Some direct selling companies charge their independent representatives annual renewal fees. Watch our video to learn the basics about renewal fees.
Then, read the rest of this post to learn more.
Required Or Optional Monthly Fees
When it comes to charging your independent reps required or optional monthly fees, your direct selling company has choices. This post is about these choices and each choice has strategies and consequences.
Mandatory or Optional Monthly Fees
If you are or will be charging your independent representative’s monthly fees for services, you will need to decide if your fees will be a requirement to remain a representative or if they will be optional to receive specific tools, benefits, or services, none of which are required.
When you choose to make your monthly fees required, you will observe the following effects:
- For a very small percentage of reps, your monthly fees will motivate them to continue selling and/or recruiting for a short period of time.
- However, because most reps do not generate sales and earn income every month, for most of your reps the required monthly fees will become the final reason they quit.
- Some of your reps will continue to pay the required monthly fees for extra months when they forget to quit, which is financially healthy for your company.
If you believe that the tools, benefits, or services your company provides are essential to the success of your representatives, you probably want all of your reps to use them. However, when you make these fees optional, most representatives won’t pay for them!
A survey of direct selling companies with optional fees for replicated websites revealed that only 20-35% of representatives choose to pay for them.
The majority of your reps will choose not to pay for optional tools, benefits, or services for these reasons:
- They don’t believe the tools, benefits or services are worth the money.
- They are not earning income every month from their independent rep businesses to cover the cost each and every month.
Nearly all representatives don’t like to be charged fees in months when they are earning no money.
Some direct selling companies include in their enrollment options or starter kits one or more months of optional or required services. This approach looks great on the surface, but it merely delays the inevitable effects. When the specific numbers of months have passed, the effects listed above will be observed.
Did you know that you have other options? If not, you will know this momentarily. Keep reading!
Mandatory When Active
Here is one innovative approach you may wish to consider for your company which will put your important tools, benefits or services into the hands of every representative, but not charge every representative for them.
Make your monthly fee mandatory, but assess them only upon representatives whose monthly income exceeds the monthly fee. In months where one’s income is less than the mandatory monthly fee, no monthly fee will be assessed.
Bury Your Fees
Don’t charge monthly fees. Instead, calculate the expected revenues from your mandatory or optional monthly fees per representative over their first year and add this amount to your enrollment fee or starter kit prices.
Optionally, implement an annual renewal fee to collect this amount again on representative annual anniversary dates.
Now you know understand how when it comes to charging your independent reps required or optional monthly fees, the approach your direct selling company takes has consequences. Choose wisely.
Also, don’t forget that your MLM software will need to support whatever approach you choose.
Are you building a party plan or network marketing company, or seriously thinking about it?
Your greatest challenge is that you don’t know what you don’t know. We can help you with that.
In addition to consulting with companies in the USA and around the world to build and improve their direct selling businesses, Sylvina offers an insightful 250-page “how to” book for new and young MLM and party plan companies. First published in 2008, Start Here: The Guide to Building and Growing Your Direct Selling Company is available now in its 4th edition.
Our book will do more than just save you money and time. It will tell you what to do, what not to do, and teach you what you need to know to have a successful direct selling company. Without our book, you may make big mistakes that could cost you thousands of dollars and hundreds of hours of your time. At $299 plus shipping, our book is a great value.
BONUS: Each book includes one hour of consulting time for your business, a $200 value.
Inside Our Direct Selling Guide
Each chapter includes vital information, business building tasks, thought-provoking questions to direct you to action, examples and suggested next steps. Topics covered include:
- About Direct Selling
- Telling Your Story
- Building Your Team
- Positioning Your Company
- Product & Income Opportunities
- Compensation Plans
- Assessment of Competitors
- Initial Recruiting
- Legal Issues
- Sales Tax
- MLM Software Options
- Business Plans
- Major Task List
- Business Building Checklists
- Pilot Program Considerations
and many more.
For more details, view the Table of Contents.
Would you like to know more about what others think of our book? Browse our Guide Comments.
While there are common elements between network marketing businesses, party plan businesses, and other types of businesses, our guide addresses the need-to-know differences.
This extraordinary guide offers not only important reading material to teach you what you need to know, but also groundwork activities at the end of each chapter to give you clarity, focus, and a path to take you to your goal.
If you are building or growing a home party plan or network marketing company, this guide was written for you.
The price is $299. Included with each guide is one hour of consulting for your business, a $200 bonus value.
Learn what you need to know and do to be successful. Avoid mistakes that may cost you thousands of dollars. Save valuable time and money. Grow faster.
Start here. Start now. Order your copy of our book today.
We recommend that if you charge a renewal fee, include something of value in exchange for it. Don’t charge a fee just “because” without explaining what is being paid for.
If your company charges a renewal fee, how much is it?
If you need help to decide whether to charge a renewal fee, we can help you with that. We can be reached at 503.244.8787.