What is a Pyramid Scheme?
By Brad Schneider
http://www.bradsblog.net
Most people these days have heard of the term “Pyramid Schemeâ€, but not everyone knows quite what the term refers to. Pyramids are businesses that involve earning money from those who are beneath you in the pyramid. Many of these businesses are perfectly legitimate, and one can be quite successful without recruiting anyone else.
There are many businesses that you might be familiar with that are pyramids, including:
Tupperware
Mary Kay
Amway
Quickstar
Creative Memories
Stampin’ Up!
The “Bad†ones are those that will not make you money unless you recruit more and more people. These are the schemes that bring the bad name to the business, and are otherwise referred to as “Pyramid Scamsâ€. If and when you are approached to be recruited, you should ask the hard questions. Be sure to ask how much money you make without any recruits. Also find out how long they have been affiliated with the program, and how many recruits they have underneath them.
The only time I would recommend getting involved with one of these pyramid type businesses is where you make regular purchases and you enjoy dealing with a certain product (Such as Mary Kay, Stampin’ Up!, etc.)
Brad Schneider writes financial and blog related articles for his blog as well as www.blog-hints.com and www.investingpub.com
This article is copyright © 2005 www.bradsblog.net and is free to distribute as long as this copyright statement and all links and text are included.
This article posted 11 01 05
December 6th, 2005 at 8:51 am
I was doing some unrelated research and came across your article “What is a Pyramid Scheme?” I noticed the list of companies you have down and know a few of them and they are what you call dual marketing or dual marking sales. In dual marking your goods for sale are purchased from the company not people above you and you earn your money directly from your sales. Any bonus are paid by the companies and not the people below you. The people on your team or people you recruit different companies use different terms all the same thing though, you earn bonus off their sales level but your bonus does not come out of their sales profit the company pays it out of the companies share. That’s the real difference between Pyramid and dual marketing. Pyramid Schemes you are getting the money out of the profits of the people below you, cutting into their income. I do very much agree with your statement about getting involved ” where you make regular purchases and you enjoy dealing with a certain product (Such as Mary Kay, Stampin’ Up!, etc.) “. Someone thinking that any of these business are something that you can just sit at home and make money with little to no work would be wrong. Any direct sales is a full time job if you plan to make a living at it, it is possible but with any business requires work. You don’t get paid for just showing up like a 9 to 5 job. I would not recommend pyramid based companies like Amway etc.. to anyone and dual marketing Companies like Mary Kay, Partylite, etc.. I would not recommend if you know you have a self motivation problem.
September 18th, 2006 at 5:01 pm
I could not find your information on Direct Buy. Thanks!