Amway/Quixtar Negative Sum Game (cont'd)

What Happens When We Add Bonuses?

If we try to improve the situation by adding the bonuses above direct including the 4% leadership bonus, Emerald bonus, Diamond, we add anther 6.5% on BV.

Income Statement For the All -- Excluding Tool Profits
Revenue:
Product Sales at retail 180,000 + 30%	$234,000
25% Direct Distributor Rebate (25% of $180,000)	45,000
Q-12 Reqaulification bonus	10,000
Bonuses above direct (6.5% of $180,000)	11,700
Total Revenue	300,700
Expenses:
Cost of goods sold	$180,000
Overhead Expenses (for 75 distributors)	244,200
Total Expenses	424,200
Net Loss	(123,500)
Net loss per distributor	(1,646)

Distributors would have to retail ($1802/.55) = $2993 per year of products at retail prices to generate an additional $1,646 in gross margin just to break even!

Now Let's Get Real!

Now let's take the example to the limit and make realistic assumptions instead of unrealistically conservative assumptions. Let's remove the 30% savings by just buying for your self. Let's assume the "Direct Distributorship Group" must pay wages @$7.50/hour and each distributor works 10 hours per week (520 man-hours per year).

Income Statement for the "Direct Distributor Group" Including Labor Costs
Product Sales	$180,000
25% Direct Distributor Rebate	45,000
Q-12 bonus	10,000
Bonuses above direct (6.5% of $180,000)	11,700
Total Revenue	246,700
Cost of goods sold	180,000
Overhead Expenses	244,200
520 hours @ $7.50 per hour *75 people/year	292,500
Total Expenses	716,700
"Direct Distributor Group" Net Profit	($470,000)
Net Economic loss per distributor per year	($6,266)

So in any one "Direct Distributor Group" of 75 people, people are spending 39,000 man-hours per year, and $244,200 in overhead expenses to distribute $180,000 of product per year to themselves!

This business is terribly inefficient at distributing goods and services. In man-hours alone, it is less than $5 in sales for every hour invested in the business! If everyone had no expenses, the 39,000 man-hours would translate into an hourly income of only $1.41/hour! This business would go broke very quickly, as it would be losing $470,000 per year! Since the losses are spread out over 75 dream-filled distributors, who subsidize the business with a full time job, it is no big deal to lose money. They have a dream that they will make it back when they "make' it. A chain letter is a more efficient game than an Amway/Quixtar Distributorship run by the AQMO's plan, because the chain letter group as whole does not lose money: money is only redistributed in a chain letter.

Conclusion: An Amway/Quixtar distributorship is a "Negative Sum game" when everyone is trying to build the business by the AQMO's plan, of "just buying for yourself".