Back in 2009 I wrote a post Let’s Talk About Tools Part I, beginning a conversation about an area that has been of some controversy in the Amway world – the promotion and sale of Business Support Materials or BSM. After a mere 5 year break I’m finally here to talk about Part II – Do Diamonds make most of their money from selling tools?
Just today I saw a claim from an MLM critic that (in 2004) “the best of the best (Diamonds) were earning $250k/yr, but only $60,000 from sales/downline sales.”
He was claiming that while Amway Diamonds and above were making more than $250,000/yr, only about $60,000 of that was from the sale of Amway products through their network – the rest from the sale of “tools” – books, CDs, and seminar tickets. It’s not an unusual claim. Amway critic “Joecool” regularly makes similar claims, and former IBO Scott Johnson (aka Tex) is absolutely obsessed with the idea, commenting about “Stop the Amway Tool Scam” on virtually any news article or website that mentions Amway.
So is there any truth to this claim? As I point out in Part I, successful Amway IBOs can and do earn money from (1) the production and resale of training products and services to Amway organisations (2) the sale and distribution of tools through one’s own downline and (3) by selling their services as professional speakers.
So how much do they make?
Several years ago I and a number of other Amway bloggers were invited to participate in a panel discussion with Amway staff. One of the invitees was the tool-profit obsessed Scott Johnson, so I decided to see if I could get some hard data and information about how much Diamonds made from BSM sales. I emailed all the various “support organisations” I could find contact information for, including Britt WorldWide (BWW), eFinity, INA, Network 21, Yager Internet Services and others to see if they would share some information. Unfortunately only one of them was willing. For confidentiality reasons I won’t name them, but they’re a very significant and large group.
For this company, qualified Amway Platinums and above could earn a monthly volume rebate on the BSM purchased by their Amway organisation. CDs for example sold for a retail price of $7. However, just like with Amway, there was an increasing discount (paid as a rebate) for larger volumes, as follows –
A similar rebate scale works for tickets to seminars. For example, qualified Emeralds and above earned the following rebates on tickets to major Weekend Seminars –
The schedule works like the bonus brackets of Amway, so a Diamond earing at the “WES 250” bracket would most likely be “paying out” of their bonus to at least a couple of Emeralds. A Founders Platinum with a volume rebate of 75 cents might be paying out 50 or even 75 cents of that to another downline Platinum.
In addition this organisation pays speakers to present at major functions. Airfaires, hotels, and a per diem for expenses are paid, along with a speakers fee. This fee averages about $3250.
Now, just like with Amway, there are huge differences between organisations. A Diamond can have 6 platinums all in the US, or thousands of platinums spread around the world. So there can be huge differences in their Amway income, and huge differences in the volume of BSM materials they move through their organisation. But how does the BSM income compare to Amway income?
Well, in 2007 the average North American Emerald earned around $70,000 from Amway.
The average North American Emerald in this organisation in 2007 earned around $7,000 from BSM rebates and speakers fees combined.
The average Emerald had “system” or “tool” income of around 10% of their Amway income.
In 2007 the average North American Diamond earned around $155,000 from Amway.
The average North American Diamond in this organisation in 2007 earned around $23,000 from BSM rebates and speakers fees combined.
The average Diamond had “system” or “tool” income of around 15% of their Amway income.
Now, this data is now 7+ years old and it’s important to note a few things. First of all, different BSM companies calculate their rebate systems in different ways. I’m told for example that in the past some BSM companies paid their rebates not based on volume, but based on the pin level they had achieved. So someone who had qualified Diamond received the Diamond rebate level – even if their volumes had dropped and they were no longer qualifying as an Amway Diamond.
Different groups also have different numbers of CDs and meetings they encouraged their groups to attend. I’ve heard of groups that encouraged the members to buy as many as 10 CDs a week. Others are 4 or 5 a month. Obviously if you’re selling a lot more CDs then you’re making a lot more money from this income source. Similarly some speakers are far more in demand (or have far more personal desire) to be on the speaking circuit, and this earn more from that income source. There are also other differences in how the profits (if any) of the production companies are used and/or distributed.
So yes, some Diamonds, in some organisations may earn more from their BSM related activites than from Amway. But this is unusual, not the norm!
Furthermore, in 2007/2008 Amway implemented a whole new accreditation system for companies that supplied BSM to Amway IBOs. As part of this Amway required the companies to allow an independent marketing firm to study their compensation plans for fairness and Amway’s approval. Many changes had to be made – including moving from an “pin level” based rebate to a volume rebate. On top of that, Amway also drastically increased a range of bonuses. In 2007 the average Diamond earned around $155,000. In 2014 the figure is over $600,000.
In the past, cases of Amway Diamonds and above earning more from “tools” and “the system” than from Amway occurred but were not common. In 2014 it’s virtually non-existent.
No, in general Diamonds do not make more money from tools than from Amway.
30 thoughts on “Part II – Do Diamonds make most of their money from selling tools?”
Thank you for posting this and trying to get the facts straight. I understand that Amway itself is not a scam, the opportunity is not a pyramid, and the education is not a scheme; however, there will always be people who are in the system that do wrong. Whether this means exaggerating the income to work ratio, forcing new IBOs to purchase absurd amounts of BSM or products for volume, or intentionally sponsoring new IBOs without helping them to become profitable through customer sales.
It’s refreshing to see someone on the internet posting relatively neutral, fact-based, information.
Easy answer. Have a diamond come forward and show a neutral party their profit loss business only statement. That will show their actual earnings without reveailing details to the world. Frankly. if diamonds are making claims about how rich they are, surely they shouldn’t mind proving those claims.
If not, people should run the other way when prospected.
So someone makes a claim without any evidence, and people should jump to prove it wrong? You think it would help? People still believe Obama wasn’t born in Hawaii after he produced his birth certificate. As it happens there are things like the Duncan bankruptcy documents that already show the claim to be wrong.
I don’t understand why this is even viewed as a bad thing. People have no problem spending THOUSANDS of dollars at schools for education and HUNDREDS of dollars on their education tools, books, softwares, etc, to put towards a job, to make someone ELSE money, but they think buying a $15 book from someone is a scam and evil and a manipulation consipiracy? The tools and books we read are significant and helpful in so many areas of life. They don’t care if you buy it from them or from chapters, but it’s cheaper to buy it through your OWN store and put money back in your pocket rather than buying over priced books from chapters and putting money in their pocket. These people have spent years, some decades on getting educated, becoming successful and learning how to become mentors and teach others to do the same. Why shouldn’t they get paid for their time and hard work?
I have a question. Has there ever been a new Diamond (in the past 20 years) that built an Amway business to the Diamond level or higher, but didn’t use the tools or system? I’m just curious. Any information would be appreciated.
built it to Diamond or built to Diamond and kept it there?
Good question. t would be interesting to know how much one makes per HOUR doing Amway. In other words, how many hours a week must one of these Diamonds put in in order to generate that kind of income?
When you run your own business you don’t work for an hourly rate. You’re aiming to both generate an income and an asset. I stopped building Amway in Australia back in 1998/1999 and continued to receive money from that work until I neglected to renew this year. I believe my (former) wife is still getting money from it. How do you calculate that in to an “hourly rate”?
I’ve never seen any Diamond’s tax return so I don’t know how much of their income comes from Amway and how much comes from tools.
I personally don’t like the idea of distributors making money off their downline from things outside of the business itself. In fact, most companies in our industry prohibit distributors from trying to sell tools, leads, websites and systems to their downline.
At the end of the day, it is an individual decision. I think there should be a clear disclaimer to each new person (in writing) about how much and whether or not their upline makes money from recommending certain business toolsl, so there is no misunderstanding. I think it’s the ethical thing to do, similar to an affiliate disclosure.
I know that if my upline or sponsor (I’m not in Amway) was recommending a tool or system that they made money from my purchase, I would be hesitant to say the least. I wouldn’t know if they had my true interest at heart or if they were only worried about padding their wallet.
Just to clarify. I am not against business tools. I just think they should be sold at cost and sold by the company, not by distributors.
Just my two cents. What do you think?
I totally agree. In fact, I have followed Walter Bass’s lead and will sometimes give new people books, such as “How to Win Friends and Influence People.” It always has to be a judgement call on how much you should do to help people get started.
Tools are needed to build big and stable business, if you have a personality to lead +100 people without continous reading and keeping you in focus, just do it. It is not mandantory to buy any BSM material. It is up to you. What do you want? That is the question. That is how it works, until people focus on how much money others make, they have never get success. It is just distraction and another exception.
Calculate, think, distract yourself…stay in the line.
I do not see here amway facts
i’m 18% and happy to learn how my upline make money. Be cause I spend moré thand $60K on my profesional career and did not have succes . But Equipo Visión have all The tools to have succes in ebrety single part of you live. me Gusta Tu Misión.
I’m glad you addressed this issue on a pro-Amway website, but the fact that you only got any statistics from one of the support organizations doesn’t do much to advance your argument. If you had data from all or most of the organizations you listed (because those are all support organizations I’ve heard of), I might be more inclined to buy your argument.
Well, (a) this particular organization is the single largest in the world and (b) Amway’s Accreditation+ now requires similiar models, assessed by independent consultants appointed by Amway (c) there is little evidence that it was previously a major problem.
Data from a bankruptcy involving a significant pin in a large US organization showed his BSM income plus speaking fees at best matched his amway income, it didn’t far exceed it as has been claimed. Other lawsuits have had platinums, emeralds, and even diamonds accusing other people of making more from the BSM than Amway (in other words, the accusers themselves weren’t) so even in the past I don’t think it’s been anything like the issue some believe. Now clearly there have been cases where we know it was happening (IBS in the UK for example) but again, not the norm.
Interesting how the numbers have changed since 2007. Tracey and Kimberly Eaton got a 250,000 founders diamond bonus in one month. Not including their regular monthly income. Dean and Marcie Whalen when they earned their founder’s Emerald Bonus was a 75,000 bonus on top of their monthly Amway income. God knows what it is now that they’re also Founder’s Diamonds. They should be getting that soon.
I made $78,000 as a founders platinum in 2011, I don’t understand how the ave Emerald made $70k in 2007. That’s sounds super low. I know Emeralds making $250k/yr purely in Amway income. Amway has really pushed in alot of new money and people are taking advantage of it compared to 2007 apparently.
This is heartening to hear! Yet there is a persistent yelling from within, ‘that uplines narcissistically choose downlines to higher pins depending upon the downlines profitability to them in respect of tools and diff. Commission.’ for example an Upline Founders Platinium is mightily happy because he doesn’t have any Downline platinum in his group. Now this very people accuse and condem their Downline about stinking thinking hindering their progress, what about such uplines then? The truth is the system havoc allows these uplinks to manipulate minds and extort money by dumping tools and then espouse tools flow equals mont flow! All in all system and tools is a double edged sword and a painful hook unless the tap is in your hands!
Got to look at what really matters…Do you need to use the tools or not? If I want to learn something I buy the book, the audio or take the course. I don’t question weather or not the publisher or the author or the university made money on that transaction.
As far as this subject is concerned I think that if someone learned what it takes to build this business and he is willing to share that information that he had to work hard to get, he should be compensated.
Its is doubtful that more money is made with the tools than with the business at those levels. Some exceptions would be where the owner of the tool system might make more for obvious reasons. but not all the time.
The other might be where teams from other lines of sponsorship use your system so the number of the people on the system would greatly out number the down line in his group.
Lets say you own a car dealership… after a few years people need to get those cars worked on, so you open a car repair shop. lets say that people who bought cars at other dealers need their car worked on and come to your car repair shop because you have a high success rate… Now if you made more money from your car repair shop than your dealership what’s wrong with that?
All this is pretty obsolete now anyway. Amway training is free and covers most everything. I don’t use a system at all. but when the audios come out in mp3 (or the like) so I don’t have to pay shipping on them I will subscribe because I like the story’s, and I like to see what others have done in some situations.
100% agree! I was kind of surprised to discover there was a controversy of this issue years ago. Call me naive but I just assumed if someone is selling me something, then someone is making money out of out! Never had a problem with it. If I think it’s a value I buy it, if I don’t, I don’t. Pretty simple really!
Ouch, that explanation made my head sore. Just joking. But seriously, wouldn’t it be easier to project income from tools versus expenses and divide that by the number of qualified people receiving tool money? For example, a function costs $100 and the expense (per person) is say $40. That’s $60 net per person. So say there’s 10,000 IBO’s at a function, they would make $600,000 net. Divide that by the number of shareholders.
They figures I gave where actual averages calculated from payouts. Why would you try to do more complicated calculations that require now income and expenses for every event? Not to mention then having to factor in indirect expenses – all your staffing costs over the year, investments in new markets, legal costs etc etc etc. Again, the average income percentages I gave weren’t projections, they were based on actual payouts.
Perhaps Brad is a Diamond and is offering a reasonable suggestion.
Why would making guestimates be a better idea than looking at actual payout data?
Perhaps because it is their business and not ours? Why the renewed curiosity? Remember, only one business responded to your request. I ceased doing business (LOA), years ago, with the business I believed responded to you. Many, many more did, also. Much has changed since then.
I’m not sure I understand your point Howard? As I pointed out in the article this is still an issue for many people are critics regularly claim that Diamonds and above make their money from “tools” and not Amway. This is clear data that it was not the norm 6+ years ago when I got the data, and is likely even less usual today. It’s information that should be out there.
David, I agreed with Brad. The point is, you are NOT going to get the information you want. The Critics can say what they want. Amway has fixed the problem. The IBOs (over 30,000) that were part of the problem and didn’t want to be part of the solution are no longer IBOs. The Amway business in North America has rebounded. We are a stronger business today.
Howard, I still don’t understand your point? I got the information and I posted it above, so it’s wrong to say I won’t get the information. I already got it. I haven’t asked anyone for similar information since. I wrote this post because I continued to encounter people making the claim that Diamonds make most of their income from BSM. This is hard data showing otherwise and I’m getting a sense you disagree with me posting it for some reason?
Also, the TEAM group (which I think you are referring to?) was not the only group that had a problem in this area in the past. I wasn’t even particularly considering them when I wrote this post.
I agree totally with the article you wrote. I also agree that “actual” is better than “guesstimate.” I disagreed with the way you responded to Brad. He didn’t respond to you and hasn’t. I agreed with his suggestion. Sorry if my commenting has disturbed you. I will refrain from further comments.
No need to refrain, Howard. Healthy discussion is healthy :). What did you disagree with? I stand by what I said – why try to guestimate averages when you can get the actual averages?