Is Optavia a pyramid scheme? Well… Their business model is that of a MLM and is structured to place a good deal of emphasis on recruitment, but does this amount to it being a pyramid scheme?
I’m guessing that you are probably reading my post here because you are contacted by an Optavia coach and asked to join in on the business opportunity, or maybe a friend or family member was. But anyways… It doesn’t really matter your reason for reading this. In this short review I will be addressing the claims that Optavia may very well be a pyramid scheme.
What Is Optavia?
Optavia is a weight loss MLM company that sells meal plans scientifically designed for weight loss, similar to Avisae, It Works, and Shaklee. They take a more holistic approach to weight loss, not just focusing on the short-term, but rather having a more long-term focus. The goal is to adopt new healthy habits one at a time in your life so that the changes you make stick.
This is an approach that I really like. A lot of people lose weight and then gain it right back. They put in all this work and effort losing the weight but then end up regressing back to their old unhealthy habits. Optavia’s goal is to help change those habits to healthier ones.
At the core of the Optavia business model are coaches that are there to help guide and support people on their weight loss journeys. These coaches can be anyone. You are I both could join the business as a coach and make money doing so. Coaches are able to make money by selling weight loss products as well as by recruiting and other coaches beneath them and earning from what they sell.
This recruitment part of it all is the reason people are calling a pyramid scheme. Yes… Coaches can make money by recruiting in other coaches and so on, but this does not mean it is a pyramid scheme. In order to get a better understanding of what is going on here we first need to take a look at the compensation plan and see how these coaches are getting compensated.
The Compensation Plan
There are a bunch of different ways that you can earn as a coach and I will not be going over them all. Just be going over some of the more core components of the compensation plan, starting with client support commissions…
Client Support Commissions
These are commissions that are paid out based on the orders that your personal customers make.
So for example if you recruiting Joe and he buys something through your personal Optavia website, or calls their phone number to order, you get credited for that and earn a commission from the sale, which is 15%.
The consistency bonus is a bonus that is paid for having a “frontline” that makes consistent orders each month. Your frontline consists of the people that you have directly recruited in.
Each product that Optavia sells has a certain number of points attached to it. If the people in your frontline order enough products to reach a 2000 cumulative PV (point value) for three consecutive months, then you get a bonus. And you get a bigger bonus if your frontline reaches a 4000 PV and in even larger bonus if they reach a 6000 PV, as you can see here…
- 2000 in FLV for 3 months = $250 bonus
- 4000 in FLV for 3 months = $500 bonus
- 6000 in FLV for 3 months = $1,000 bonus
Team Growth Bonuses
The Team Growth Bonuses are available to coaches that are ranked as a senior coach or higher. This is where you get paid based on the sales that other coach teams make beneath you.
Executive Director Generation Bonuses
These bonuses are generational bonuses that are paid for developing executives within your downline. So if coaches beneath you, anywhere beneath you and your downline, make it to the rank of Executive, you will be able to earn commissions from this. At most you’ll be able to earn six generations deep…
But of course you will not be able to earn down six generations from the get-go. In order to earn down all the generations and unlock the entire opportunity here within the Executive Director Generation Bonuses, you will have to move up the ranks as you can see in this table:
Moving Up The Ranks
Making money with Optavia is all about moving up the ranks. As you move up the ranks further you will unlock more and more of the compensation plan and be able to earn more and more. But how do you do this? How do you move up the ranks?
Well… It’s all about bringing in more clients and recruiting and more coaches. Below you can see a table of all the different ranks and the qualifications that you need to meet in order to move up:
Okay… So a MLM type business like this can be completely legitimate and rely on recruitment of other distributors, in this case “coaches”, to a good deal. What separates a legitimate MLM from in illegal pyramid scheme is how much they actually rely on recruitment of distributors. If they rely on recruitment like this too much and do not focus enough on selling products to the general public, that is where it begins to cross line and becoming an illegal pyramid scheme.
That said…there is definitely not enough here for me to say that this is a pyramid scheme, BUT… I am a bit concerned when looking at their compensation plan. They don’t really seem to have any safeguards in place to keep a pyramid scheme -like scenario from playing out.
As far as I know, you could become a coach and to do nothing but recruit in other coaches to move up the ranks and make tons of money. Some MLM’s that I have reviewed require you to sell a certain amount of products each month to the general public (non-distributors), while Optavia does not.
But anyways… Know this does not seem like a pyramid scheme to me. Recruitment like this is completely legal and although it might not be the most trustworthy business, since many coaches are out there just to recruit a bunch of people in and make money, it is still legal.
The Downside To This Type Of Business
There is a big downside to this type of business, or any MLM business for that matter. This is something that people never tell you… Especially if they are trying to recruit you in.
While MLM’s like this offer a lot of potential to move up within the company, since there are so many ranks and benefits to be had moving up there all those ranks, the big downside is that they actually make it more difficult for the majority of people to make money.
You see with a pyramid- like structure such as the MLM structure, the majority of distributors are at the bottom of the pyramid. As we know there are really many benefits at the bottom… You have to work your way to the top to start receiving all those commissions flowing out from the bottom to you. This is good for those at the top but for those at the bottom they just end up getting what could possibly be money in their pockets, sucked away from them in funneled out to those above them.
I hope this makes sense. In a nutshell what I am saying is that money is being siphoned from the bottom to the top and the majority of people are at the bottom, which means they are getting the short end of the stick.
This is one of the reasons that MLM businesses have such high turnover rates… There just much more difficult than people are led to believe most of the time.
Final Thoughts – Good Opportunity?
If you are thinking about joining Optavia as a coach and looking to capitalize on this business opportunity I am not trying to steer you away from it. I’m just trying to give you a better view of what is really going on here so that you know what you’re getting yourself into if you do join.
Some people love MLM businesses like this and really excel at them, but then again many people end up failing miserably. It all depends on you and your situation. The bottom line is that to really make any business like this you’re going to have to be darn good at recruiting others in. Those that make it to the top ranks within the company are recruiting and constantly. Remember, these businesses have high turnover rates so you never can just stop recruiting and expect the money to keep flowing inconsistently.
If you do think you have what it takes to recruit inconsistently and you really do like the products that Optavia sells, and you have a passion for helping people lose weight, then go for it… I wish you luck.
For those of you who are starting to have doubts on this whole thing, you might want to take a look at what I do to make a living online. I started making money online back in 2015 and went from $0 to now making over $6000 per month. Why I’m telling you about this is because I work for myself and have my own home-based business, which is in a way similar to what you would have working for a MLM company like Optavia.
But anyways, you can click the button below to see how I make money online and also learn how you can get started doing the same…
Please leave any questions, comments, or concerns below and I will get back to you as soon as I can 🙂
Also: You might want to take a look at my list here of top picks for earning an online income.