Chances are you’re here because you’re considering joining Scentsy and becoming a Scentsy Independent Consultant.
You’ve probably tried some Scentsy products or been to a Scentsy party and figured you may as well take the next step and register as an Independent Consultant so that you can start selling Scentsy to your family and friends and enjoy the additional income.
And why wouldn’t you?
Who wouldn’t want to have their own business, work from anywhere in the world and enjoy financial freedom?
However, you’re hesitant.
You’ve heard people saying that Scentsy is a pyramid scheme and that it is impossible to make money with them, and you want to do your research before you dive in headfirst.
This article is here to help.
We are going to dive into the Scentsy business opportunity and find out whether you’ll be able to make money selling Scentsy, and most importantly, whether Scentsy is secretly a pyramid scheme in disguise.
Is Scentsy a Pyramid Scheme? The Truth About Selling Scentsy
What is MLM and is Scentsy an MLM?
YES, Scentsy 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 Arbonne, Monat, Color Street and even Avon!
You don’t receive a salary in a multi-level marketing company.
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 Scentsy 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 company like Scentsy 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 Scentsy?
Scentsy was founded in Salt Lake City, Utah, in 2003, by Kara Egan and her sister-in-law Colette Gunnell.
Kara’s vision was to create scented products that were both safe and sustainable, and so the flagship Scentsy product was born – an electric candle warmer.
Because they don’t release harmful pollutants into the atmosphere, electric candle warmers are considered a safer alternative to traditional candles, plus the fact that there is no naked flame makes them safer for pets and children.
Although Scentsy’s main products are the electric candle warmers and accompanying wax melts, they also sell room sprays, diffusers, air fresheners and laundry detergent.
However, although Scentsy started out as a regular company, after just 12 months it was bought by a struggling entrepreneur named Orville Thompson, who swiftly moved it to Idaho and changed the business structure to an MLM model, with a particular focus on the ‘party plan’ style of selling.
Scentsy Independent Consultants will purchase Scentsy products themselves (as a discounted price), use the products, and make social media posts and videos about how great they are, encouraging their followers to buy the products through their personalised links.
They will also host parties where guests can sample the products and learn about how to become a Scentsy Consultant themselves.
This is because, in addition to selling products, Scentsy Consultants can earn money by signing other people up to become distributors.
While they don’t get paid directly for recruiting people, they do get bonuses and promotions for ‘building a team,’ and they also earn commissions from every sale that people in their downline make.
Inside the Scentsy Business Opportunity
How do Scentsy Independent Consultants make money?
I took a look at Scentsy’s compensation plan to see how to make money as a Scentsy Consultant.
There are 10 ways to make money with Scentsy:
- Commission from product sales (20-25% per sale)
- Bonus from wholesale volume
- Frontline bonus TWV (team wholesale volume)
- Frontline consultant bonus TWV
- Frontline star consultant bonus TWV
- Frontline superstar consultant bonus TWV
- Frontline director bonus TWV
- First generation direction TWV bonus
- Second generation direction TWV bonus
- Third generation direction TWV bonus
What this tells us is that 9 out of 10 ways of making money with Scentsy involve recruitment in some way, rather than product sales to the public. This usually comes in the form of ‘rewards’ for how much your team sells, as well as how big your team grows etc.
Although Scentsy do not directly give bonuses for recruiting people, 9 out of 10 ways to make money with Scentsy involve having a ‘team’ underneath you, so there is a clear incentive to grow one.
Scentsy themselves actually confirm this in the Scentsy Consultant Guide when they say ‘There’s no better way to grow your income than through building a team,’ and ‘when you bring more consultants to the Scentsy team, you get paid more.’
They double down on this when they say ‘We regularly develop promotions and incentives to help you recruit new consultants.’
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.
How much do you make selling Scentsy?
Is selling Scentsy worth it?
To see how much money people are making with Scentsy, I checked out their UK Income Disclosure Statement (IDS) from 2020.
Scentsy’s Income Disclosure Statement is split into 2 columns, which is actually super interesting.
The first one shows the average earnings of Scentsy Consultants who were working with Scentsy for the entire year, while the second column shows the earnings of those who did not stay in the business for the full 12 months.
Of all Consultants, only about 25% were selling Scentsy for the entire year, and this is because network marketing in general has a very high dropout rate.
For the purposes of this analysis, I will only be looking at the 25.5% of Consultants who worked for Scentsy for the entire duration of 2020.
So, let’s take a look at the numbers:
- There were 4253 active Scentsy Consultants in the UK in 2020
- The minimum annual commissions were £127
- The maximum annual commissions were £268,654
- The mean average in annual commissions was £3131
- The median average in annual commissions was £1106
So, what do these numbers tell us?
Well, the median average is the most representative here because the highest commission earned by a Scentsy Consultant (£268,654) will have skewed the mean average massively, whereas the median average is slap bang in the middle of what Scentsy Consultants earned, with 50% of them earning more, and 50% earning less than the amount shown.
So, taking this median average of £1106 and dividing it by 12, we can see that the average monthly earnings for Scentsy Consultants was £92.06, which works out to less than £3 a day.
Of course, the median average is the middle number, which means that 50% of Scentsy Consultants actually earned less than this.
It is also interesting to note that these numbers don’t represent profit because they do not take any expenses into consideration.
How much does it cost to be a Scentsy Independent Consultant?
The numbers on Scentsy’s Income Disclosure Statement don’t take into account the expenses that a Scentsy Consultant will accrue.
To be able to sell Scentsy, you must first buy a Starter Kit, which is 99 USD, plus tax and shipping.
After the first 3 months, you must also begin paying 10 USD per month for your personalised Scentsy website, where people can place their orders.
If you don’t build a downline, then you will have to sell $200 worth of products in 1 month out of every 12 to avoid having your account deleted.
If you do have a downline, you have to do this in 1 in every 4 months.
If you don’t manage to reach this number, you can buy products yourself to hit this target, which is what people in MLM companies often end up doing, meaning that they are spending money just to remain ‘active’ in the company.
A Scentsy Consultant will rack up other expenses such as:
- Refreshments & other supplies for Scentsy Parties
- Phone/internet bills
- Products for personal use (MLM distributors are encouraged to ‘be a product of the product’
- Food, gas, travel and accommodation when travelling to Scentsy events and conferences
- Costs of running your own blog or promotional channel such as YouTube
You then have to take into account the time spent working on your Scentsy business and whether the money made justifies the hours spent.
Every single cent of these costs must be subtracted from the ‘average earnings’ that we saw earlier.
Only then do we get an accurate picture of how much money Scentsy Consultants are taking home at the end of the day.
When we take into account a Scentsy Consultant’s expenses, it is likely that many of them are actually losing money.
Is Scentsy a pyramid scheme?
What is a pyramid scheme?
Pyramid schemes are very similar to MLMs, but the main difference is that MLM reps 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 these days have got wise to the fact that they have to offer a product in order to appear legit, but even though they 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, but this simply isn’t true.
In order to see whether Scentsy is a pyramid scheme in disguise, we must attempt to answer 3 questions.
1. Are most people unable to profit?
When we analysed Scentsy’s Income Disclosure Statement, we saw that the vast majority of Scentsy Consultants were not making anything close to a real wage, and that many of them would have probably lost money in 2020.
With the average Scentsy Consultant earning less than £3 a day, it’s fair to say that most people in Scentsy are not making a profit (and no, £3 does not count as profit if you are spending hours each day working on your business).
2. Do you have to ‘pay to play?’
Not only do you have to pay $99 to join the Scentsy, but you also have to spend $10 per month on your Scentsy website, as well as being heavily encouraged to buy Scentsy products, both to hit your targets and also to show your friends and family how wonderful Scentsy products are.
Most Scentsy Consultants end up spending a lot of money on Scentsy.
3. Is there a heavy focus on recruitment?
As we have seen so far, the only way to make real money with Scentsy is by growing a large team underneath you, and 9 out of 10 ways of earning money with Scentsy involve recruitment.
This shows that there is an incredibly heavy focus on recruitment, and not too much emphasis on selling wax melts to people on social media.
While you can earn money by selling Scentsy products, you would have to sell a LOT of $9 wax melts to make a full time income, and the only realistic way of making a living is by growing a large downline and making passive income from the people in it.
It is also very interesting to note that there are 8 ranks within Scentsy, and according to Jon Taylor, once there are more than 5 levels in a compensation plan, it becomes extremely difficult for new members to make a profit.
He states that when a compensation plan becomes more than 5 levels deep, it becomes ‘an exploitative money transfer scheme, or product-based pyramid scheme.’
Yes, Scentsy is an MLM, or multi-level marketing company.
The majority of Scentsy Consultants make no money, or very little money. We do not recommend joining Scentsy.
Because most Scentsy Consultants don’t make money, Scentsy cannot be considered a good company to work for.
Yes, you must pay taxes on everything you earn as a Scentsy Consultant.
No, Scentsy Consultants must pay full price for any Scentsy products they buy. This differs to most other MLMs, where sellers receive a discount on the products.
Is Scentsy a Pyramid Scheme? | Final Thoughts
Most MLMs closely resemble pyramid schemes and Scentsy is no different.
With a huge emphasis on recruitment, fees to join and pressure to constantly buy products (making the distributors the biggest customers), Scentsy appears to be functioning very much like a pyramid scheme.
Most Scentsy Consultants are either not making very much money or actually losing money, and so the idea that Scentsy is a legitimate business opportunity is just not true.
If it wasn’t already clear, Not Your Boss Babe does not recommend becoming a Scentsy Independent Consultant!
An Alternative to Scentsy
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,