Compensation plan
Binary MLM Software
A binary plan is two legs, one pairing rule and a great deal of liability hiding in the carry-forward. The engine treats unpaid volume as a balance you can see and cap, not as a number that quietly compounds until a cycle empties the commission budget.
What you get
Outcomes operators report after moving onto the platform.
Placement strategy is configurable
Breadth-first, depth-first, automatic weaker-leg balancing, or sponsor-nominated placement with a holding tank for pending decisions.
Carry-forward you can see
Both leg balances, matched volume and carry-forward are visible per distributor per period, and reportable in aggregate as a liability.
Caps that hold under load
Per-cycle, per-period and per-rank caps with configurable overflow — discarded, carried, or diverted to a pool.
Plan structure
The placement shape this plan produces, drawn from its real width and depth rules.
Each position holds exactly two frontline slots. Anyone sponsored beyond the second spills to the next open slot below, which is why placement strategy matters more here than in any other plan family.
How the plan actually pays
A binary plan has two structural facts and everything else follows from them.
Every position has exactly two frontline slots. Sponsor a third person and they are placed below one of the first two. This is spillover, and it is the reason placement is a strategic decision in a binary and an afterthought in a unilevel.
Commission is paid on matched volume, not on volume. The engine compares the two legs each period and pays on the lesser of the two. Volume in the stronger leg is not lost — it carries forward — but it does not pay until the weaker leg matches it.
A worked cycle
Take a plan that cycles at 300/300 in volume and pays $50 per cycle, with a 40% cap on group volume.
| Period | Left leg | Right leg | Matched | Cycles paid | Carry-forward |
|---|---|---|---|---|---|
| 1 | 900 | 300 | 300 | 1 | 600 left |
| 2 | 300 (+600) | 600 | 600 | 2 | 300 left |
| 3 | 300 (+300) | 1,500 | 600 | 2 | 900 right |
Note what happens in period three: the right leg surges, but the payout is still bounded by what the left leg can match. The 900 sitting in the right leg is a liability that will pay whenever the left leg catches up — possibly all at once.
That is the number to watch. The platform reports aggregate carry-forward across the organisation as a liability figure per period, because it is the difference between a plan that is fine and a plan that is one strong recruiting month away from a payout spike.
Configuration decisions to make before launch
- Pair on volume or on units. Volume is standard. Unit pairing only makes sense if you sell a single product at one price.
- Does carry-forward expire? Indefinite carry-forward is the most generous option and the most dangerous. Six to twelve periods is common.
- Flush the weaker leg after a cycle, or reduce both by the matched amount? Reducing both is the fairer reading and the one distributors expect. Flushing the weaker leg to zero is more restrictive and needs to be disclosed plainly.
- What is the cap, and what happens to overflow? Per rank, almost always. Overflow discarded, carried, or paid into a pool.
- What qualifies a distributor to cycle at all? Personal volume plus at least one personally sponsored active distributor per leg is the usual answer, and it is the main defence against spillover eroding sponsoring effort.
- Which placement rule is the default, and can sponsors override it? A holding tank that lets a sponsor decide placement within a time window is popular with leaders and adds an operational step.
Each of these is a rule in the engine rather than a code change, and each is versioned — so a change next year does not alter what last year paid.
Modelling it before you commit
Binary cost is driven by matching efficiency, which is a property of your organisation’s shape rather than of the plan document. Model the ceiling first: run the plan calculator with your intended cycle commission and a realistic pairs-per-cycle estimate, then check the resulting ratio against your gross margin. If the cap is binding in the model, it will bind in reality, and the cap design is doing more work in your plan than the commission rate is.
Commission mechanics
How money moves through this plan, rule by rule.
| Pairing basis | Matched volume between the two legs, or matched unit counts, configurable per planVolume pairing is the norm; unit pairing suits single-product companies. |
|---|---|
| Cycle definition | A cycle occurs when both legs reach the configured matching threshold — commonly 300/300 in volume terms |
| Commission per cycle | Fixed amount, or a percentage of the matched volume, with different rates available per rank |
| Carry-forward | Unmatched volume in the stronger leg carries forward indefinitely, or expires after a configurable number of periodsExpiry is the standard control on runaway carry-forward liability. |
| Flushing | Optional. The weaker leg can be reset to zero after a cycle, or both legs reduced by the matched amount |
| Cycle cap | Per-period ceiling as a fixed amount, a number of cycles, or a percentage of group volume, applied per rank |
| Spillover | Automatic to the next open position by breadth-first, depth-first, weaker-leg or sponsor-nominated placement |
| Qualification | Personal volume, active status, and a minimum number of personally sponsored distributors in each leg |
At a glance
| Best suited to | Companies with a strong recruiting culture and a product that supports repeat monthly volume |
|---|---|
| Typical payout ratio | 35% to 45% of sales volume including all bonus types, heavily dependent on cap design |
| Main design risk | Unbounded carry-forward. Without expiry or a cap, accumulated volume can produce a payout spike no budget anticipated |
| Common hybrid pairing | Binary pairing on the placement tree plus unilevel level commissions and a matching bonus on the sponsor tree |
| Run frequency | Usually weekly or per-cycle, independent of the monthly schedule used for other bonus types |
Questions operators ask before they switch
Straight answers on plan mechanics, migration risk and compliance. If yours is not here, ask us directly.
Why is carry-forward the main risk in a binary plan?
Does spillover help or hurt?
How is a binary plan's cost modelled if it does not pay per level?
Can we cap payouts by rank rather than with one global cap?
Ready to Transform Your Direct Selling Business?
Send us your plan rules and we will run a live commission cycle against them, on your numbers, before you commit to anything.
- Configured in a sandbox before the call, usually within two business days
- No slide deck and no card — you watch your own plan pay out
- Your plan document stays confidential and is deleted on request
Prefer email? Write to us at sales@mlmsoftwarepro.com