For joining the network of a Multi-level Marketing (MLM) business, you have to choose a compensation plan which calculates your commissions and determines your payout. A majority of direct selling companies offer compensation through the binary commission plan.
Now, the network marketing companies are well-versed with the advantages of binary commission plans to their business. But, people interested in being a part of these network marketing companies aren’t aware of what binary compensation plan actually means.
To estimate the payouts that this plan would offer, you need to know how to calculate binary commissions in direct selling. Leading companies in network marketing choose to partner with an MLM software company to build binary commission calculator tools. However, there are some free MLM tools that help us calculate binary commissions online.
Before using these free calculators, let’s learn more about the binary commission compensations in direct selling.
What is Binary Commission in Network Marketing?
A binary plan is a compensation plan in MLM that enables distributors to add not more than two distributors to the downstream of the distributor network. This downstream is called the downline, and according to the binary commission model, a distributor can add a maximum of two distributors to his or her downline.
The binary commission structure allows you to add more distributors but not directly. After adding the two distributors, the additional distributors are further adjusted to these two distributors in a similar fashion.
Let’s say, you add distributors A and B to your downline for binary commissions, meaning you have completed your direct downline additions. Now, the next two distributors added to your downline would be
- either extended with A by becoming A1 and A2
- or with B by becoming B1 and B2,
- or to A and B both, calling them A1 and B1 respectively
To add to two distributors, you can fill the spaces under A downline and B downline. Once their downline is filled with two distributors, the next level of distributors is introduced.
Top 5 Free MLM Tools to Calculate Binary Commission
Any MLM software development company needs to build a tool that precisely calculates the commissions through the selected compensation plans. For calculating binary commissions, these are the five free MLM tools that help you evaluate your commissions online in the best way possible.
Ventforce, one of the best direct selling software available, offers a free online tool to calculate binary commissions for your MLM work. In this tool, a matching set of commissions is structured on the left-side and the right-side of a distributor’s downline. The commission is distributed on the grounds of binary pair ratios – 1:2, 2:2, 2:1, and 1:1.
Ventaforce MLM binary calculator accurately calculates the binary commissions and ensures there are no spills in the network. As the new distributors get added, the tool keeps calculating the payout cycle according. With this calculator, you can also estimate the payout cycle, set a capping value to commissions, and configure the number of levels in the downline.
2 Binary MLM Calculator (Softwin Infotech)
MLM software developer, Softwin Infotech, provides an online binary MLM calculator free to use. The tool calculates the exact binary commission by processing the joining amount and the product amount through the specific binary levels. It also allows you to enter the Admin charges for calculating deductions.
By setting the matching percentage and the pair type, your binary compensation is calculated. Essentially, this tool is a part of its MLM software suite, with additional features that include rider income, spill, and daily cut-offs.
3 MLM Income Calculator
To estimate your MLM marketing income, a binary commission calculator is available on free-online-calculator-use.com. The tool calculates your MLM income based on sales volume and your projected distributor recruitment.
The tool lets you set your average monthly sales volume as well as the volume for your distributor. There are up to ten levels enlisted in the tool, which help you calculate the total binary commissions of your downline. You can also customize the commission percentage and the number of adjusted distributors for specific calculations.
This tool is not customized for binary commission calculations. It is basically a calculator for general MLM commissions. By entering the average monthly personal sales volume of every distributor and filling the matrix, the commissions are processed.
The calculations are complete after feeding the commission percentage, monthly caps, and the number of downline distributors.
5 MLM Calculator by DNB
This free online MLM calculator is a bit complicated to process the binary commissions. But, it does delivery accurate results. Using this tool is a bit complicated as you need to register to the tool for generating the results.
Apart from the MLM information, it also asks for your email address and business name. It also calculates the binary commissions on the basis of time frame, country, target, and hybrid MLM structure.
If you are looking only for calculating binary plan calculations, consider using the Ventaforce calculator.
Advantages of Binary Compensation Plan
Now that you know how to calculate the binary commissions, you should also know why a binary compensation plan is good for your MLM efforts. The binary pay plan in network marketing offers several advantages, which can be categorized into:
- Binary commission payout: Since you earn by adding just two members to your downline, the time invested in less. And, comparatively, the earnings are high. With these payouts, there is no limitation to your earnings.
- Binary commission strategy: Binary compensation plan is easy to follow and enables you to explain it to other distributors. At the same time, an MLM company can allow you to add as many levels to your downline in a binary plan.
Compared to the matrix plan, board plan, and generation plan, the binary plan is predominantly used by direct selling companies to calculate the MLM earnings of their distributors. Some companies also prefer establishing a differential plan that smoothly integrates with the binary model.