The Mathematics of Direct Selling: Auditing the Cumulative PV Model & 6×6 Strategy

By Shamima Khatoon, Lead Data Researcher and Business Journalist, Elites Mindset

Moving Past the Hype: A Financial Analyst’s View of Network Marketing

The direct selling industry generated approximately $186 billion in global revenue in 2023. That is not a small number. It is, in fact, large enough to obscure the more instructive statistic sitting directly beneath it: according to FTC staff analysis of 70 MLM income disclosure statements published in September 2024, the vast majority of participants in these companies receive $1,000 or less per year — less than £84 per month — before expenses.

That gap between headline revenue and distributor-level reality is precisely where serious financial due diligence must begin.

This report does not aim to condemn the direct selling model as inherently fraudulent, nor to endorse it uncritically. The objective is more granular: to apply standard financial analysis frameworks to two structural mechanisms — the Cumulative Point Value (PV) model and the 6×6 income duplication strategy — and to surface the actual numbers behind the narrative.

Why Standard ROI Metrics Fail in Direct Selling

In conventional retail or franchise models, Return on Investment (ROI) is calculated by dividing net profit by total capital invested. The inputs are relatively clean: Cost of Goods Sold (COGS), fixed and variable overhead, revenue from sales to end consumers, and time-to-break-even.

In multi-level compensation structures, this calculus breaks down for several interconnected reasons. First, the “investment” is not a discrete capital outlay but an ongoing obligation — distributors typically must maintain minimum monthly purchase volumes to remain commission-eligible. Second, revenue streams are bifurcated between retail margin (the spread between wholesale acquisition cost and retail selling price) and recruitment-linked commissions, which flow from downline activity rather than direct sales performance. Third, and most critically, the bonus structure is tiered across multiple generations of recruits, meaning a distributor’s income is partially — sometimes predominantly — a function of behaviours they cannot directly control.

Standard ROI, therefore, fails not because the mathematics are wrong, but because the model it was designed to evaluate bears little structural resemblance to a multi-tiered compensation plan. Evaluating an MLM opportunity requires decomposing the compensation plan into its mechanical components and stress-testing each against real-world probability distributions, not theoretical best-case projections.

The Role of the “10-Step Verified Methodology” in Auditing MLMs

At Elites Mindset, our 10-Step Verified Methodology provides the analytical scaffold for all compensation plan reviews. The methodology moves sequentially through corporate structure verification, product margin analysis, compensation plan deconstruction, income disclosure statement cross-referencing, regulatory filing review, downline attrition modelling, cost-of-goods-sold mapping, rank advancement probability assessment, comparative market benchmarking, and final verdict synthesis.

Applied to any network marketing opportunity, this process consistently surfaces the same structural pressure points: the PV/BV spread, cumulative rank mechanics, and the statistical improbability of sustained downline duplication. Each of these is addressed in detail below.

Deconstructing the Core Architecture: PV vs. BV

What is Point Value (PV) and Why is it Used?

Point Value (PV) is the internal unit of account that most direct selling companies assign to each product or product bundle. It functions as a normalised metric — a way to track distributor activity and rank progression independently of local currency fluctuations or product price variation across markets.

Critically, PV is not money. It is a proxy that measures volume activity. A distributor accumulates PV through personal purchases, retail customer purchases they process through their account, and in some structures, a proportion of their frontline downline’s purchases. Rank advancement thresholds, bonus eligibility gates, and performance tier qualifications are all denominated in PV.

The commercial utility of PV from the company’s perspective is significant: it creates a standardised, internally controlled metric that can be calibrated to serve the compensation plan’s structure, rather than one that directly reflects market value or product cost.

Business Volume (BV): The Actual Currency of Commissions

Business Volume (BV) is the dollar (or pound) value assigned to each product against which commission percentages are calculated. Where PV measures activity, BV determines payout magnitude.

The two values are assigned by the company and are not always published together transparently. A product might carry 100 PV and £60 BV, meaning the distributor’s commission on that product is calculated against £60, not against the retail price the customer paid, and not against the wholesale cost the distributor paid to acquire the product.

This architecture is not inherently deceptive — it is a standard mechanism in direct selling — but it creates a structural opacity that most distributors do not fully interrogate at the point of joining. Understanding BV is not optional if you are performing financial due diligence; it is the foundational unit of your actual commission earnings.

Calculating the Spread: Why 1 PV Does Not Equal £1 (or $1) in Payouts

The “spread” is the financial gap between what a distributor pays to generate one unit of PV and what they receive in commission generated by that PV’s associated BV.

Consider a worked example using industry-typical parameters:

• Product retail price: £100
• Distributor wholesale acquisition cost: £70 (30% retail margin built in)
• Assigned PV: 80 PV
• Assigned BV: £60
• Distributor’s performance bonus tier: 21% (a typical mid-tier rate in unilevel plans)
• Commission earned on this product: £60 × 21% = £12.60

The distributor paid £70 to acquire the product. If they sell it at full retail (£100), their gross margin is £30. Against that £70 outlay, they earned £12.60 in downline commission eligibility value. The product’s BV is £60 — 14.3% below the wholesale acquisition cost and 40% below retail.

The spread here is the gap between the £70 acquisition cost and the £60 BV: a £10 deficit per product that directly reduces commission pool size. Multiplied across an organisation’s volume, this spread is the primary mechanism through which the company retains its profit margin. The company sets BV; the distributor has no input into that number.

This spread is not unique to any single company — it is a structural feature of the model, present in virtually every direct selling compensation plan. The precise ratio varies, but the direction does not: BV is always lower than the cost to generate it.

The Mechanics of the Cumulative PV Model

How “Never Reaching Zero” Manipulates Distributor Retention

The Cumulative PV model is marketed to prospective distributors with a simple and emotionally resonant proposition: your volume “never resets.” In conventional MLM structures, monthly PV requirements must be met from scratch each calendar month to maintain bonus eligibility. In a cumulative model, unmet monthly volume is carried forward and added to future months’ totals, allowing distributors to eventually cross rank-advancement thresholds even across extended periods of low activity.

On the surface, this appears to be a distributor-friendly feature. In practice, it functions as a powerful retention mechanism for the company.

The psychological architecture here is well-documented in behavioural economics. When an individual has accumulated progress toward a goal — even an arbitrary one measured in PV units — the sunk cost effect creates reluctance to abandon that progress. A distributor who has accumulated 3,400 PV toward a 4,000 PV rank threshold is unlikely to discontinue purchasing, even during months when their financial return does not justify further investment. The company benefits from this continued purchasing regardless of whether the distributor ever crosses the rank threshold.

The retention data supports this reading: industry average annual turnover rates range from 50-75%, but companies employing cumulative or “never lose your rank” mechanics consistently report slightly better short-term retention than those with hard monthly resets. The feature does not improve distributor income outcomes — it improves the company’s revenue predictability from its distributor base.

The Financial Difference Between Cumulative Rank and Active Income

This is one of the most consequential distinctions any prospective distributor must understand, and it is one that compensation plan presentations routinely obscure.

Cumulative rank refers to a title or tier designation — Silver, Gold, Platinum, Director, and so on — earned by crossing a cumulative PV threshold. The title confers status, recognition at company events, and eligibility for certain bonus types.

Active income requires a separate, usually monthly, qualification. To receive commissions on downline volume in a given pay period, a distributor typically must meet a minimum personal volume (PV) requirement in that specific period, regardless of their cumulative rank designation.

In practical terms: a distributor who has earned a “Director” rank through cumulative PV accumulation over 14 months may receive zero commission income in any month where their personal active volume falls below the eligibility threshold. They hold the title. They earn no commission.

This distinction is rarely foregrounded in recruitment presentations. The title is emphasised; the monthly qualification requirement is buried in the compensation plan document. A distributor who conflates cumulative rank with active commission eligibility will systematically overestimate their income reliability.

Case Study: Scaling from 5% to 21% Performance Bonuses — The Real-World Payout

Most unilevel or stairstep breakaway plans operate on a performance bonus schedule tied to monthly personal and group volume. Below is a data scenario modelling a distributor progressing through three typical performance tiers:

Scenario inputs:

• Group Volume (GV) generated per month by downline: £3,000 BV
• Personal Volume (PV) maintained by distributor: minimum threshold (e.g., 100 PV / £80 BV)

The progression from 5% to 21% looks compelling in isolation. However, three contextual data points qualify this picture substantially.

First, sustaining £3,000 in monthly group BV requires a meaningful active downline — typically 15-25 distributors making qualifying purchases, depending on product price points. Second, the attrition rate within most direct selling downlines means that active membership fluctuates month-to-month; a downline that generates £3,000 BV in month one may generate £1,400 BV in month three as newer members lapse. Third, the 21% tier requires volume thresholds that, for most compensation plans, necessitate a downline of 50-100+ active distributors — a population that, as we will demonstrate in the following section, is statistically difficult to maintain.

Auditing the 6×6 Income Strategy

The Theoretical Math: Perfect Duplication Scenarios

The 6×6 matrix is a duplication model in which each distributor recruits six individuals, and each of those six recruits six more, producing a theoretically geometric expansion across six levels.

Under perfect duplication conditions:

If each of those 55,987 distributors generates even £30 BV per month, the theoretical group volume is approximately £1.68 million monthly. At a 5% Leadership Overriding Bonus rate, the theoretical top-line commission would be £84,000 per month.

This figure is the one presented in promotional materials. It is also, statistically, almost completely disconnected from realised outcomes.

The Statistical Reality: Factoring in Downline Attrition Rates

Industry data consistently shows that 50-75% of MLM distributors leave within their first year, with some estimates placing first-year attrition closer to 75-80%. Independent research analysing MLM retention over four to nine years estimates active retention at approximately 10-15%.

Applying a conservative 80% first-year attrition rate — meaning only 20% of recruited distributors remain active after 12 months — to the 6×6 model:

Even at the optimistic 20% retention rate, the active downline shrinks from 55,987 to approximately 11,197. At the more empirically grounded 10% long-term retention rate, the active base falls to approximately 5,598 — roughly 10% of the theoretical maximum. The commission income in that scenario is not £84,000 per month; it is closer to £8,400 per month before expenses, recruitment costs, and personal volume obligations are subtracted.

The FTC’s September 2024 staff report on MLM income disclosure statements found that across 70 reviewed companies, most participants earned $1,000 or less annually. In at least 17 of those companies, the majority of participants received no payment at all. None of the reviewed disclosures adequately accounted for participant expenses.

Calculating the True Cost of Goods Sold (COGS) to Maintain “Active” Status

The 6×6 model’s income projections universally omit the COGS associated with maintaining the distributor’s own “active” qualification. To receive commissions on any level of downline volume, the distributor must typically meet a monthly personal purchase obligation.

In a representative structure:

• Monthly personal volume requirement: 100 PV
• Wholesale product cost to generate 100 PV: £70-£90
• Annual COGS for personal qualification alone: £840 – £1,080

If the distributor fails to retail this product to external customers — a documented reality, given that research indicates 70-80% of MLM “sales” are internal purchases by distributors themselves — this cost is a net expense against commission income.

For a distributor at the 5% bonus tier earning £150 per month in commissions while spending £80 per month on qualifying purchases, the net monthly income is £70. Annualised: £840 gross commission income against £960 in product acquisition costs = a net annual loss of £120 before any other business expenses (marketing, event attendance, training, digital tools).

The break-even point — where commission income exceeds total product acquisition COGS — is not achieved until a distributor reaches a performance tier and group volume level that, per the attrition modelling above, fewer than 1-3% of participants actually sustain.

The Hidden Economics of Multi-Tiered Bonuses

Director Bonuses and Leadership Overriding Bonuses (LOB) Explained

Above the standard performance bonus structure, most direct selling compensation plans introduce a second layer of commission: the Leadership Overriding Bonus (LOB), sometimes termed a “Generation Bonus” or “Infinity Bonus.” This is the mechanism through which senior-ranked distributors earn a percentage of volume generated by their “breakaway” legs — downline organisations that have themselves achieved leadership rank.

The LOB is presented as the pathway to leveraged, scalable income. In structural terms, it represents a redistribution of a portion of the BV spread — the gap between what the company charges distributors for products and what it pays out across the entire commission stack.

Typical LOB rates range from 1% to 6% per generation, applied across two to four generational levels of breakaway leadership. On paper, a Director-level distributor with three active breakaway legs each generating £10,000 monthly BV might receive a 4% LOB on that volume: £400 × 3 legs = £1,200 per month in LOB income.

The qualification requirements to maintain this income, however, involve maintaining both personal active status and the continued active qualification of those breakaway legs — each of which is itself subject to its own minimum volume requirements and attrition pressures.

The “Dynamic Compression” Rule: Where Does Unpaid Commission Go?

Dynamic compression is the mechanism by which the company handles commission that would theoretically be owed to a distributor who fails to qualify for payout in a given period. When a distributor does not meet the minimum active qualification — whether due to insufficient personal PV, a lapsed rank requirement, or failure to maintain “side volume” maintenance in breakaway structures — their commission eligibility for that period is forfeited.

The mathematical question is: where does that money go?

In most compensation plans, it does not get redistributed to the next qualified upline distributor in full. Instead, it is subject to compression — a portion is passed to the nearest qualified upline, and the remainder is retained by the company. Depending on the plan’s architecture, the company may retain between 30% and 60% of commissions that “compress” due to distributor ineligibility in any given period.

This is not a minor technicality. In a large network with 50-75% monthly attrition across the lower tiers, a significant portion of the BV generated by those lapsing distributors’ purchasing activity generates commissions that compress partially or entirely back to the company. The net effect is that the company’s effective profit margin on product volume is higher during periods of high attrition — which, as the data shows, is the norm rather than the exception.

The FTC’s 2024 Business Guidance on MLMs explicitly notes the obligation for companies to disclose realistic typical earnings, including the effect of all qualifying requirements. Dynamic compression is one of the mechanisms that most consistently creates a gap between stated commission rates and realised distributor income.

Verdict: Assessing the True Financial Health of the Cumulative Model

Who Actually Profits? A Tier-by-Tier Data Breakdown

The data presents a consistent picture across multiple sources, regulators, and independent analyses:

Company level: Profits systematically, regardless of distributor performance. The BV/PV spread, dynamic compression of unclaimed commissions, and mandatory personal volume requirements collectively ensure a revenue stream that is partially decoupled from distributor income success. The industry’s $186 billion in global annual revenue flows predominantly to corporate structures, not to distributor networks.

Top 1-3% of distributors: This cohort — those who joined early, built large organisations in low-saturation markets, and maintained sustained recruitment activity over multiple years — can generate meaningful income. Research on Amway’s Wisconsin distributors found that even the top 1% generated roughly $12,500 in gross profit annually, with net income turning negative once expenses were deducted. The truly high earners in any network marketing company represent a statistically rare convergence of timing, market positioning, and recruitment capability.

Middle tier (approximately 10-20% of participants): Earn modest supplemental income — typically £500 to £3,000 annually — that partially offsets but rarely exceeds their total business-related expenditure. These distributors are the compensation plan’s “social proof” layer; they earn enough to remain engaged and to credibly represent the opportunity, but not enough to qualify as primary income.

Lower tier (approximately 75-80% of participants): Earn $1,000 or less annually, or nothing at all, while continuing to make qualifying purchases. Their net financial position is typically negative once product acquisition costs are included. Approximately 48% of MLM participants report experiencing financial losses.

Red Flags vs. Legitimate Retail Arbitrage in 2026

The analytical framework for distinguishing a commercially viable direct selling opportunity from a structurally extractive one comes down to a small set of verifiable criteria.

Green indicators of legitimate retail arbitrage:

• Retail sales primacy: The compensation plan demonstrably rewards sales to non-distributor end consumers, not merely internal volume. Companies operating with genuine retail arbitrage mechanics will have documented retail customer-to-distributor ratios and will track retail sales separately from internal distributor purchases.
• Transparent income disclosures: The company’s IDS includes all participants — not merely “active” earners — and accounts for documented business expenses. The FTC’s 2024 guidance explicitly requires that non-earners not be excluded from disclosure data.
• Product market competitiveness: The product can be sold profitably at retail without a recruitment narrative, in competition with comparable products available through conventional retail channels.
• Low minimum volume obligations: Personal qualification thresholds are modest enough that a distributor earning no commission income does not sustain a net financial loss through mandatory purchases.

Red flags warranting forensic scrutiny in 2026:

• Income projections that present the 6×6 or similar geometric duplication model without attrition-adjusted scenarios.
• Cumulative PV mechanics marketed primarily as a retention benefit rather than as a genuine income preservation tool.
• Dynamic compression rules that are not disclosed in plain language in recruitment materials.
• A BV/PV spread exceeding 25% (i.e., BV set more than 25% below the distributor’s wholesale acquisition cost).
• Income disclosure statements that exclude any participant category from the reported earnings data — a practice the FTC’s 2024 report identifies as prevalent in at least 67 of 70 reviewed companies.

The cumulative PV model and 6×6 income strategy are not inherently fraudulent mechanisms. They are structural tools that, when combined with high attrition rates, opaque BV/PV spreads, and income disclosures that systematically omit non-earners, produce outcomes that diverge significantly from the income projections presented during recruitment. The data is not ambiguous on this point.For the entrepreneur conducting due diligence in 2026, the methodology is clear: obtain the company’s most recent income disclosure statement, apply the attrition rate to the duplication model, calculate your break-even COGS against realistic commission income at entry-level bonus tiers, and interrogate the BV/PV spread before signing anything. The mathematics will tell you what the presentation will not.