Top Network Marketing Company – Why Are The Products So Expensive?

I'm sure you've heard this question before, Why are top network marketing company products so expensive?

This is one of (Ever), ever-present questions that networkers and direct sales people will continue to encounter (probably) forever – and there's always more to it than meets a simple answer.

One key is not to side-step it. Der er gode og egentlige årsager til legitime, premium-priced produkter – og selvfølgelig er der over-priced som godt. Honesty is best, as always, and I'll endeavor to give you the general truth with my answer to the question.

Special Products at Special Prices

First, the products available through top network marketing companies sales and distribution model are mostly what are called "specialty" items. De er højere priced produkter til at begynde med, have mere kostbare ingredienser og mere komplekse designs eller formler; De er simpelthen mer kostbare at lave og pakke. Some well-known non-network marketed examples include Clinique makeup and fragrance products, Apple computers, iPods and iPhones, Armani clothing, Mercedes and Lexus cars.

Unless you're Handelen met een systeem of een scam, deze premiumproducten overtreffen hun goedere, off-the-shelf tegenparts, waardoor consumenten meer en betere voordelen krijgen.

If these products are outsourced by the networking company (produced by a third party vendor / supplier), they are more expensive. Tend to be manufactured in smaller production runs that do not allow for all the optimal low-cost advantages of buying and making in the high volumes of mass-marketers enjoy. De productieprocessen zijn meer complex en exclusieve. The profit margins are higher.

The reason manufacturers and marketing companies select network marketing and direct sales are because these higher-priced products are of higher quality and they therefore require Special methods of distribution and sales.

Simply put, they can not compete with the lower-priced, lower quality "commodity" products, which are sold based mainly on discounted mass-market pricing and brand awareness alone. Think Wal-Mart and Costco.

Specialty products are "education-intensive." They need greater explanation; For example, what formula, ingredients and / or processes makes the product more expensive than those mass-market goods available through direct response marketing (such as the Internet and mail order) or retail chain store sales. Many require demonstration.

Mass-market products depend on advertising, promotion and merchandising at point-of-purchase, all of which are required to get consumers' attention, let them know the product exists "Trial" especially if it's "brand new"), and to give them enough compelling reasons to buy and keep on purchasing.

Going head-to-head with nationally advertised products, many of which are heavily Discounted and sold at the lowest price possible, is a tough game for just about all smaller businesses to win. Imagine trying to sell vitamins or nutritional beverages or "prestige" cosmetics against a major manufacturer selling through Wal-Mart, or a natural toothpaste against a tube of Crest® through Kroger or Publix supermarkets.


Specialty products are perfect for the person-to-person, information-rich education, demonstration and service oriented methods of network marketing. Secondary Network Marketing's "higher price" comes in: the added value that you add as a "distributor" to the specialty products you sell.

Added Value Added

] Network marketing and direct sales representatives add significant value to the product they sell and they are well paid when they do so successfully.

We reach consumers with the awareness of new products and services that ads and merchandising matte R how persuasive or promiscuous – would not be able to reach out and touch. Og ved dygtighed af vores one-on-one, personlige forhold med disse købere, vi appellerer til dem med et niveau af tillid og service uden massemarked, detailproducenten kunne håbe at konkurrere med.

The extraordinary level of service Network Marketers provide is not available when buying through mail order or retail outlets.

For example: Someone tries a network marketing anti-aging health product. It's a real and tangible benefit, part of the product's value. It's personally presented for them – either in person or via mail – with a host of educational material about the product: scientific studies, article reprints, even books or tapes explaining how the product was made, how to use it, its unique features And its benefits.

Within one to two days, the network marketer again contacts the person to follow up, asking how they are doing, checking to see that their customer is following usage directions properly, making recommendations, etcetera.

The network marketeer will also continue to send informative and educational material such as updates from scientific literature. He / she will also let the customer know about other products the company offers that this particular customer with his or her unique needs and wants might also enjoy.

This is an extraordinary level of service that is a real and tangible Benefit for the consumer. Deze soort van persoonlijke en deskundige aandacht is niet beschikbaar wanneer u via de internet alleen, of postorder of meest alle retail outlets.

Er det tilfeller hvor ovenstående uddannelse og service ikke er tilbudt? Det er en af ​​de ting, netværksmarkører er betalt for, og det er en del af produktets værdi. Of course.

Are there products that do not have special ingredients or qualities that support a higher price? Sure.

And are there times when a network marketed product is simply more expensive to pay for the multiple-level commission structure? Yes.

Back in the early 1950s, a dog grooming service was opened in New York City to serve people living in the exclusive Park Avenue, 70th and 80th Streets area. They charged $ 25 to shampoo and clip a dog. They had no customers. Then they jacked up their prices to $ 250 per visit – and were an instant success. The Cadillac Seville, when first introduced in test-market showrooms priced at under $ 10,000, bombed; That $ 14,000 the very same automobile became an instant best seller.

Value is a perception. The relationship between quality, benefit and price, i.e., value is in the mind of the consumer container. Businesses price goods and services according to what the market will bear. Successful marketers come up with just the right mix of value-benefit-price.

The majority of network marketing direct sales products are of the genuine higher-quality variety, not available In stores, special in ingredients, design and making.

Most offer the convenience of in-home or on-line ordering and to-the-door delivery. They are also special in terms of …

Marketing and Customer Service

The network marketing "sales person" adds value to the product through his or her education, Service and sales to the customer.

All of this has its price.

What is the truth about the price of products offered through network marketing? What is the truth about the price of products that are offered through network marketing? Are they too high? And if so, why?

The full answer to this one is complicated. If you need a short one, mine is:

High? Usually, yes.

Too high? Sometimes … yes, but generally no.

So, if they are high, why?

The Truth is, Specialty Products Cost More

Network marketing is predominantly a "specialty Products "business: De produkter som vi sælger mest, tendens til ikke å være den type du ville finde i supermarkeder, drug stores eller andre massemarkeder. De er ikke den slags som kombinerer den lavest mulige pris for det mindst acceptable nivå av kvalitet. For a conventional retail parallel, look at the products in a natural or health food store, beauty salon, boutique or upscale department store.

Specialty products cost more to make. De ingredienser er unikke og høj kvalitet og produktion er lav mængde – de mængder, der fremstilles, er normalt ikke tilstrækkelige til at udnytte de økonomier af skala, der nyder stor-tid, højvolumen, massemarkedproducenter. So, these products are more expensive – both to make and to buy.

Also, specialty product makers usually can not depend on major advertising to increase sales: they do not have that kind of money.

Profit Margins and Markups

Profit Margins and Markups

Here's an example: a discount chain drug store may be able to market a bottle of vitamins that normally sells for $ 3.00 wholesale for less than the normal 33 percent retail profit margin. And, because they buy in large volumes, they will get the product for less than $ 3.00 to begin with.

A natural or health food store might buy that same product at the full $ 3.00 wholesale price, and use a Markup of 50 percent to get their full 33.3 percent retail profit margin.

To the consumer, buying at retail, here's the difference: $ 3.99 at the drug store and $ 4.50 at the health food store.

And then there's "what the traffic will bear."

There are sexy boxes of imported chocolate that go for $ 38.00 each, and poly-bags of 50 mini Reeses Peanut Butter Cups you can get for less than $ 3.80. If your taste tends to be expensive, you'll generally pay more – in "margin" percentages to middle-people and in total dollars.

Let's look at a comparison of one single product offered through the conventional manufacturer- To-retailer distribution system and the exact same product sold through network marketing.

$$$ From Conventional Manufacturer to Consumer

We know specialty products cost more to make;

Manufacturers speak of "Cost of Goods" (CoG): that's the figure that a product costs the Company to make, including overhead, ingredients, packaging and labeling, sales commissions (such as broker's fees), etc.

The very minimum a manufacturer needs to sell that product for double, or a 50 percent margin. Med tanke på at de fleste konkurrerende bedrifter opererer på en seks prosent før skatt, fortjener de 44 prosent å betale for alt annet. So, the $ 2.00 CoG product they make, they sell for $ 4.00.

Now, some manufacturers sell directly to retailers – not many, but a few do, and when they do, they will take a higher profit

Imidlertid, de fleste fremstillingsvirksomheder forhandler, som betaler for varehus, forsendelse og salg af produkter til butikker. Normal wholesale is a 25 percent markup, which you get by multiplying the purchase price – plus freight if not included – at 1.33. So, our $ 4.00 item would be sold by a wholesale distributor to the retailer for $ 5.32.

To achieve a 33.3 percent profit margin, the retailer has a 50 percent mark-up – or higher. Our $ 5.32 product will end up on the shelf at $ 7.98.

Now, this is the minimum scenario – not what normally happens except in the more highly competitive markets. It's not the least bit unusual to find the manufacturer selling that $ 2.00 CoG product for $ 5.00 or $ 6.00 … the distributor working on 35 percent instead of 25 percent … and a retailer – especially from a specialty market segment – look for a 50 percent profit (ie, a 100 percent markup), instead of "only" one third.

And if all of that were true, the retail price of the product through that sales and distribution system would be more like $ 14.95.

$$$ In Network Marketing Direct Sales

Let's work this one backwards.

If the networking company's product sells to consumers for $ 15.00 it will have a average retail commission to the networker or from 20 percent to 40 percent. So, using a 30 percent retail commission, the company's "wholesale" price to the MLM distributor will be about $ 10.50.

Let's say that your company pays out a full 50 percent in downline or organizational commissions. Det vil si at firmaets laveste fraktpris for produktet skulle være halv eller engros, eller $ 5,25.

It's a Question of Value

There is also a higher value, beyond the "specialty products" issues of ingredient quality, cost of manufacture and so forth and that's the education, information and service delivered by The person-to-person distribution network.

Learning the product's proper use, additional uses, history, all about the ingredients, etcetera, is all part of its value.

This last point begs the question:

] "Are products purchased through network marketing higher priced to make up for the payment of commission payments to distributors and their networks?"

Can they be? Yes.

Are they … usually? No and Yes.

In an authentic, intelligent, sincere and sensible network marketing direct sales company, one that is well-managed and directed … a company that understands that the financial health and well-being of the men And women in the field MUST lead their mission, decisions, strategy, policies and procedures … no.

But that new ostentatious corporate headquarters in the prestigious location … corporate jet … an army of " Distributor service "personnel … rock concert" conventions "… $ 50,000" big name "keynote speakers … resort vacations and incentive cruses to exotic locations paid for by the company … luxury car allowances … are all expenses That need to be paid for. Where does that money come from?

Directly (in terms of potential commissions that will not be paid to people) or indirectly (in over-priced products and / or inflated charges for marketing materials, self-replicating websites , Business building tools and trainings), the money comes from only one place …

"So … do network marketed products Cost more? " Sometimes yes and other times no.

Can they be more expensive than similar items or equal value offered in a conventional market such as a retail store? Yes, they can.

In fact, you can find numerous examples of both conventionally retailed products and networking products of similar sizes, shapes and qualities at prices that vary by as much as 30 to 40 percent or more.

The only sure rule in product pricing around the world is, "What the traffic will bear …" No matter what distribution and sales route the product travels. "Let the Buyer Be Aware."

"Let The Buyer Be Aware."

Factor in the at-home shopping convenience … the customer service … the satisfaction guarantee … staff attention … education and information – and in today's increasingly competitive Global marketplace, the "aggressive pricing" posture being taken by more and more networking companies around the world – along with the overall superior quality of the products available through network marketing and direct sales …

… Og jeg tror at et voksende antal kvalitetsbevidste forbrugere vil være enige med meg, topnetverksmarkedsbedriftens produkter representerer fremragende værdi.

Source by John Milton Fogg

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