matrix plan, which allows unlimited width as well as depth, This plan permits distributors to sponsor N numbers of direct sponsors in their front line as well as they can expand their downlines up to N numbers of level, but unlike Uni-level plan, here they will get commissions for unlimited levels. In this plan, distributors can gain commission by motivating their downlines to purchase goods or helping them sell more goods to consumers.

In Generation plan, downlines of any distributor will be divided into levels called generation. For an example, according to the table shown below, you have achieved rank of diamond by fulfilling the criteria set by company. Now, Platinum Rank holder distributors in your downline will be marked your First Generation, and Gold rank holder distributors in your downline will be considered as your second Generation and so on. The base of this segregation will vary form company to company. The most common segregation will be based on Level of ranks explained in example. The commission distributors can earn will increase as the level of generation increase. As you can see in table, the commission you will get from your first generation will be 7% of their purchase, form your 2nd generation will be 12% and so on.

Sales Volume Levels Ranks based on levels Generations Gap bonus
1-299 PV 3% Silver 3rd Generation 17% (20-3) of their purchase
300-799 PV 8% Gold 2nd Generation 12% (20-8) of their purchase
800-1399 PV 13% Platinum 1st Generation 7% (20-13) of their purchase
1400+ PV 20% Diamond You You

Types of Income in Generation Plan

  1. Direct Referral Bonus/ Direct Sponsor income

    Direct Referral incomes encourage distributor to introduce new distributors in the system and get benefited when they purchase any products from company. The income they will generate after purchased is made by these distributors will be decided by company.

  2. Rank based royalty

    Rank based royalty allows distributor to earn additional income based on the rank they are holding. Company share some percentage of their turnover and distribute them among the qualified rank holders based on their business.

  3. Rank based commission / Gap income

    Distributor can get some percentage of their downlines’ purchased because of the difference between their ranks. It is also known as performance bonus.

  4. Retail Profit

    Distributor will get products at DP (Distributor Price) Rate which will be less than MRP of product. Distributor can sell those products at their comfortable rate which is less than or equal to MRP. Now the difference between distributor price (DP) and selling price of a product will be considered as retail profit for distributor.

  5. Consistency Bonus

    When distributor brings business of fixed amount on regular basis for consecutive months, than company rewards those distributors by providing additional income called consistency bonus.

  6. Rewards

    • Fixed Rewards: Distributor earns this commission by fulfilling certain criteria set by company.

    • Flexible Rewards: such rewards keep changing with time. / Same as Uni-level, company use rewards as a medium to encourage sales and give the additional benefit.

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MLM Plans

Advantages of Generation Plan

  1. Deeper the network you have, more money you can earn, because if you have more distributors in your network, the probability of selling more products is high.

  2. Very effective plan, if your organization is solely focus on product selling.

  3. This plan helps in saving money on Commercial advertisements as the members become your advertising media.

  4. There is no capping in generation plan which gives distributor a chance to earn more money by selling more products.

  5. Legally it is easy to prove that all the commission distributing in the network is purely based on products selling.

  6. This is not speculative plan. Not more than what company have decided will be distributed among distributors.

Disadvantages of Generation Plan

  1. It is complex plan by structure compare to other MLM plans, Sometimes distributor who actually works neither understand it well nor they can present well in front of customer.

  2. This plan makes it hard for distributors to focus on single leg as there are so many legs to work with.

  3. You can’t generate Instant income with this plan

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