< My LiveWave Blog: The LifeWave Compensation Plan

Sunday, May 22, 2005

The LifeWave Compensation Plan

Overview

This document describes the way that people make money through product sales in LifeWave™. If you read this document carefully, you can determine both the type of Distributor you want to become and the ways that you can most effectively maximize your income in the company. This document does not assume that you are already familiar with network marketing terms or compensation plans. All of the important terms are defined and discussed. This will ensure that you completely understand the differences that LifeWave™ has built into its compensation plan in order to give everyone enrolled in the program the opportunity to make significant income. If you are completely familiar with network marketing terms you may just want to look at the following plan summary.

The Pay Plan Made Simple:

A review of the LifeWave Pay Plan.

Product Introduction Bonus!

Product Introduction Bonus (P.I. Bonus) to be paid to the Sponsor when the new Distributor purchases a Value Silver or Value Gold Package upon joining or within their first 30 days. The Sponsor must be signed up for Autoship to participate in the P.I. Bonus program.
V
alue Silver Package: $274.00 + $25 Distributor Kit (Total: $299)
4 sets of patches, 1 CD, 1 Brochure, 1 BookBV Value = 165Product Introduction Bonus paid to the Sponsor: $50

Value Gold Package: $474.00 + $25 Distributor Kit (Total: $499)
7 sets of patches, 1 CD, 1 Brochure, 1 BookBV Value = 275Product Introduction Bonus paid to the Sponsor: $100

Terms and Conditions:
$50 paid to the Sponsor for a Value Silver and $100 paid to the Sponsor for a Value Gold purchase, if the Sponsor is on Autoship.

Only 1 Value Package may be purchased per new Distributor within the first 30 days.

No P.I. Bonus will be paid for Bronze packages.

No roll-up or compression on the P.I. Bonus. The bonus will be paid to the Sponsor only.

P.I. Bonus will be paid out weekly, 1 week in arrears.

Distributor Kit includes 1 replicated site for one year and back office.


Plan Summary

Compensation Plan Type:

Binary Tree with 3 Level Matching Bonus

Payout Amount To Field:

60% of all BV Plus 5% Special Leadership Bonus Pool

Cycles:
Cycle on 330 Short Leg / 660 Long Leg

BV = Business Volume = Each commissionable product or product package is allocated a specific number of points, which are designated “Business Volume.” Commissions are calculated based on the BV generated by each Distributor and his/her downline organization.

PV = personal volume = The combined BV of your purchases plus retail sales made from your replicated website

PGV = personal Distributor's volume = The combined BV of your purchases, your retail sales + your personally Sponsored group’s volume


Retail Customers

Retail customers purchase LifeWave™ products at full retail price directly from a Business Center’s replicated web site or directly from a LifeWave Distributor. Normally, retail sales pass through a Business Center. Strictly speaking, retail customers are not considered Business Centers. There are no qualification requirements for or commissions to retail customers.
All retail customers who are shipped products by LifeWave™ must register on the LifeWave™ system. This associates them with a Distributor and collects shipping and other information. Registered retail customers can be thought of as having an “account” on the LifeWave™ system. They are permanently linked to their "introducer's" Business Center. All sales to these customers will be associated with that Business Center. If a retail customer goes directly to the LifeWave™ web site they will be referred to their "introducer's" Business Center. In the occasional event that a retail customer prefers to interact directly with LifeWave™ rather than through a Distributor, a formula will be devised to allocate some or all of the BV back to the Distributor based upon their involvement in the sale or service of the customer.

Business Centers

Bronze Distributors

A Bronze Distributor may personally Sponsor other Distributors. He/She receives Cycle Commissions, but they do not receive Matching Bonuses until they advance to the Silver level.

Silver Distributors

Silver Distributors may do everything that Bronze Distributors may do. They also receive Cycle Commissions plus are eligible to qualify for 1st Generation Matching Bonuses by obtaining 2 personally Sponsored Silvers in the right leg plus 2 personally Sponsored Silvers in the left leg.

There are three qualification methods to become a Silver Distributor.
· Purchase a Silver Value Package immediately when signing up with LifeWave™.
· Sign up as a Bronze and earn your way to Silver by generating 250 PV from personal purchases or retail sales from your website.
· Generate 750 PGV (personal group volume which includes PV from your personally Sponsored Distributors plus your personal purchases and retail sales from your replicated website)

Silver Distributors may qualify for 1st generation Matching Bonuses by personally Sponsoring two Silver Distributors on their left and two Silver Distributors on their right.

Gold Distributors

Gold Distributors are eligible to receive Cycle Commissions plus up to 3 Generations of Matching Bonuses, if they qualify. To receive the 1st generation of match, a Gold Distributor only needs to Sponsor 1 Silver Distributor in the left leg and 1 Silver Distributor in the right leg. The 2nd generation and 3rd generations of matches are reserved for only Gold Distributors. In order to receive the 2nd generation of match, the Gold Distributor must have 2 personally Sponsored Silver or Gold Distributors in both the left leg and the right legs. The 3rd generation of match requires an additional Gold Distributor in each leg that must also have 2 personally Sponsored Silver or Gold Distributors in each leg.

There are two qualification methods to become a Gold Distributor.
· Purchase a Gold Business Center Package immediately when signing up with LifeWave™.
· Sign up as a Bronze or Silver and generate 450 PV or 1500 PGV

Starter Kit

The Starter Kit program enables an individual to join the LifeWave program without the purchase of any product. The individual becomes a Distributor and acquires a LifeWave replicated website and the ability to receive commissions by check or bank card. Nothing is required to earn retail sales commission except a starter kit.


Compensation Methods for Distributors

Retail Sales

Distributors receive the difference between the retail price and Distributor wholesale price.

Minimum Qualification

In order to earn any money in addition to Retail Sales in the LifeWave™ pay plan you must Sponsor at least 1 Distributor on the left leg and 1 Distributor on the right leg.


Payout Structure
LifeWave™ will distribute 65% of the BV it takes in and place it in the Commissions and Leadership Bonuses Cash Pool to be paid back to Distributor Business Centers.

Cycle Commission Caps

Cycle Commissions are limited to maximum payment amounts per week for each Distributor Business Center depending on the type of Distributor Business Center you have qualified for. Cycle Commissions have the following cap amounts depending on the Business Center type.
· Bronze- $5,000 per week
· Silver- $15,000 per week
· Gold- $25,000 per week

Commissions and Bonuses

The following commissions and bonuses are available to all Business Centers. The specific bonuses that any given Business Center is eligible for depends on the Distributor type of that Business Center and the qualifications that the Business Center has met. All the commissions and bonuses in this section are taken from the Commissions and Bonuses Cash Pool.

Downline Compensation Cycles

The PV of each and every Business Center in the downline of a given Business Center is accumulated into the PGV of that Business Center. Those in the left leg are accumulated into the left PGV and those in the right leg are accumulated in the right PGV. Each week Cycle Commissions are computed for each Business Center that has achieved at least one compensation cycle in the week ending seven days previously. $50 is paid for each cycle earned.
In weeks where the cap is exceeded, the 60% Cap will be implemented as follows:The first four cycles of every weekly pay period for every Distributor are known as "exempt cycles" and will be paid at the maximum commission which is $50 per cycle. Therefore, cap adjustments would affect only cycles 5 and above.For each weekly pay period, all cycles 5 and above will be counted company wide and are known as "capped cycles." After payment of all exempt cycles, any remaining balance from the allotted 60%, plus any surplus escrowed from previous weeks, will be divided by the number of capped cycles and the resulting amount will be paid for all capped cycles

Cycle Commissions are available to Bronze, Silver, and Gold Distributors. In order to qualify for any Cycle Commissions you must have personally Sponsored one Business Center on the left leg and one Business Center on the right leg. Retail customers are not considered Distributor Business Centers.

1st Generation Matching Bonus

1st generation Matching Bonuses for a given Business Center are computed as 25% of the sum of the Cycle Commission earned by each Business Center that the given Business Center has personally Sponsored.

2nd Generation Matching Bonus

2nd generation Matching Bonuses are similar in concept to 1st generation Matching Bonuses. In this case the given Business Center earns 20% of the Cycle Commissions that are earned by Business Centers that are personally Sponsored by Business Centers that the given center has personally Sponsored. That is, 2nd generation Matching Bonuses are paid based on Generation 2 Sponsorship.

3rd Generation Matching Bonus

3 rd generation Matching Bonuses are again similar. In this case a given Business Center earns 20% of the Cycle Commissions earned by 3rd Generation Business Centers.

Special Bonuses

LifeWave™ will establish an additional 5% pool of money not included in the Commissions and Bonuses Money Pool. The amount in this pool will vary from month to month depending on the total BV generated by the company. The pools will be used to fund special leadership bonuses that are based on performance. The details of how these bonuses are earned and how they are paid out may change at any time at the sole discretion of LifeWave™. Changes will be published on the web site in advance.


Binary Compensation Structure and Basic Terms

Levels vs. Generations vs. Types

In order to avoid confusion, the terms level and generation will be used in a consistent manner throughout this document. Level will always refer to "levels" in the binary tree. Generation will always be used in reference to "levels according to the direct line of sponsorship" in which Matching Bonuses are calculated and paid.

Personally Sponsored Positions

For any position to be filled in the binary structure, the person being placed in that position must be Sponsored (enrolled) by someone in the upline of that position. This may be by an immediate upline position or by a more distant upline position.

Long Legs and Short Legs

Notice in the binary tree diagram that the left leg for position 1 has fewer filled positions that the right leg. For any position, the leg with fewer positions is called the short leg and the other leg is called the long leg. This is important because the ratio of product sales (measured by the Total Business Volume) between the two legs is one of the things that determines when you make money and the longer leg will generally reflect more product sales that the shorter leg.

Business Centers

In the LifeWave™ system each position in the binary structure is called a Business Center. The terms “position” and “ Business Center” can be used interchangeably.

Replicated Web Sites

Each Business Center has a Replicated Web Site. This is essentially a copy of the LifeWave™ corporate web site with special customizations like name, contact information, Distributor picture, and other information specific to each individual Business Center. Replicated web sites are important because they are the excellent way for retail customers and potential Distributors to interface with LifeWave™ Distributors. Sales and Distributor sign-ups that are done through a replicated web site are automatically associated to the Business Center linked to the replicated site.

Product Retail Price

Most products have a retail price. Some products are not available to retail customers and they do not have a retail price. The retail price is the amount that retail customers pay for the product when they purchase the product through the LifeWave™ web site or a Distributor’s replicated web site. When retail customers purchase directly from a Distributor, rather than through the web, the actual sales price should is the retail price.

Product Distributor Price

Every product has a Distributor price, which is the wholesale price of the products.

Business Points (BV)

Commissionable products have a point value associated with them that is used in the computation of payments to Distributors. By law, certain things may not have a BV associated with them. Some network marketing companies consider this to be a dollar value, but in the LifeWave™ compensation plan this should be regarded as a more abstract number. Business Points are used to determine when compensation cycles occur.

Personal Group Volume (PGV)

The Total Business Volume is the sum of all Personal Volumes for the entire downline of any given Business Center. Generally the PGV is computed for the left leg and the right leg separately. This is important because the ratio of PGV in each leg is one thing that determines when you get paid.

Personal Volume (PV)

The Personal Volume is the sum of all the Business Values for products directly purchased by a Business Center over a given period of time. They do not include sales or purchases made by any other Business Center. Sales to retail customers are included in PV.

PV Qualification Requirements

A Business Center is required to have a minimum level of PV every month in order to receive Cycle Commissions. The specific requirements are detailed at the beginning of this page.

Autoship

Autoship is an optional service available to all LifeWave™ Business Centers (both retail customers and Distributors). The Autoship service allows Business Centers to define standard orders that are automatically billed and shipped each month. It saves the Business Center from having to enter the same order over and over and is a convenient way to ensure that PV Qualification Requirements are met.

Standard Autoship

Standard Autoship allows Business Centers to define a standard order. This order may be modified at any time. The order is shipped each and every month until it is cancelled by the Business Center.

Primary Leg and Secondary Leg PGV

The Primary Leg is the left or right leg of a given Business Center that has the larger Total Business Volume. The Secondary Leg is the leg with the smaller Total Business Volume. Usually the long leg will also be the primary leg and the short leg will also be the secondary leg. However, that is not a requirement. It is possible for the long leg to be the secondary leg if its PGV is less than the PGV of the short leg.

Commission Cycles

In a given Business Center, PGV will accumulate from week to week for the left leg and for the right leg until a commission cycle occurs. A commission cycle occurs whenever the PGV of the secondary leg is reaches 330 and the PGV of the primary leg reaches at least 660. Commissions are paid once per week. You will receive commissions in a given week if at least one commission cycle has occurred during the week ending fourteen days prior. It is possible to achieve more than one commission cycle in any week depending on the PGV of each leg. For example, if, in a Business Center, the PGV of the short leg reaches 660 and the PGV of the long leg reaches 1320 during a given week, then 2 commission cycles will be counted for that Business Center.
In binary systems, there is a tendency for one leg to always have greater accumulated PGV. This is why the LifeWave plan allows a short leg to have only 1/3 the volume and the stronger leg up to 2/3 of the volume.

Flushing and No-Flushing

PGV accumulates in both the left leg and right leg. This takes place on a daily, week to week and month to month basis. When these totals accumulate and are not reset to zero, it is called “no-Flushing”. Flushing occurs if the accumulated PGV is set to zero on a weekly, monthly, or other basis. The LifeWave™ compensation plan flushes accumulate PGV when minimum PV Qualification Requirements are not met in a month.

Automatic Inactivation

The LifeWave™ system monitors your activity from month to month. If you have six continuous months of inactivity, then you will be automatically inactivated. This means that you will loose your position in the binary tree and in the Sponsor tree. An inactive month is defined as a month in which you do not meet your minimum PV Qualification Requirement.


The Secrets to Success

Life provides four ways for you to make money.
· Retail sales (including "Product Introduction Bonuses")
· Cycle Commissions
· Matching Bonuses
· Special Leadership Bonuses

Of course, it is completely up to you to decide the best way that you can make money yourself. Even so, there are a few things about binary trees and Matching Bonuses that you should be aware of to help you earn the most that you can.

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