How Do You Make Money From the System?

The Quixtar product business is supposed to be the primary business opportunity for IBOs. Lines of Sponsorship also promote the two complementary businesses of "Speaking" and "Tools" otherwise known as "Business Support Materials" (BSMs). The BSMs business is very profitable to the Diamond leaders, and is much more profitable than their Quixtar product businesses. It is a multi-million dollar enterprise, which has few or no retail customers outside of their IBO participants. The profits to those above platinum from recruiting new IBOs on their system is much higher than the Quixtar bonus attributable to their new Quixtar IBO purchases.

Once IBOs get to the silver or platinum level they will be able to participate in the income from the tools systems. It starts out with "tape breaks" and commissions from books moved in the groups. The legality of these systems is very questionable since there are very little sales to those not participating in the scheme or those not hoping to one day participate in the scheme.

A Sample Tools Commission Schedule

Books and Audio Tapes/CDs

Rally/Function Tickets

Quantity

Book Discount

Tape Commission
per tape

 

Quantity

Commission per Rally Ticket

Commission per Rally Ticket

0 - 24
25 - 49
50 - 74
75 - 99
100 - 149
150 - 199
200 - 274
275 - 349
350 - 474
475 - 599
600 - 799
800 - 899
1000 +

0%
5%
10%
15%
18%
20%
22%
24%
26%
28%
30%
32%
34%

$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
$1.75
$2.00
$2.25
$2.50
$2.75
$3.00

 

0 - 99
100 - 149
150 - 199
200 - 274
275 - 349
350 - 474
475 - 599
600 - 799
800 - 999
1000+

$0
$2.00
$2.75
$3.75
$4.25
$5.00
$5.75
$6.50
$7.25
$8.00

$0
$6.00
$11.00
$16.00
$21.00
$26.00
$31.00
$36.00
$41.00
$46.00

Where's all the Money in the System?

Audio Tapes and CDs
It costs about $0.50 to reproduce a cassette audiotape, which is sold for at least $6. Further more, most of the tapes and CD's are just recordings of meetings, which IBOs have also paid to attend! I estimate 92% of the tape price is profit to those selling the system.

Open Meeting entrance fees
Every team has open opportunity meetings were IBOs bring their guest hoping to get them interesting in joining the business. All teams I know of collect $5 (generally cash only) at the door from IBOs attending the meeting. At an open meeting I attended they collected about $250 from their IBOs to attend the meeting. The room rented for only $50. Some groups let the speaker keep the difference and others must send the money to the group's head office.

Line of sponsorship Web Site fees
All major lines of sponsorship now have websites. Some teams charge to set up access to their website and these fees are sometimes hidden in the recommended starter packages that IBOs buy. Most new people do not know what they are actually purchasing. Some teams then charge fees for access to the websties and can be as much as $120/year. The cost to host my website is only $120/year; the same cost as one IBO pays for access to some line of sponsorship websites. Assume Web site maintenance costs $30,000/year. That cost is covered by the $25 set up charge for just 1,200 new IBOs yearly. You will find that they probably net 100% profit, or $120/IBO/year on their website alone.

Voice Messaging
IBOs are also encouraged to purchase a voice messaging service for about $25/month. The voice messaging is possibly the least profitable item they sell since it must be sourced from another company. I speculate that added all together the BSMs are at least 80% pure profit to the line of sponsorship leaders.

Other Meetings and Functions
Every team has monthly rallies, monthly leadership meetings, quarterly major functions, and yearly "Go Diamond Weekends".. Rallies generally cost $25 per ticket ($50 per couple), and major function tickets are usually at least $90. Go Diamond Weekend can cost $75.  There will also be special meetings depending upon your level in the business. Many times the top leaders will have special trips with their leaders such as cruises or fishing expeditions.

The graphic below shows the profit potential from each IBO 100% on the system assuming the tools are 80% profit and their Quixtar generate profit. 

The annual profit available from a Quixtar IBO's product purchases of 150PV/month, to those above platinum is only about $450/year when counting those bonuses above the 25% level. I suspect a single IBO buying the complete system however would generate about $1,575/year in gross profit to the line of sponsorship leaders. I suspect a couple buying the same system would generate about $2,100/year. Line of sponsorship leaders could earn at least three times more from an IBO on the system than they would from their product sales. It would seem there is a greater incentive to sell their system then there is for the Quixtar products. It is quite easy to see their emphasis in selling the system when you listen to them speak.

A Quixtar group at 7,500 PV would generate about $18,000/year to those above platinum. Assuming this group had just 20 IBOs (10 couples, 10 singles) consuming the full system, and an 80% profit on the tools, the profit to the system leaders on the system alone would be almost $37,000/year, or double that from the "Quixtar opportunity".

There is also a significant income from new IBOs and prospects. System leaders could expect to net at least half again the income of its "active groups" from purchases by new IBOs and prospects. Many prospects are encouraged to attend a seminar or a major function. There are many who buy the recommended starter kits for about $235 even though the actual cost to sign up for Quixtar is only about $50. The diagram below shows my estimates of the net income from Quixtar, active IBOs, and one time purchases by new IBOs and prospects to the leaders for each Platinum group.

In the final analysis I suspect that the line of sponsorship Business Support materials business is at least three times as profitable to the system leaders as their supposed main business of moving products for Quixtar. There is of course nothing wrong with making a profit. I suggest you only be aware of the money being made and their motivations for wanting you to consume their BSM's. Is their motivation to make all IBOs businesses profitable? Is it their goal to make their own business more profitable? Given the amount of money involved I would suspect they have other motivations than what is best for the average IBO. It would seem if these items were really needed to help IBOs build profitable businesses, that they would be as inexpensive as possible.

I've heard it said on their tapes that there is profit built in on tapes so that the leaders can recover some of their costs in the case of lost tapes. A leader could afford to lose a lot more tapes if they only cost him $0.54 instead of say $6.50 (when you include the sales tax).

IBOs will argue that the cost of the system is inexpensive when compared to the cost of going to college. No doubt IBOs can learn many inter-personal skills from the books sold in the business. Prospecting people for the business is also a way to practice these newly learned skills. The majority of what can be learned from the business can also be obtained for nothing at your local public library in the self-help, motivation, and sales sections.

"Two-- you dropped a hundred and fifty grand on an education you coulda' picked
up for a dollar fifty in late charges at the Public Library
. Matt Damon -Good Will Hunting

You can practice these skills with everyone with whom you come in contact. The advantage here is that every new person you meet will be an individual and not just a prospect that can be exploited in what I believe to be a pyramid scheme funded by the profits from the BSM scheme.

The line of sponsorship information systems could be distributed much more cost efficiently if they were truly interested in making their system as "cheap as possible". It is my opinion that the Quixtar compensation system is not commensurate with the effort required, therefore the Quixtar products business must be subsidized by the profits from the system in order to keep people working it.

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