# Recognizing Basic Plan Mechanics and Point Value to Cash Calculation

Recognizing Basic Plan Mechanics

Now that we are very clear how important it is to learn about marketing plans, let us seek to understand more about its basic mechanics. This will be covered over a course of a many posts.  We hope you are learning something at this point and time!

Over the next few pages, I will outline the basic plan mechanics and outline its benefits based on the following topics:

1. What downline building strategies are the best?

2. How well does it synergizes with the product?

3. If I start a company with this feature, what are the strengths and weaknesses?

Point Value to Cash Calculation

Point value, or PV in most network marketing usually relates to a monetary value that translates into how much money you will get after purchasing a product from the company. An illustration would look like this:

SCENARIO 1

Let’s say, a product costs \$100 and each dollar spent on the product gives you 1 PV:

I get paid on 100 PV for purchasing \$100 worth of products and if I am eligible for 10% override, I earn \$10

Hence the dollar to PV ratio is \$1:1 PV – a dollar to dollar equal comparison

SCENARIO 2

Sometimes, the same price of a product will only give you 0.5 PV for each \$1 spent.

I get paid on 50PV for purchasing \$100 in this scenario. If I am eligible for 10% override, I earn only \$5

Hence the dollar to PV ratio now is \$2:1 PV – you don’t get as much as 1:1 because you have to spend more to earn more points

SCENARIO 3

Certain companies might give away promotions for products and offer \$1:1.1 PV so if you buy \$100, you get paid on \$110 value. At 10%, I earn \$11 – more commission from the company on the product for less spent buying it,

Downline Building Strategies

If I need to generate large volume for my group this month, I would ask my downlines to focus more on selling or moving products that give a higher point value. That way, everyone spends less but earns more.

Product Synergy

Products on promotions usually give a higher PV ratio. Other products that are outsourced (acquired from outside companies) usually give either a smaller PV or the same PV but a smaller business volume because they have to pay to the outsourced company as well. These products pay the distributor less but give more variety on the business catalogue.

Starting a New Company

Giving a high dollar to PV ratio usually encourages the distributors since they get paid more for the same effort. If I were to focus on moving high ticket items (like water filters, air treatment systems or expensive cookware) I would offer a higher PV incentive to distributors to move these items and go for the big bucks.

Payout Transparency and the Buy Back Policy are the next posts coming up, so stay tuned all…

Until then talk at ya later…