For the last decade, whenever Amway has published income data for the Amway business they have also reported, based on a survey in 2000, an “average income” for “active IBOs” –
The average monthly gross income for “active” IBOs was $115.
Approximately 66% of all IBOs of record were found to be “active.”
“Active” means an IBO attempted to make a retail sale, or presented the Amway Independent Business Ownership Plan, or received bonus money, or attended a company or IBO meeting in the year 2000.
“Gross income” means the amount received from retail sales, minus the cost of goods sold, plus the amount of Performance Bonus retained. There may be significant business expenses, mostly discretionary, that may be greater in relation to income in the first years of operation.
Amway critics have often latched on to this “average income” and claimed (by falsely assuming all these IBOs are working hard and have business expenses) that virtually all IBOs are losing money and that it’s a poor business opportunity. In reality it’s a very poor and virtually meaningless statistic. There’s a reason why if you google “average income” you’ll be hard pressed to find it. What you’ll find instead is “median income”, which is altogether different statistic. “Average” only really works when you have a group that is homogenous, or members are similar to each other. The group used by Amway is “active IBOs”, and as per their definition includes everyone from the handful of US Founders Crown Ambassadors who have been building their businesses for decades and earn millions, through to the 19yr old college student who joined a few months back and asked their brother if they wanted to buy an XS – and the brother said “no”, and they never did anything again.
Clearly the statistic doesn’t tell us much at all! I can only surmise that Amway keeps publishing it at the behest of their lawyers, who want to keep on the good side of the FTC and ensure nobody can complain Amway gave them an overly optimistic view of their chances of making money with Amway.
So, we’re left with a lousy, misleading, statistic. At least now though, we’re not left with an old lousy, misleading statistic. Recent issues of Amway’s Achieve Magazine have been reporting new data, based on a survey from 2010 –
The average monthly Gross Income for “active” IBOs was $202.
Approximately 46% of all IBOs were active.
U.S. IBOs were considered “active” in months in 2010 when they attempted to make a retail sale, or presented the Amway IBO Compensation Plan, or received bonus money, or attended an Amway or IBO meeting. “Gross Income” means the amount received from retail sales, minus the cost of goods sold, plus monthly bonuses and cash incentives. It excludes all annual bonuses and cash incentives, and all non-cash awards. There may be significant business expenses, mostly discretionary, that may be greater in relation to income in the first years of operation.
While it’s a lousy, misleading statistic, we can at least compare it with itself, and a few changes are apparent. First of all, the “average monthly Gross Income” has increased nearly 76% to $202. That’s well in excess of the 25% you can attribute to inflation over the same time period. Next is that the number of IBOs considered “active” has dropped from 66% to 46%. I’m not quite sure what to make of that number. It’s well known that most people who register with Amway don’t do anything to build a business, with some registering just for cheaper pricing. Amway has however been introducing numerous incentives (such as free shipping) to encourage people to register as customers rather than IBOs. That should have the effect of increasing the percentage of IBOs who fit into the (very broad) “active” category, not decreasing it. It would appear instead that more people are registering and then not attempting at all to earn an income. This may mean the free shipping incentives have failed, and people prefer the discount shopping, or that even more people than 2000 are registering when they probably shouldn’t … or there’s something else going on I haven’t thought of! Either way it just more evidence that Amway critics ,who would have us believe everyone who registers tries to make money, are simply not being honest.
The other interesting change is a clarification of what this income data includes, or rather, doesn’t include – “It excludes all annual bonuses and cash incentives, and all non-cash awards”. This is significant. Take Founders’ Platinum. According to the most recent statistics, Founders’ Platinums in the US earn an average of $40,125/yr. That however includes annual bonuses, such as the Q-12 Platinum and Sapphire Bonuses of $15000 and $20000. This means the “average income” statistic of $202 doesn’t include up to half of a Founders’ Platinum’s income! Not to mention the $1.22 million dollars ($4.48 million the first time) that IBOs like Founders Crown Ambassadors FAA70 Barry Chi and Holly Chen get as just one of their many yearly bonuses. From Founders’ Platinum and above a significant portion of the income comes in yearly bonuses. None of this is included in the “average monthly Gross Income for active IBOs”.
The statistic is even more misleading than I ever thought, and this information puts lie to the critics claim that it’s been skewed significantly upwards by the higher achievers.