Binary MLM Plan? How Does Binary MLM Plan Work? — LETSCMS Pvt. Ltd

6 min readMar 19, 2023

Binary MLM Compensation Plan

Binary MLM (multi-level marketing ) plan is defined as a compensation plan that has two legs (left leg and right leg) or sub-trees under each distributor. By adding subtrees, a binary tree is formed. New members who join after them are sent downline or to the next business level.

Structure of Binary Multi-Level Marketing Plan

The binary tree consists of 2 sub-trees, one is referred to as Power leg and while the second subtree is called the Weak leg.

Power leg

As the new distributors sign up, they will be automatically placed in the distributor’s power leg. The power leg structure will have automatic placement of new distributors. As the number of front-line distributors is limited to 2, any new sponsors would be placed in the distributor’s downline power leg (Spillover).

Weak leg

Weak Leg does not support spillover. All the distributors in the profit leg are personally hired( or sponsored) by their immediate distributor As the new distributors sign up, they will be automatically placed in the distributor’s power leg.

How Does Binary MLM Plan Work?

Binary MLM Plan Work: The new members sponsored by distributors are added either on the left leg or right leg. Upon adding two new members on either side of the subtree, a binary tree gets formed. All the new members referred after forming a binary tree get spilled to the downlines.
Note: Distributors become a part of the binary plan by purchasing an enrollment package. The enrollment package here means either a service or a list of products. The distributor buys the package and becomes a part of the binary MLM company.

Let’s See Different Scenarios Of Forming A Binary MLM Structure

Before looking into the structure, try to understand the difference between a Sponsor and the Parent of a downline.

Sponsor: The sponsor is the person who introduced the new member to the binary network.

Parent: The distributor is the direct upline of the new member introduced to the binary network.

Structure 1:-The Sponsor & the Parent of downlines are the same :

If a distributor X sponsors A and A sponsors a new member B to the left position of A in the binary network, then B is the direct downline of A. If again A referred a new member C, then it is added to the right position of A since it was the vacant position.
Now B, C are the direct downlines of A and the binary of A is formed to get the binary commission. A is the sponsor as well as the parent of B, C.

Structure 2: The Sponsor and the Parent of the downline are different.

Here distributer X sponsors A and Y, where Y is placed under the right position of A and now A sponsors new member B, where B is placed under the left position of A . However, B wasn’t added on the direct right leg because it was already acquired by distributor Y sponsored by X .since there is no vacant position at the left leg of A.
Here the parent of Y is A and the sponsor of Y is X.
here the sponsor and the parent are different for the downline Y. The binary of A is formed from its own effort and the upline’s (X) effort by spilling over member Y.

Structure 3: Spillover without completely forming the binary.

Here distributer X sponsors two new members A and B, where A is placed under the left leg of X And B is placed under the right leg of X, and a binary of X is formed. Now distributer A sponsors new member C to the right leg as the left leg of A is filled by the new member Y, who is sponsored again by X. X also sponsors Z and places to the right of B. Here Y, and Z is spillover and placed under the downlines of X i.e. A and B . Y is placed under the left downline of X i.e. A and Z is placed under the right downline of X i.e. B When you look into the picture, it is understood that the two spillovers occurred on two sides of X without completely forming the binary on either side.

Structure 4 : Sponsoring only to the left leg of the binary structure.

Here distributer A sponsors two new members B and C. B is placed under the direct left leg position of A, and C is placed to the direct left leg position of B. here the sponsor of c is distributer A and the parent of C is distributer B. here C is the spillover which is placed to the extreme left.

Structure 5: Normal spillover in binary structure

When the direct left and the right legs get complete, the next new member sponsored will be placed under the next level as spillover. This is called normal spillover.
When the distributor X sponsors new members A and B, the binary structure of X is completed, and if X again sponsors the new members Y and Z, they will be placed under the next level as normal spillovers.in this structure Y, Z both members placed under the next level as normal spillovers.

Type of commission in the Binary MLM Plan

Join Commissions
Direct Referral Commission
Pair Commission
Custom Bonus
Royalty Bonus

Join Commissions

MLM companies create join commissions to encourage their MLM members and attract more new members to join the binary network. this commission amount is credited to the user’s account at the time of joining the network.

Direct Referral Commission

The referral commission also referred to as the sponsor commission/leader bonus or the introducer bonus is the benefit gotten by a user for introducing new members to the downline network. The commission is calculated based on the percentage or fixed amount the company has already predefined. The commissioned amount is automatically credited to the user’s account.

Pair Commission

Pair commission or binary commission. the distributor or user sponsors new members to balance both legs with active members. when the user balances both legs with the active leg, the user will be able to achieve pair commission. The commission is calculated based on the percentage of the amount the company has already defined.

Custom Bonus

Companies create their own custom bonus to motivate their distributors and attract more distributors to join their binary network. this bonus amount is automatically credited to the distributer’s account based on their referrals which is defined by the company.

Royalty Bonus

In the royalty bonus, when a certain set target is achieved by distributors, then all the eligible members receive a certain percentage of the amount as a bonus as per the company’s rule.

Binary Capping Based on Commission

Binary Capping value is set by the administrator to maintain financial stability of company. The turnover of the company may affect if the commission payout goes out of control. Binary Capping will depend upon Commission. Binary capping value is set based on the total commission of binary plan received by the distributer. Suppose distributor A get the commission $1000, and admin may set the binary capping value to $500 there distributer can not receive commission more than $1000 as commission . admin can be set capping value daily , weekly or monthly.

Alternatives Relative Binary MLM Plan & Free Demo