Chances are you’re here because you’ve been approached by somebody trying to sell you doTERRA essential oils, who has told you about an incredible ‘business opportunity.’
It sounds great – who wouldn’t want to make some extra cash by recommending products you love to your friends while improving your health and wellness at the same time?
However, you’re a little hesitant.
Maybe you think that everything sounds too good to be true, or you’ve heard people saying things like ‘doTERRA is a pyramid scheme!’ and ‘doTERRA is a scam!’ and you want to do your research before diving in headfirst.
In this article, we are going to dive into the doTERRA MLM opportunity and find out what being a doTERRA Wellness Advocate is really like, and whether doTERRA is just another pyramid scheme in disguise.
Is doTERRA legit?
Let’s find out.
Is doTERRA a Pyramid Scheme? A Deep Dive Into the doTERRA MLM Opportunity
What is MLM?
In case you were wondering, YES, doTERRA is an MLM company.
MLM stands for multi-level marketing, and MLM companies are also referred to as network marketing companies or social selling companies.
MLMs have been around for years, and popular MLMs include Nu Skin, Monat, Arbonne and even Avon!
You don’t receive a salary in a multi-level marketing company.
Instead, you earn money from selling products to people you know and recruiting others into the business.
When you recruit a new person and that person begins earning money, you will earn commission from the sales and recruits generated by THAT person.
This continues down in multiple levels (hence multi-level).
Imagine a triangle.
If the person at the very top of the triangle recruits 10 people, and every one of those 10 people recruit another 10 people, and each one of those people recruit another 10 people, you’ll be making commissions from EVERYBODY within the triangle because they’re all in your direct downline (the people underneath you in an MLM are referred to as your ‘downline’ and you’re their ‘upline’).
All you had to do was recruit 10 people and you make money from 1100.
While MLM companies like doTERRA also give you the chance to make money from selling their products, most of the people in MLM companies prefer to recruit others because they stand to make a lifelong passive income from that person, whereas if they sell a product they’re just going to receive a one-off commission.
The ultimate aim of somebody in an MLM then, is to have as many people in their ‘downline’ as possible, enabling them to form large amounts of passive income for little work.
What is doTERRA?
doTERRA, which means ‘gift of the earth’ in Latin, is an MLM company that sells health and wellness products containing essential oils.
It was founded back in 2008 by a team of former Young Living executives (another essential oil MLM), and its current CEO is Corey Lindley.
According to their website, doTERRA’s mission is to ‘share the highest quality essential oils with the world,’ and the founders claim that they are so committed to selling pure, high-grade essential oils, that they created the CPTG Certified Pure Therapeutic Grade to ensure that their oils really are the best of the best.
However, creating your own ‘certification’ to then certify yourself with, is really a bit silly, isn’t it?
Not only that, but doTERRA also wax lyrical about wanting to partner with scientists and hospitals for a ‘compelling authentication’ of their products, but reading between the lines, this need for third-party sources to endorse their products is likely due to the lack of medical credibility of anyone at doTERRA.
In addition to the United States, the MLM doTERRA now has a presence in 18* international markets including China, Mexico and Brazil, and over 5 million Wellness Advocates (the name doTERRA give to their distributors) and customers.
*doTERRA claim to have 18 different international markets, but classify ‘Europe’ as one international market, and ‘Italy’ as another, despite the fact that Italy is a part of Europe.
doTERRA essential oils
Because this article is analysing the business model of doTERRA and whether doTERRA is a pyramid scheme, we won’t spend too much time on the doTERRA products themselves, but it’s worth giving them a mention.
doTERRA’s flagship product is its range of pure essential oils.
Essential oils include lavender, peppermint, and tea tree, and you’ve probably come across them at least once in your lifetime (I actually use lavender oil on my pillow to help me sleep).
Essential oils are essentially (see what I did there?) organic liquid compounds that have been extracted and distilled from plant materials.
They capture the fragrance of a wide variety of flowers, herbs and fruits, and essential oils have been shown to have some health and wellness benefits.
In addition to their pure oils, doTERRA produce a variety of blended oils that are designed to combat specific ailments, as well as oil-infused products such as shampoos, antiperspirants and lotions.
They even have the doTerra Kid’s Oil Collection, which is composed of mild blends that are claimed to be ideal for children of all ages.
It should be noted at this point that buying essential oils from doTERRA costs significantly more than purchasing them at a regular health store.
Inside the doTERRA MLM Opportunity
How do MLM doTERRA Wellness Advocates make money?
In order to find out how doTERRA distributors make money, I took a look at their compensation plan.
The doTERRA compensation plan, like most MLM compensation plans, is pretty complicated, but the gist is as follows.
There are 3 main ways to make money with doTERRA:
- Retail Profit
- Fast Start Bonus
- Power of 3 Bonus
For every item you sell to a retail customer, you will receive a 25% commission.
You can see the various levels and commissions within doTERRA here.
Fast Start Bonus
The Fast Start Bonus means that within the first 60 days of signing somebody up, you will earn a higher commission percentage from their purchases, for up to 3 levels in your downline (20% for Level 1, 10% for Level 2, and 5% for Level 3).
In order to qualify for this bonus though, you have to be earning at least 100 PV (Point Value) on your own Loyalty Rewards Order (more on that later).
Power of 3 Bonus
The Power of 3 Bonus is all about building a proper ‘structure’ within your ‘organisation,’ meaning that it is focused on recruiting others into the business and encouraging them to spend money.
How this works is that you must recruit 3 people to enrol in the Loyalty Rewards Programme.
These people must then enrol another 3 people into the programme, and so on.
If you reach a point where you have 3 personally-enroled distributors who are doing 100 PV per month and your total Team Volume is over 600 PV, you will qualify for a $50 bonus.
As the size of your downline increases, so does the Power of 3 Bonus.
If this is all sounding a bit complicated, it’s because it is.
Here is an image from the doTERRA compensation plan showing just what the Power of 3 looks like in practice.
If you’re thinking that this is looking a bit like a pyramid, it’s because it does.
How much do you make with doTERRA?
In order to see how much money doTERRA Wellness Advocates are making, I took a look at their 2021 Income Disclosure Statement.
An Income Disclosure Statement is a document that allows us to see exactly how many people are earning money with an MLM company, and how much of it they’re making.
The doTERRA Income Disclosure states that in 2021, 48.72% of Wellness Advocates made no money with doTERRA.
Of those who did earn commission with doTERRA, they are broken up into 2 groups based on how long they have been in the company.
This is because, like with any business, those in their first year can expect to earn less than those who are more experienced.
The doTERRA IDS shows us that, of the First Year Distributors:
- 50% earned over $130 in 2021
- The top 10% of distributors earned over $295 in 2021
- The top 1% of distributors earned over $1235 in 2021
Of the doTERRA distributors who had been in the company for over a year:
- 50% earned over $322
- The top 10% earned over $1287
- The top 1% earned over $9105
The statement also tells us that the top 1% of doTERRA distributors (those earning around $9000 per year) have been with the company for 10 years, on average.
It’s a bit of a brain scramble, but we can clearly see that most doTERRA distributors are making very little money, with even the top 1% of First Year Distributors earning just $103 per month, BEFORE expenses (which include purchasing enough product to remain active).
Even the top 1% of the seasoned doTERRA distributors are only making ‘more than’ (whatever that means) $9105 per year.
Nowhere else would being in the top 1% yield so little.
To be in the top 1% of Americans, you must have an annual wage of at least $823,763, while the top 1% of doTERRA reps don’t even make enough money to quit their full time job.
How much does it cost to be a doTERRA Wellness Advocate?
In the income disclosure statement, we saw that most doTERRA distributors were either making little to no money.
However, this number does not take into account the costs involved in signing up to doTERRA and maintaining your doTERRA ‘business.’
When you sign up to doTERRA, you have the choice between signing up as a Wholesale Customer or as a Wellness Advocate.
Joining doTERRA as a Wholesale Customer means that you pay a sign up fee of $35 (renewable annually for $25) and you will then only pay their wholesale prices for products.
However, you are not allowed to sell any products you purchase as a Wholesale Customer.
If you want to earn money, you must sign up as a Wellness Advocate instead.
To join at this level, you must purchase an enrolment kit.
Enrolment kits range from $207/$155 (retail/wholesale) to $2600/$1950.
Not only that, but doTERRA Wellness Advocates are required to spend at least $100 every month on doTERRA products, or they won’t qualify for sales commissions.
Even forgetting the sign up fee and enrolment kit, this still equates to $1200 per year, which is way more than what most distributors earn.
When you do take the sign up fee and enrolment kit into consideration, the 99% of seasoned distributors who earned $1287 and 100% of First Year Distributors (of whom the top 1% only earned $1235) likely lost money.
Is doTERRA a pyramid scheme?
In order to see whether doTERRA is a pyramid scheme in disguise, we must first outline what a pyramid scheme actually is.
What is a pyramid scheme?
Pyramid schemes are very similar to MLMs, but the main difference is that MLM distributors are supposed to make more of their money from product sales rather than recruitment.
A traditional pyramid scheme takes an initial investment from each member and promises to pay them for enroling others into the scheme, meaning that people are buying into an ‘opportunity’ to get rich.
However, as members increase, recruiting quickly becomes impossible and so most members are unable to profit or even make their initial investment back.
The Wikipedia diagram below illustrates just how unsustainable this business model is – after just a few levels of recruitment, the scheme would have recruited everybody in the world and there would be no-one left to recruit!
Because it’s impossible for most people to make any money in a pyramid scheme, pyramid schemes are illegal.
However, most pyramid schemes have got wise to the fact that they have to offer a product in order to appear legit, but even though a business may have products, the focus will always be on recruitment rather than product sales.
Because there are so many of these ‘pyramid schemes with products,’ around, the FTC hasn’t quite caught up yet, and so many people believe that just because a company hasn’t been shut down yet, it can’t possibly be a pyramid scheme, which simply isn’t true.
In order to see whether doTERRA is a pyramid scheme, we must attempt to answer 3 questions.
1. Are most people unable to profit?
When we looked at doTERRA’s Income Disclosure Statement, we saw that even the top 1% of all doTERRA distributors weren’t even making minimum wage, and that the other 99% were likely losing money.
With this in mind, the idea that the doTERRA MLM is a legitimate business opportunity seems ludicrous – would you join a company if you knew there was a 99% chance of losing money?
2. Do you have to ‘pay to play?’
Not only are doTERRA distributors having to buy super expensive sign-up packages in order to qualify for their commissions, but they must also spend around $100 per month on doTERRA products to receive a commission on sales they make.
The doTERRA compensation plan is designed to make distributors spend as much as possible, as quickly as possible, meaning that most doTERRA Wellness Advocates will end up spending in excess of $1200 during their first year with doTERRA.
3. Is there a heavy focus on recruitment?
Just like most MLM companies, doTERRA has a very aggressive approach to recruiting, with bonuses and higher commissions only being paid to those who build a large downline.
However, it is important to note that doTERRA do not pay their members directly to recruit people.
Instead, they give ‘bonuses’ for ‘building a structure’ and enroling others into the ‘opportunity.’
This is one of the sneaky ways that doTERRA avoids being classified as a pyramid scheme by the FTC.
Of course, you can make a small amount of money selling doTERRA products, but retail sales alone will never get you to those higher commission ranks or make you any bonuses.
The only real way to make real money with doTERRA is by recruiting a lot of people and earning residual income through their sales and the sales of people under them.
What does doTERRA have to say?
Interestingly, doTERRA have an entire section of their ‘Handling Objections’ page dedicated to what their reps should say when asked whether doTERRA is a pyramid scheme.
They actually provide a script, which can be used by distributors when people challenge them about their ‘business.’
First off, the fact that this even needs to be a section on their website is sus enough (hint: if you’re constantly having to defend your business from pyramid scheme allegations, it’s probably a pyramid scheme), but let’s take a look at what it says:
‘doTERRA is a Direct Selling Company, which is very different from a pyramid scheme. A pyramid scheme’s focus is to recruit new members, and pay bonuses for achieving recruitment goals. The start-up costs for a pyramid scheme are much higher, often involving recurring “membership” fees or expensive “educational,” “training,” or “advertising” materials that can easily be found free of charge elsewhere. They often pressure people into recruiting new members and promise large profits for minimal work, often in high-pressure seminar environments. I’ve found doTERRA is definitely not a pyramid scheme; it is highly product sales driven. Wellness Advocates earn when they sell products.’
Let’s dissect this.
‘doTERRA is a Direct Selling Company, which is very different from a pyramid scheme.’
While doTERRA does involve direct sales, it is actually an MLM, or multi-level marketing company, which is not that different from a pyramid scheme.
‘A pyramid scheme’s focus is to recruit new members, and pay bonuses for achieving recruitment goals.’
We have seen in doTERRA’s compensation plan that 2 out of 3 ways of earning money with doTERRA rely on recruitment, and bonuses can only be achieved by ‘achieving recruitment goals.’
‘The start-up costs for a pyramid scheme are much higher, often involving recurring “membership” fees […]’
There are no recurring ‘membership fees’ per se with doTERRA, but there is a requirement to spend a minimum of $100 per month on doTERRA products to remain active within the company.
This kinda sounds like a recurring membership fee to me.
‘They often pressure people into recruiting new members and promise large profits for minimal work […]’
Recruiting new members is a huge part of doTERRA’s business model, and you only have to look at what doTERRA reps have to say about their business online to see them making promises of ‘financial freedom’ and a ‘life of your dreams.’
‘I’ve found doTERRA is definitely not a pyramid scheme; it is highly product sales driven.’
This first-person testimony is interesting as it is part of a generic script, supposed to be used by hundreds of thousands of people.
Why would doTERRA want people to lie about their experiences and claim to have seen things firsthand that they haven’t?
Isn’t this a tactic that cults use?
Yes, doTERRA is a multi-level marketing company, also known as MLM, network marketing, social selling and direct sales.
doTERRA’s headquarters is in Utah, where around 60% of the population are members of the LDS Church. However, the company itself is not affiliated with the Mormon Church.
doTERRA’s essential oils are very expensive compared to essential oils from regular health stores. The business opportunity is also not worth it, with 99% of people losing money.
No, doTERRA products are not FDA approved.
doTERRA is a legitimate company, but it is very similar to a pyramid scheme and it is highly unlikely that you will ever make money in doTERRA.
Is doTERRA a Pyramid Scheme? Final Thoughts
Most MLMs closely resemble pyramid schemes and doTERRA is no different.
With a huge emphasis on recruitment, a ‘pay to play’ model and the vast majority of participants making no money in the company, doTERRA definitely appears to be functioning like a pyramid scheme.
If it wasn’t already clear, Not Your Boss Babe does not recommend joining doTERRA, or any other MLM!
An alternative to doTERRA
If you’re looking for a side hustle or a work from home job, you may find these articles helpful:
Advantages and Disadvantages of Blogging
Easy Freelance Jobs for Beginners
Best Side Hustles for Single Moms
How to Sell Feet Pics Online
Secrets to Selling on Poshmark
Profitable Digital Products to Sell on Etsy
How to Become a Micro Influencer
That’s about it for today, but as always, if you have any questions then don’t hesitate to leave them in the comments section below and I will get back to you!
Until next time,