Dynamic compression is a method of distributing commission to members in the MLM business plans. Understand how the method works, its advantages, disadvantages and alternatives available to this method.
Uses & Alternatives
Summary – Dynamic compression is a method of distributing commission to members in the MLM
business plans. Understand how the method works, its advantages, disadvantages and alternatives
available to this method.
MLM business plans are constantly evolving. Compression, a technique, specific to MLM businesses,
refers to a method that keeps inactive and non qualified distributors from being a part of the payouts in
the level commission plan. This method has been effectively put to use and brings about fairness in the
entire process of an MLM business plan.
Dynamic compression is a variant of standard compression which is more complex than the standard
method. In a standard compression method, the commission amount in not paid fully but dynamic
compression provides a different take on it. It becomes applicable to the distributors who are in a
premium position with four or five levels of distributors under them.
In the other method, it is not only the inactive or the non qualified distributors who do not get the
commission, but also those who do not qualify for a specific level of commission. This specific level is
enjoyed and passed on to the real working distributors and the others are ‘compressed’. The
commission is paid to their up line using certain MLM commission calculator and yet the ‘non
deserving’ get compressed, with no impact on the active and deserving ones.
The biggest and the foremost
advantage of thismodel is that the
leader gets paid by thecompany even
for the deepest down line.If any of his
distributors, no matter wherein line
they are placed, are active and
qualified, then a portion of the
commissionis enjoyed by the leader
too. MLM commission calculator is set
as such that the commissions are
distributedas per the model.
The main disadvantage of this method
ofcommission is that the basic qualifying
levelmay be difficult for distributors to
reach and there could be many
distributors whoose out down the line.
The qualification clause becomes difficult
to reach and therefore, some may get the
feeling oflosing out on money. Also, in this
systemthere may be a case when
someone on thefirst level of the
distributor qualifies and the entire income
moves up to the distributor. This member
can then experiencea sudden fall in the
earning and may feelthat he has not
earned the deserved commission.
Dynamic compression may not be the most effective way to get the full payout only for the active
The model is created in such a way that while the inactive members will be sifted out, the active
members also may suffer in the process. Hence, this method must be avoided by companies that are
looking at a long term and successful MLM business plan execution.
The best solution to this problem of fair distribution of commission is using an effective MLM software.
MLM software solutions in India is provided by companies like DNB MLM Software Solutions that
create software that has built in algorithms for calculation of commission. You can either use the
standardized MLM software or get the flexibility to modify the same to suit to the needs of your
business. Modification and scaling up of software is inevitable, and therefore, you must always opt for
experienced and seasoned professionals in the business of MLM software solutions in India.