The Karatbars International compensation plan can be very lucrative but there is talk of it being a possible pyramid scheme. Is this just an un-backed rumor or is this a legitimate concern?
This question is a reasonable one considering the recruitment aspect of this business model. In this review I’ll be going over the compensation plan and giving my view of the matter at hand, whether or not its a pyramid scheme, a downside that many people overlook and more.
Karatbars International Review
Ok, just to give a brief overview: Karatbars International is a mlm company that sells gold. Anyone and their mothers can become affiliates for this company and make money by both selling gold products themselves and also by recruiting in other affiliates beneath them and earning from what they earn.
Like many of the mlm’s out there, their products are very overpriced. But this is a discussion for another day. I’m not going to get into that here.
The Compensation Plan
Ok, so the compensation plan is mostly focused on recruitment, which I will go over second. First I’ll briefly touch upon how you can make money by selling these products yourself.
When I say sell them yourself you aren’t going to actually be selling the gold physically to other people. When you join as an affiliate you will get set up with your own Karatbars International website that you can direct people to. When people shop at your site you will be able to earn 6 – 26% commissions from the sale of each item.
These direct commissions are good and all, and can lead to you making some decent money because of the price of these items, but the focus of this comp plan is mainly on recruitment.
By recruiting in other affiliates into this business there are a lot of ways to earn.
The first way you will be able to earn is through selling affiliates business packages. You could kind of think of these packages as a bunch of things designed to help get affiliates’ home businesses off the ground. They come with gold (of course), brochures, presentations, etc. You will be able to make up to 20% commissions selling these to affiliates, which is normally done when you first recruit them in.
I would say that the main part of the comp plan here is the unilevel commission structure. With this you will be able to earn commissions from the people that you recruit in, the people that they recruit in, and so on. You will be able to earn a certain percent in commissions from all the sales in your organization, aka your downline. And of course the percentage that you earn is related to the amount of sales that have… the more product value your organization sells the more potential to earn higher commissions, which in turn gives more incentive to go out and recruit a bunch of people in.
They also have a Unilevel Generation Bonus, a Karatbar Pool, and a Dual Team Commission structure (which is a binary structure where you earn commissions once you read a certain amount of sales on both sides of the downline), but I’m not going to get into all of this. You can obviously see that the focus of this entire comp plan is on recruitment which is my point.
Pyramid Scheme?
There are a few things that are a bit “shady” about the business model here. Obviously they are focused on recruitment above all else. This is a bit suspicious but it is ok. They are allowed to put focus on recruitment as all mlm’s do. The question is whether or not they put enough focus on retail sales?
There isn’t much focus put on retail sales but I do think they put enough to be considered legal and not a pyramid scheme. The direct commissions from retail sales are the first thing covered in the compensation plan and your personal sales (and everyone else’s personal sales) play a big role in the unilevel commissions structure.
The Downside to This Business Model
While I really don’t think this could be legally called a pyramid scheme, the recruitment aspect of it all does come with a major problem….. and this is that it makes it much more difficult to make money. This is what many people overlook and don’t realize in the beginning.
As with all mlm’s, much of the income that you could be making on sales is taken out of your cut and paid to affiliates above you in the form of commissions. Instead of earning.. lets say 35% commissions on retail sales, you only earn up to 26% commissions and the rest is passed up to affiliates above you…. just as you can earn from affiliates beneath you.
This can be good if you recruit a lot of people an build a big downline but for most people it will just make things worse. The fact is that the pyramid-like mlm structure favors those at the top and makes it harder for those at the bottom…. and of course the large majority of people are at the bottom. This is why there is such an insanely high failure (turnover) rate for mlm businesses.
I review and look into mlm opportunities all the time, most recently Shaklee & Zeal, and they are all the same when it comes to this.
Final Thoughts on This Opportunity
Well I wouldn’t call Karatbars International a pyramid scheme, nor would I call it a scam. However… its just not a great opportunity for many out there. Statistics prove this to be the case when it comes to mlm’s.
I personally stay away from them because you have to be one heck of a recruiter to really make good money, which I am not good at.
But if you think you would be good at it and you like the overpriced gold then go for it…. just be realistic and don’t expect it to be easy.
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Questions, comments, concerns? Leave them below in the comment section and I’ll get back to you soon ?
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