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Amway/Quixtar
Prices/Profitability |
| I remember when I was in Amway they always said one of the benefits to the
business was that the bonuses would always be adjusted for inflation. With
this you would not have to worry about your income dropping over time due to inflation.
I got a hold of a Amway wholesale price list from September 1, 1981 and
decided to see how true this actually was. The product selection at that time was
pretty limited but I was able to find many of the core Amway products still sold today in
Quixtar. There are the old standby's like LOC, Zoom, SA8, cookware, Glister
toothpaste and so on. I quickly ran through the catalog and picked 19 products
that I was pretty sure were still available today. I threw their PV/BV/cost
into an excel spreadsheet The results are rather interesting. Since there is no usage data available in the 1981 price list, I must assume the product concentrations have not changed one way or another (quantity/use has stayed the same). I looked up the inflation index on the bureau of Labor and Statistics website. From 1981 to 2006 the inflation multiplier is 2.29. The bonus per sales dollar in 1981 was 30. cents versus 27.5 cents in 2006. For those under platinum (direct) the profitability has decreased about 8.6% in real terms. It could be that bonus money has been shifted from the 25% level to pay for other new bonuses for those over platinum. Several new bonuses have been introduced for those over direct/Platinum in this time. In 1981 the leadership bonus was 3% versus today's 4 %. The product prices are now about 15% less expensive than they were in 1981 when adjusted by the consumer price index. Accounting for the drop in profitability per sales dollar (8.6%) and lower prices (15%), a distributors inflation adjusted income has fallen about 22.5% for these products. The product price decrease is good for the "self consumption" business model, but bad for those who were selling product retail. The PV/unit of product has improved about 14% over that time. The cost per PV did not increase as fast as inflation (CPI) and is only 2.58 $/PV compared to 1.52 $/PV. If the cost per PV kept up with inflation it would now be about 3.5 $/PV point. |
and
then got on the Quixtar website and looked up the current wholesale data.