Chances are you’re here because you’ve been approached by an It Works! Global Distributor 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 getting fit and losing weight 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 ‘It Works! is a pyramid scheme!’ and ‘It Works! is a scam!’ and you want to do your research before diving in headfirst.
In this article, we are going to dive into the It Works! opportunity and find out what being an It Works! Distributor is really like, whether It Works! is a scam, and finally, whether It Works! is just another pyramid scheme in disguise.
Is It Works! a Pyramid Scheme? A Deep Dive Into the It Works! MLM
What is MLM?
Before we get into It Works! specifically, you ought to know what an MLM company is, because this is the business model that It Works! use, and it is very different to a regular business.
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 Beachbody, Monat, Savvi 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 It Works! 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 It Works! Global?
It Works! Global is a multi-level marketing company based in Florida.
It was founded by Mark and Cindy Pentecost in 2001, and as of 2017, it was worth hundreds of millions of dollars.
Before creating It Works!, Mark Pentecost was a public school teacher in Michigan. He worked in a few different multi-level marketing companies before realising that if he wanted to make real money, he should start his own.
He wasn’t wrong – only very few people make money in MLM, and the best way to succeed in network marketing is either by founding the company or getting in at the very beginning.
It Works! Sells a range of skincare and nutritional products, but its flagship product is a body wrap named the ‘Ultimate Body Applicator,’ or ‘That Crazy Wrap Thing.’
It Works! claim that their body wrap helps tighten, tone, firm and reduce cellulite, all within 45 minutes.
Like the vast majority of MLM companies, It Works! do not have brick and mortar stores where you can buy their products.
Instead, It Works! products are sold online through their ‘Distributors,’ who advertise on social media, using the products themselves and making videos showing off their results and talking about how the products have benefited them.
As with any MLM, the Distributors make a commission from selling products and recruiting new people into the company.
Every person an It Works! Distributor recruits becomes part of their downline, and so the more they recruit, the more money they make.
It Works! is a very typical MLM company in the way that it is structured.
Are It Works! products any good?
Although It Works! preach about the endless health and weight loss benefits of their products, we should take note of the fact that none of the It Works! products have been evaluated or approved by the FDA.
Not only that, but It Works! themselves have not provided any scientific evidence to back up their health claims.
The FDA have actually issued specific warnings about body wraps in general, saying that there are no long term contouring effects and that the practice can be dangerous.
Another thing to note about It Works! products is that the mark-up price is huge, meaning that any discounts Distributors or ‘loyal customers’ receive isn’t really a discount at all.
For example, It Works! sell ‘Hair Skin Nails Beautifying Supplement’ tablets, with the active ingredients being Biotin and Keratin.
These tablets cost £48 for 60 tablets, but you can actually buy pure Biotin tablets on Amazon for a fraction of the price (£10 for 365 tablets).
The same goes for the body wraps.
The It Works! ‘Crazy Wrap Thing’ costs £78, but you can buy similar wraps on Amazon for as little as £8.
Even the most expensive body wraps on Amazon cost around £30, which is still less than half the price of the It Works! version, despite having the same ingredients.
Inside the It Works! MLM Opportunity
How do It Works! Distributors make money?
According to the It Works! compensation plan, there are several ways that It Works! Distributors can make money.
First, they receive commissions for selling It Works! products.
These commission types are called ‘Retail Commission’ and ‘Loyal Customer Commission.’
There is another type of commission called ‘Team Commission,’ which describes the residual income that trickles up the ranks from the sales generated by the people at the bottom.
The more teams and downline members you build, the more commissions and bonuses you receive.
You also increase your rank in the company by recruiting more people, meaning that your commission rates will increase.
There are 16 pages in the It Works! compensation plan dedicated to recruitment, and only a couple of paragraphs about selling the product, showing how recruitment-focused the company is.
One major red flag of a product-based pyramid scheme is a focus on growing a ‘team’ rather than selling products to the general public, and as we can see with It Works!, there is a definite emphasis on growing a team.
How much do you make in It Works! Global?
In order to see whether It Works! Distributors are making money, we must take a close look at their Income Disclosure Statement.
An Income Disclosure Statement is a document that allows us to see exactly how many people are earning money with It Works!, and how much of it they’re making.
The It Works! Income Disclosure shows us that in 2019, of all distributors, 85.94% earned an average of 48 USD per month with It Works!
Only 1.49% of Distributors earned 2009 USD a month, and less than 2% of active It Works! distributors earned above minimum wage.
While the people in that top percentile are making a significant income, the fact that over 98% of people in the company are making less than minimum wage paints a grim picture.
And that’s not all.
The numbers on the Income Disclosure do not actually represent profit.
It Works! themselves say that ‘The figures above refer to gross income (total income before any expenses are deducted). The expenses a Distributor incurs in the operation of his or her It Works! business vary widely. Expenses for Distributors can be several hundred or thousands of dollars annually.’
This means that when you take into account all of the money spent by It Works! Distributors, it is likely that many of them weren’t actually turning a profit at all.
How much does it cost to be an It Works! Distributor?
To be able to call yourself an It Works! Distributor, there are some things that you will need to pay for.
First, you must buy the Business Builder Distributor Kit, which costs 99 USD and consists of a pack of the wraps, tiny samples of gel & some catalogues.
Once you’ve done that, you’ll be a ‘Wrapreneur.’
You will be given your own website, which you must pay 20 USD per month for.
This is significantly more than most web hosting companies, which usually cost a couple of dollars per month for a basic website.
There’s also a 35 USD renewal fee every year.
So far, the minimum amount that you have to spend to be a part of It Works! for a year is 344 USD.
However, that’s not all.
In order to qualify for any commission, you need to maintain a monthly autoship of 80 unit volume per month, which is equivalent to around 112 USD.
Your sales can count towards this, but you will likely have to make you own purchases as well in order to hit this target.
You will also be expected to ‘live the product’ and constantly be buying It Works! products yourself which you can talk about on social media.
Unlike a traditional brand/influencer partnership, you are not given It Works! Products for free.
You have to buy them.
You also do not get paid just to promote them, like influencers do.
You only get paid if somebody buys something.
Another sales target that you have to meet is that you must sell 400 unit volume of products each month, which is about 560 USD worth of product.
If you do not sell 560 USD worth of products in a month, you will receive NO commission on the things that you HAVE.
In order to qualify for their commissions, many It Works! Distributors will buy products through their own links, meaning that they are spending even more money on their ‘business.’
This all adds up, and when you remember that most It Works! Distributors are only making $48 per month, it is likely that they are actually losing money.
Is It Works! a pyramid scheme?
In order to see whether or not It Works! 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 enrolling 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 It Works! is a pyramid scheme in disguise, we must attempt to answer 3 questions.
1. Are most people unable to profit?
In their Income Disclosure Statement, It Works! reveal that 85.94% of Distributors make $48 per month.
However, given the high costs of running an It Works! business, it is highly likely that these people are actually losing money.
Over 98% of It Works! Distributors did not earn enough money to replace a full-time wage.
This shows that yes, most people in It Works! are unable to profit.
2. Do you have to ‘pay to play?’
The absolute minimum that you can spend to become an It Works! Distributor is $344, and that does not take into account a whole lot of other expenses that you will certainly rack up during your time in the company.
Most people in MLM companies end up spending a lot more money than they make in the company, and It Works! is no different.
3. Is there a heavy focus on recruitment?
As we have seen, recruitment is the only way to make real money with It Works! Global.
The higher you rise in the company, the more bonuses are awarded, commissions increase and you begin receiving passive income from other people’s sales.
What’s more, in the It Works! compensation plan, almost no mention is made of product sales while 16 pages are dedicated to recruitment.
Is It Works! a Pyramid Scheme? | Final Thoughts
Most MLMs closely resemble pyramid schemes and It Works! is no different.
With a huge emphasis on recruitment, fees to join and pressure to buy products in order to hit targets, It Works! definitely appears to be functioning like a pyramid scheme.
Most It Works! Distributors are not making a profit, and so the idea that this is a legitimate business opportunity is just not true.
If it wasn’t already clear, Not Your Boss Babe does not recommend joining It Works!, or any other MLM!
That’s about it for now, but if you have any questions or comments, don’t forget to leave them in the comments section below.
An alternative to joining It Works!
So then, how the hell do you make passive income online?!
Well, a much more viable alternative to network marketing is affiliate marketing.
Affiliate marketing is very similar to network marketing, but unlike multi-level marketing, you actually stand a chance at making a substantial amount of money from the comfort of your own home!
Just like multi-level marketing, affiliate marketing involves promoting products you love and making a commission every time you make a sale.
However, unlike MLM, there are no monthly quotas, no sign-up fees, no recruitment involved, and most importantly, the money that YOU earn will be going straight into your pocket, NOT trickling up the pyramid.
Affordable affiliate marketing courses
Below are a few recommendations of courses and other tools that may be useful if you want to build a blog, grow your social media account and make money with affiliate marketing.
The best bit is that if you use our discount code to sign up, you can save as much as 70%, meaning that you getting all of the material at a fraction of the price!
Here are the best affiliate marketing courses:
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