« Paul Timmins meets TOD | Main | Joe Land to sue Archive.org? »
June 12, 2004
PV/BV Message from Larry
By QBlog in
Can any Quixtar scholars explain what Larry Harper is talking about here?
» Audio Message from Larry Harper about changes to PV/BV ratio. (May 24, 2004)
"While PV is reduced by 4%, BV is increased by 4% and all bonuses are paid on BV."Ok, that sort of makes sense. Not much else in the message makes a lot of sense to me but I'm not a Quixtar IBO so maybe that's why. I just thought this business was so simple even a moron like me could understand it. Guess I was wrong... again. Lil' help?
Comments
There are 4 numbers in the bonus structure:
1) PV = point value. Just a number assigned to products. This number shouldn't change over time.
2) BV = bonus value. This number is suppose to represent the "current value" of the product; eg it adjust according to inflation
3) IBO cost. I have no idea how they compute this. For coreline, it's less than BV. For non-coreline, it's much higher than BV.
4) suggested retail price.
There are 2 type of products: coreline and "catalog".
In the coreline product, the PV/BV ratio is 2.72 and the BV greater than or equal IBO cost. For the potion & lotion, the BV is about 20% higher than IBO cost and the BV is close to the suggested retail price.
In the catalog product, the PV/BV is 2.00 and the BV is about 20%-40% of IBO cost. The IBO cost is 5% to 15% lower than the manufacturer list price.
What Larry is talking about is making the PV/BV ratio consistent between the 2 different product line to make the bonus consistent; eg, bring the PV/BV ratio to 2.70.
For example 1000 PV of double X would cost an IBO $2k (BV = 2.7k) and it would yield a bonus check for $326 whereas 1000 PV of pillow would cost an IBO $5.2k (Bv = 2.0 k) and it would yield a bonus check for $240.
The change only affect non-coreline product and its purpose is to gradual change the PV/BV ratio for non-coreline to be 2.7.
To continue the above example, once the migration is complete, 1000 PV of non-coreline will yield a bonus check for $326 instead of $240.
If you're reading between the line, you got it half right (see Shawn comment).
What Larry said is correct: on a per dollar spent, there will be more paid out. (This is the BV increasing part).
What Larry didn't say was who would be getting the increased bonus. This is where Shawn is half correct. Because the PV decreased, it take more dollar spent to get the equivalent bonus percentage. The person who would get the increased bonus is the person where a little decrease on PV won't affect them (read platinum & above).
In any case, this only affect non-coreline product which only account for a small percentage of the overall sales.
I personally think it's stupid--they screwing over the new or small IBO when they should be doing everything to make them successful. Decreasing PV is not the way unless they're also decreasing the bonus threshold.
Okay, here is my opinion on how this will affect things.
First off, I would like to point out that Larry Harper said it was going to change 4% per year for the next five years. That means in 5 years there will be a 20% difference. PV will be 20% lower and BV will be 20% higher. I will use 20% in my example.
In order to get a bonus check from Quixtar you have to have at least 100 PV. For those IBO's who are personally using or selling just above 100PV and spending roughly $250 to get the 100PV will, in five years, be spending about $250 to get 80 PV instead of 100PV. In order get 20 more PV a month it will cost roughly $50 MORE per month in personal use or sales. (With Quixtar this usually means personal use since the average IBO personally purchases their 100PV instead of selling it.)
Now... with BV UP 20% in five years an IBO who hasn't sponsered anyone yet but has met the 100PV bonus of 3% will see an increase in their bonus check of .6%. An IBO who is at 7500PV and recieving 25% of the total BV will see an increase in their bonus check of 5%. These increases dont even take into account that now the average IBO is purchasing 20% to get to their minimum 100 PV a month only that the BV has increased 20%.
In my opinon, this will hurt those IBO's starting out due to the extra cash being spent on attaining the 100PV per month level BUT it will help those who are already established by increasing their bonus checks on their downlines spending.
Correct me if I'm wrong but I think I hit the nail on the head here.
I take it back about this change screwing the new ibo.
The IBO that this affect are those at the threshold.
For example, IBO with 101 PV. The change will drop him to 85 PV, dropping him lower in the bonus payout.
But if he's at 118 PV, the change will drop him to 101 PV. In this case, he will receive a bigger payout (17% increase from $7.08 to $8.28).
For those at the threshold, they'll have to spend an extra $40 to maintain their bonus percentage.
I have no idea how often people are at the threshold, so have no idea how many IBO are affected. But in general, all IBO will receive 17% increase in their bonus payout for non-coreline product.
Jennifer,
In no way is that of benefit to IBO's. Get over yourself.
Wow. What a lucid and intelligent discourse by Shawn. You continue to amaze me with your analytic skill.
To answer Caleb, the 0.6% (PV * 3% * 20%) increase is to the BV amount, eg from 3.0% to 3.6%. That would still represent a 20% increase in bonus check (+0.6%/3.0%=20%). Likewise, the 25% increase to 30% of BV would represent a 20% in bonus check.
Ex: let's say Product X is 100 PV 200 BV now. If you're in the 3% bracket, you'll get a $6.00 bonus check. In 5 years, Product X would be 73.60 BV 240 BV. If you're in the 3% bracket, your bonus check would increase to $7.20 (or a 20% increase). The 20% increase in bonus check will be true regardless of the bonus bracket you're in.
Almost everybody equally benefit.
The only IBO that are affected by this change are those at the threshold. There are 2 ways to overcome it. The stupid way is to buy your way back. The smart way is to get more retail clients.
In any case, the change only affect non-coreline product, which only account for a small percentage of the overall sale. I doubt this will have a noticeable effect on businesses.
Analytic skill?
In your determination to solve the Quixtar problem you are essentially creating fluff around the simple fact that most people still fail in the business.
By overstating and using crazed equations, it does not change anything. So there is no need for analytical skill.
But I'll go ahead and grant your subliminal request and give you my grand master analysis.
You ready? Here goes.
You're an idiot that spends to much time doing nothing.
It not just the new IBO that will get screwed by this change, just about every active IBO will get screwed. You'll see less new platinums, less new emeralds, less new diamonds, less Q12 qualifiers - because it will take so many more units sold to get to any level - be it 100PV or 7500PV.
>Almost everybody equally benefit.
I don't see how anyone trying to build the business to a higher pin level is going to benefit.
So who benefits? Probably the corporation. Why else would they agree to the change?
And why would the diamonds who sit on the IBO board agree to the change? Possibly because fewer platinums and diamonds means fewer people to share the tool profits with.
What if people took a Pampered Chef approach to focusing on in-home product demos with a low-sales pressure environment, and get back to what it is all about - selling and teaching teachers to teach selling rather than scamming folks into get-rich-quick schemes?
If the core line stuff is quality, then invest in some and go retail it. Set your own retail markup and use that to offset the decreased PV.
It's time to grow up, get real and go sell.
No wonder I don't see anti- Pampered Chef blogs.
Bottom line is that many people can't afford the business. To produce 100 PV and to have it cost more than $100 is simply smoke and mirrors.
It's no wonder that companies like LHN - www.onlinebiztrends.com - are growing like wildfire because they only require a true $30 PV to get paid and pay out up to 75% on the actual PV dollar with no math tricks... www.onlinebiztrends.com
PV doesn't equate equally to BV. PV is far more important as it increases your % of the BV. So for it to be of better benefit, the BV would have to increase dramatically higher than the loss of PV.
Essentially, BV is just a joke in the whole Quixtar structure. I think it's more of a selling point to advertise this so called "inflation hedge". But for a company that advertises that they have over 960,000 products, most of those products prices only give you 10 percent BV.
Dropping PV only hurts the IBO's. They'll be paying more and getting less. And they made no mention to the actual price. By saying that BV is raising and they make no mention to pricing, then I would have to assume that the price is going up as well.
Posted by: Shawn Cannon | June 12, 2004 9:48 PM