Now each distributor is inspired to grow his business and eventually become a direct distributor himself. The distributor is working his business as he was taught. He is buying standing order tape, attending all functions, and showing the plan 10-15 times a month. Let's add up all the expenses that all distributors are spending working the "Direct Distributor Group". I assume the distributor just buys from his business with little or no retail sales. This is the commonest form of Amway/Quixtar promotion. It was the way the business was shown to me. Retail business is assumed to be zero for now. Few distributors retail product anyway. The 10 customer rule is largely ignored. Retailing is not a factor probably because the prices at "Amway Suggested Retail", would be even less competitive.
From the Yearly Expenses Table the normal potential recurring distributor overhead expenses are around $3,256 for a single person, and $3,800 for a couple. An active distributor admitted to me that this is about what he spends each year on his business. Of course costs can vary by line of sponsorship. The costs for a married couple will be more since 2 tickets will have to be purchased for events. Food and lodging will also be more expensive for couples. For this model each of the 75 distributors spends $3,256 each year, or a total of $244,200/year as a group in overhead to build their businesses.
As people become direct distributors, their downline businesses break off to form a copy of the model we just described here. The "Direct Distributor Group" of 75 people is spending 75 * $3,256 = $244,200 per year on overhead expenses compared to consuming just $180,000 per year of product. The distributors are spending more on business overhead than they are consuming in product! Even if distributors were saving 30%, as is commonly claimed, this leaves a total of $55,000+$54,000 or $104,000 to be split up among the group, or $1,386 per distributor as "income". Distributors are reaping a potential benefit of $1,386 per person, but overhead costs are running at $3,256 per person. This is a negative sum game, and costs the average distributor $1,870 in yearly losses!
If distributors spent only $1,386 per year on overhead, which would entail just standing order tape, 2 functions and some travel, it would be a zero sum game, since the distributor just breaks even.
