A binary plan is a multilevel marketing compensation plan which allows distributors to have only two front-line distributors (see illustration). If a distributor sponsors more than two distributors, the excess are placed at levels below the sponsoring distributor's front-line. This "spillover" is one of the most attractive features to new distributors since they need only sponsor two distributors to participate in the compensation plan.
Binary plans are so named because they are built on a matrix of two. You can sign only two people onto your first level. Everyone else goes beneath those people. One of the good feature in binary plans is that you are not paid base on levels at all, but instead, on a specified, maximum purchases (over some period of time, often weekly). It pays on that amount regardless of how many levels down you need to look to reach that total. So the number of levels between you and a given recruit is not especially relevant. The thing that determines whether you get a commission from that person is not what level he is on, but rather how much purchase volume is generated in the levels between you and that person.
Put differently, a matrix plan (not a binary plan) pays off on all purchases that occur through a specified maximum number of levels, regardless of how small or large a cash amount that might be. Binary plans turn that around. They pay off on all purchases that occur through a specified maximum amount, regardless of how many levels away you have to look to accumulate that total.
The advantage of binary plan over the standard matrix is that you can easily benefit from sales that occur many levels away from you, if that's where the volume is. The disadvantage to the other differentiating feature of a binary system is the "balancing act."
Since you can only sign two people directly under yourself, you end up with a structure that has two "legs" - two spots that in turn have all the other spots under them. In any given pay period, the two legs will likely be unequal (one will have generated more sales than the other). A binary system pays based on the volume of the weaker of the two legs. There is usually some mechanism to carry the unused volume of the stronger leg forward to the next pay period.
Even though this structure encourages spillover (that is, you will likely have people placed under you by your upline), those people generally end up in one leg, and you must balance that volume with recruits of your own (in your other leg) in order to benefit from that spillover.
Another common feature of binary plans is that there is usually some mechanism by which you can re-enter your own downline. This allows you to create a second position in the matrix that shares one leg with your initial position. For that position to receive commissions, you only need to build one new leg, since it would have its first leg essentially pre-built for it from the efforts of maintaining your primary
If you join a binary system in a group that you feel is likely to produce spillover, it is a good idea to start with two positions if possible. If you place your own recruits mostly on the two legs of your second position, you will probably maximize the income from those people as they balance each other; and their combined total will all end up under one leg of your primary position which will, in theory, largely be balanced by the spillover from above that will end up in the other leg of that first position.
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