30 June 2009

Premier Club Director Gail’s Earnings

Written by TRACY. Posted in Numbers in Mary Kay, Sales Directors

I wanted to examine the income of a Premier Club sales director. There are about 13,000 sales directors in the United States, and only a few thousand of those are Premier Club or Cadillac drivers. When you make it to those levels, you are assumed to be doing well, as not many sales directors get there.

I did a sample calculation based upon the estimated income and expenses of Gail, an actual Premier Club Mary Kay sales director. She said that her Mary Kay business contributed a “significant portion” to her family’s income. That suggested to me that she must be approaching or at that “executive” level income. I was wrong!

INCOME
$31,351 commission checks (This is based upon her unit retail of $228,339, and includes estimates of her director commission, personal recruit commission, and unit volume bonuses. She was doing about $9,000 monthly, and her average “love check” was about $2,600.)

$14,822 retail sales (I’m assuming all items were sold at full retail, even though we know many were probably discounted.)

TOTAL = $42,673

I don’t know about you, but even this income of $42,000 before expenses is not impressive to me. It’s certainly not executive. It’s certainly not the “big money” we’re led to believe so many make in Mary Kay.

EXPENSES
These are all estimates, of course, based upon my experience and multiple conversations with other Mary Kay sales directors and ex-directors. I have acutally estimated these on the LOW end, meaning that many sales directors will actually spend more on these items.

$8,893 product costs plus other miscellaneous expenses related to selling products (supplies, customer gifts and incentives, postage, etc.)

$350 director suit
$750 Leadership Conference
$250 Career Conference
$900 Seminar
$1,200 unit prizes
$500 demo products
$750 advertising, promotions, giveaways
$50 Mary Kay website
$1800 office assistant
$350 office supplies
$500 postage on newsletter for 65 unit members
$1,200 meeting room rental ($100 per month)
$360 telephone expense (yes, it costs money to make those business calls)
$250 computer software and supplies
$350 meals for career coffees, breakfasts, and other recruiting meetings
$0 health insurance (this sales director has coverage through her working spouse, but those who don’t will need to fund this themselves)
TOTAL = $18,453

INCOME BEFORE TAXES = $24,220

Self-Employment Taxes 15.3% = $3,706

BEST CASE SCENARIO NET INCOME = $20,514

(Don’t forget you’ll still pay regular income taxes on that Net Income amount!)

Oh, and what about that car, you ask? The value of the car (as evidenced by the cash compensation option) is $500 per month, or $6,000 per year. That adds to the sales director’s income, doesn’t it? Yes, it does. But the income is then reduced by the cost of using that car to go to events, skin care classes, recruiting meetings, etc. I believe that the majority of this amount (if not more) will be eaten up by the gas, mileage, and service expenses.

So there you have it: the “successful” sales director’s income is a whopping $20,000 a year, if she’s lucky. And that’s not for part-time work. The vast majority of sales directors at this level spend well over 40 hours per week working Mary Kay.