I've noticed that many products are expensive. By expensive, I mean priced at 2 or 3 times what the average consumer would pay. Some products like MonaVie are priced at 20 times (ounce for ounce) the price of competing juices. Other products like Protandim are similar much cheaper if you simply buy the ingredients separately.
Many MLM distributors say, "So what? Tiffany's jewelery is expensive and that's not a scam." I think you pay quite a premium for that little blue box and the brand name. However, it got me thinking, "How would an MLM gas station work?"
Imagine a gas station that charges $8 a gallon for gas next to one that charges $3. The $8/gallon gas station promises to pay you 50 cents a gallon for each person you convince to also fill up at the same $8 gas station. The catch is that you must also fill up at the gas station to earn the commissions.
One could look at this gas station and say, "Hey if I get 16 people to sign up, I get free gas. This is great! I'm going to publicize this all over the place and give it my highest recommendation because free gas is great... and if I can get 20 people to sign up, I'll actually be making money. Whoa!" That's the view that most MLM distributors have.
A more analytical, non-emotional view might look at the big picture and say, "If I recruit 16 people to buy $8 gas, they are paying a combined $128 a gallon so that I can get my gas for free. However, if all 17 of us just went across the street to the $3 a gallon place, we'd only pay a combined $51 for our gas. Yes, I wouldn't get my gas for free. I'd have to pay $3 like everyone else, but at the same time, I saved each of the 16 people $5 a gallon by not participating in the $8/gallon scheme."
Let's say that we go with the former view and try to get gas for free. It turns out that each of those 16 people have to recruit 16 people to get their free gas. That means that 256 people will have to be involved. And those 256 people have to recruit 16 more people to get their gas for free, bringing 4,096 people in. The next level has 65,536 people. If your city is sized like mine, there is no longer anyone left to recruit. That last group of some 61,000+ people are left footing the whole $8 gas so that approximately 4,300 can get their gas for free. A lot of the town's money just got funneled into the hands of the owner of the gas station with a few of the participants receiving a pittance.
A number of the people in the town will see the $8 gas for the scam that it is and stay on the sidelines completely. It will impossible to recruit these people so the scheme runs out of people even before it gets to the whole town.
So who thinks this $8 gas station is a scam? The gas station owner isn't going to admit it's a scam - he's getting exceptional profits and doesn't want to see it stop. The person trying to recruit others isn't going to admit it's a scam - their plan is to get people involved so that they can free gas.
What about the outsider watching these people pay $6 for their gas week after week because they were only able to recruit 4 people? He's likely to say, "These people are getting scammed. They could be paying $3." Most outsiders just continue about their day because they've got a lot of other things to do. Why care about the people getting scammed? It's their own fault for being dumb.
However, occasionally an outsider really cares about people and tries to educate them about what they are involved in. That leads to websites like this and articles like this one.
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