So I’m going to take a wild guess here… I’m guessing that you were asked to join Rodan and Fields by someone or maybe someone you know was asked to join. And because of this recruitment style of business you are now wondering is Rodan and Fields a pyramid scheme? Its a logical question to ask and in this review I’ll be answering it.
I’ll be breaking down the compensation plan and going over how you really make money. And by the way, I am not promoting this business nor am I affiliated with it in any way, so I’m not going to try to make it sound better than it really is.
Rodan and Fields Overview
Rodan and Fields is a mlm (multi-level marketing) company in the skincare niche. There products seem to be good but this is not the point of my review. Here I’m going over the business model.
As with any mlm, there are multiple levels of compensation and consultants are able to make money by recruiting other consultants into the business. This recruitment structure is why so many people are wondering whether or not its a pyramid scheme and this is exactly what I’m going to get into.
First you must know what a pyramid scheme is…
What Is a Pyramid Scheme?
A pyramid scheme, which are illegal in the US and many other places, are recruitment style businesses that are basically based on endless recruitment of new members. So for example you buy in, then you recruit others to buy in, then they recruit others to buy in and so on.
But determining what a pyramid scheme is or not is harder than it seems. Many pyramid schemes are what you call “product based pyramid schemes”, meaning they do sell real products. And the fine line comes with how many products are being sold. If a business relies on recruitment of new members more than product sales to the general public, than they are pyramid schemes. This is why you see some mlm opportunities implementing rules that 51% of your sales must be to retail customers, not recruits.
So whether a mlm opportunity like Rodan + Fields is in fact a pyramid scheme all comes down to the products they sell to the general public. Recruitment is legal. There are plenty of legit mlm’s out there and all of these rely on recruitment. But as long as they don’t rely on it too much they are good to go.
A Look at The Compensation Plan
The Rodan and Fields compensation plan provides 5 ways to make money. These include the following…
- Retail Profit – You can buy products at wholesale prices and sell them at retail, earning retail profit
- Consultant Commissions – Commissions made from selling to consultants (ex: The $45 business portfolio that is required to become a consultant)
- Personal Team Commissions – Commissions made from the sales your team (aka your downline) makes
- Generation Commissions – Commissions made from sales other teams in your downline make
- Performance Bonuses – Bonuses for achieving higher ranks
The only way you earn from selling products to the general public is with retail profits. Every other way to earn is based on recruitment. With consultant commissions you are making money from products bought and sold by consultants you recruited in. With personal team & generation commissions you are making money from the money your downline makes. And with performance bonuses you are making money by achieving higher ranks which can only be achieved with recruitment.
You will be able to make up to 15% on the people you personally recruit in and then 5% on the people that they recruit in. With the generation commissions you can earn down to 5 generations deep. Generations are like teams so you will basically be earning from teams that were developed in your downline.
Moving Up The Ranks
In order to make good money you have to move up the ranks. You will see why in a minute.
To do so you have to recruit in new consultants, make retail sales or purchase products yourself, and have enough preferred customers & consultants purchasing products beneath you.
If you really wanted to, you could literally move up the ranks by buying products yourself and recruiting in other consultants alone.
They do have legitimate good products that consultants sell, they do rely on product sales for revenue, and they do encourage retail sales. However, I don’t see any safeguards in place to ensure that real retail sales to the general public make up most of the revenue. It seems to me that one could solely rely on recruitment and buying products themselves to move up the ranks and make good money. This is what I don’t like.
I’m sure there are many people out there that are making plenty of retail sales for Rodan and Fields and doing great things, but I would like Rodan and Fields to step up to the plate and ensure that consultants can’t just endlessly recruit new consultants to get by. But they don’t and for this reason I don’t really care for the compensation plan. It might not be a pyramid scheme but it is on the shady side.
The Downside to MLM’s That No One Ever Tells You
If you are getting recruited into a mlm opportunity all you are going to hear about is how great it is and how much money you can make. But you won’t hear the dark secret that is the downside to every mlm that exists… which is that they make it MORE difficult to make money.
Let me explain:
With a mlm commissions are flowing from the people on the bottom to the people on the top. So those at the bottom are having money taken away that they could potentially be making and this money is going to those above them. This makes it more difficult for those at the bottom to make money and is more rewarding for those higher up that have recruited many consultants beneath them and are reaping the benefits.
And of course, with the pyramid-like structure that mlm’s have there will always be many more people at the bottom struggling than at the top. This is how it works and how it will always work. They are very enticing because they have lots of potential to make good money but in reality they make things more difficult and that is why most people fail miserably with opportunities like this. MLM’s have extremely high turnover rates for a reason.
You can see this is the truth by looking at Rodan and Fields income disclosure statement here in which over 90% of consultants earned on average less than $1000 annually…
Conclusion on Rodan + Fields
The reality is simple. With mlm’s like this it is difficult to make money. Its the same deal for all of them… It Works, Herbalife, Youngevity, etc. If you are good at recruiting then you might be one of the few that make very good money with it but this is easier said than done.
Join if you want to but this pyramid-like payment plan is exactly why I stay away from mlm’s.
Please leave any comments or questions below and I’ll get back to you soon. Also be sure to check out how I make a living online if you are interested in working from home.