Mary Kay Top Director Income

Written by TRACY on . Posted in Career Ladder, Failure in MLM, Mary Kay Prizes, Numbers in Mary Kay, Sales Directors

mary kay top director incomeMany recruits are snared into Mary Kay Cosmetics with the lure of executive earnings. They are told that the sky’s the limit, and the earnings are unlimited, if only you are willing to work hard enough. Sales directors tout their “highest checks” without ever mentioning all the business expenses that must be paid out of those checks, or that those are a one-time deal and don’t represent their normal commission checks.

The hard workers are the ones who make it big in Mary Kay, right? Wrong. One has to look no further than superstar Allison LaMarr, who was the fastest woman ever to make it to Mary Kay National Sales Director. Yet all of that hard work resulted in a downward spiral that culminated in Allison becoming the fastest quitter in Mary Kay history. She has flailed around since, attempting to be a personal coach, a failed participant  in multi-leve marketing company MLM Bellamora, a former “executive” for multi-level marketer Seacret Direct, and has been spinning her wheels trying to build a downline as a distributor for Seacret. (No wonder she stopped posting publicly about her Seacret stuff long ago!)

Time and again, a critical analysis of the numbers shows that almost everyone who participates in MLM will lose money, regardless of their effort. Even those who reach the top 2% of Mary Kay – – the sales directors – – aren’t making a whole lot of money. Even the most successful directors – – those in the pink Cadillac – – are making around $40,000 per year, if they’re lucky (and that’s only with 40 to 60 hour work weeks).  Even with repeated hard work, sales directors are regularly failing to move up – – and are very often moving down – – while telling recruits that they can make as much money as they want and promote themselves whenever they feel like it.

But if you work hard enough and get lucky enough and make it to “top director,” you’re set with that executive income, right? Wrong again.

I was recently provided the Income Advisory Statement for a top director in Mary Kay. This woman is in the top 25 directors in Mary Kay in the United States. She is in the Circle of Excellence, and goes on the Mary Kay Top Director Trip. She has a number of rings and prizes that she has won. While the number for total income, including commissions and prizes of $150,000 looks impressive, a closer look reveals a different truth:

  • Prizes totaled $50,000. While this sounds wonderful, the truth is that the value of many of the items appears inflated. And taxes must be paid on all of these prizes, at the inflated value.
  • The commissions totaled $100,000. This is the actual cash in hand for the director, out of which all business expenses and income taxes must be paid. Remember that the taxes are at higher rate than if she had a real job, since self-employment taxes must be paid in addition to regular income taxes.
  • The monthly commissions ranged from $4,000 to $12,000. Seven months showed commissions under $10,000. Three months showed commissions under $5,000. Even as a top director, there is no stability in earnings.
  • Some months were so bad that this director owed a copay on her pink Cadillac. So much for the free car!
  • After factoring in business expenses (including the office staff!)  and taxes due on the net income (including prizes), this director had about $34,000 cash left over from commissions to support her family.

Let me repeat that: A top director in Mary Kay – – in the top 25 nationwide – – has about $34,000 left over from that big income advisory statement figure of $150,000.

This director ordered about $35,000 wholesale value of products from Mary Kay last year.  Being generous, she may have profited $28,000 if she sold all of those products and sold most of them at full retail value. Taxes on the profit from product sales will eat up $8,000, leaving $20,000 cash from product sales to support her family.

So the big “executive” income for a director at the very top of the company leaves her with $54,000 cash to support her family, but only if she sold all those products and sold them at full retail prices.

Women will read this, and will say that they would be thrilled to earn $54,000. And while that may be a fine income for many people, the point is that this is the money in hand for a woman at the top of Mary Kay directorship. The top! And almost no one will reach this top 25 status. Sadly, in multi-level marketing, your success is not determined by how hard you work. There are 14,000 directors in the United States, and I’ve just shown you what one of the top 25 is making.

And make no mistake that this woman is working 60 hours per week or more. Mary Kay is not the “work from home” opportunity it’s pitched as. It’s a ton of hours, most of them outside your home and away from your family. To work this hard and get this high in the company, only to make middle management wages, is nothing short of disappointing. It’s the hard reality of Mary Kay.

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Comments (19)

  • MLM Radar

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    •Some months were so bad that this director owed a copay on her pink Cadillac. So much for the free car!

    In case anyone didn’t know, the car co-pay is not a one-month off-and-on penalty. When your “production” level dips below threshold, you have to make the co-pay for at least THREE months. To get rid of the co-pay you have to show consistent “production” above the threshold during the penalty months.

    Drive free? Bulls–t. The crazily inconsistent up-and-down nature of MK director commissions virtually guarantees that most car drivers are paying through the nose for that “free” car.

    Yes, if you have a big “production” month you do get a car credit which rolls forward to the following month. But hit TWO bad months in a row… Better get that credit card out and order more inventory under your “ghost” consultants (IBCs who quit without cancelling their consultant numbers), ‘cuz that co-pay is hanging over your head like a sword.

    Fake it ’til you make it, sweetheart. Starts over every month.

    Reply

    • MLM Radar

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      this director had about $34,000 cash left over from commissions to support her family

      By the way, did you take a look at this Director’s personal “production”? If she made the Queen’s Court of Selling (i.e. Queen’s Court of Ordering), that means her entire $34,000 got handed right back to Mary Kay for more inventory.

      Reply

    • alurker

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      The car co-pays are figured on a quarterly basis. If you make the numbers January through March, for example, no copays April through June. If you miss the cumulative quarterly numbers (not month by month), you pay a copay April through June. Co-pay amounts vary based on how far you missed the minimum quarterly total. And, keep in mind, any product returns from unit members affect these numbers too.

      Reply

  • Sapphire

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    I have this to say about My Gal Al – (lison) LaMarr; I admired her climb and her tenacity. You have to hand it to her; when she started seeing the writing on the wall, she created a website where she gave her though-leader commentary “Digging Deeper” away for free and she had a 90 day “free” business booster “class” that anyone could join. Then she started selling her on-line videos – ITv, her dvd’s in bunches and batches, a planner notebook of sorts, online courses etc. She created a paid “members only” site and she also had monthly “paid” Digging Deeper Telephone conferences (I know because I paid for 2 and got absolutely no information because – and here was the thing – she repeated herself constantly. She said the same things over and over just changing up the words and phrases. My ex even said she talked loud and said nothing). The point is she created for herself extra income as she was teetering at the top and spiraling downward. She may have even broken her NSD contract with Mary Kay because she “created” her own business of Driven Inc. (who knows) – good idea but bad timing on her part. The thing is, I personally think that Mary Kay Inc. over-reacted because she really didn’t give away any company secrets. What she taught was generic and oftentimes just simple BS. And again, I can’t figure out why she got penalized when Pam Shaw is still selling her Design Tools on her NSD website, Kathy Helou is still selling her “old” cd’s on her NSD website and if you to attend an event which is hosting Gloria Mayfield Banks, you have to buy tickets through a website. (Basically – Mary Kay is unfair even to its NSD’s).

    As for Allison’s other MLM mistakes – Have you seen the Bellamora YouTube video in which she was in a back of a limo touting the product. It was extremely adolescent at best on her part. So no… that was not business-like and very unattractive. And as for Seacret Direct… she did get to go to Korea to help start up the MLM there… but if I am not mistaken, in the end, she married one of the owners. So, no problem there. Why would she bother to go “door – to – door” for a MLM if she is married to one of the owners of the “parent” company?

    Getting back to the executive income conversation– If the director’s incomes were so executive, why then would they require meeting fees and fees for learning materials? And some director’s even have a policy of consultants providing items as prizes for other consultants. The executive income is just a study in mmoke and mirrors. All I can say is this: Join Mary Kay if you want to but don’t quit your day job. You just might need it in the end. And consider this as a warning.

    Reply

    • BestDecision

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      I’ve personally spent one-on-one time with Allison, and I can tell you she was bright and ahead of her time. That’s how she made it, but I can also say multiple credible people told me why MKI asked for her resignation–which is exactly the point you bring up. MKI turns its head and ignores certain, favored NSDs (and Directors). Many times, I’ve wondered how on EaRTh people made it to NSD when it was well known they broken rules or had major character flaws.

      Favoritism is actually one of the biggest flaws of the company and one of the reasons I resigned. I agree–seeing how much money NSDs, including Allison, made off workshops, retreats, and materials is ridiculous and actually sickening in that it IS against their Agreement as a National and then overlooked.

      Don’t even get me started on Sean Key and his favorites…!

      Reply

      • Missy C

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        It sounds to me like they wanted to make an example out of Allison.

        Reply

        • BestDecision

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          Allison was definitely a pawn. Worse people are still in the company, with no scolding, no slap on the hand.

          Reply

          • raisinberry

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            Yep.

            Reply

    • Lazy Gardens

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      She did everything EXCEPT find a job where she could have a regular paycheck. None of her ventures had any stability or much prospect of long-term income.

      So, she took a hint from Mary Kay’ life and married someone in the upper management at Seacret.

      Reply

      • Scrib

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        You know MLM rackets are bad when the only way you can make consistently big money is to either marry into money (and thus gain access to a tidy financial safety net that 99.9% of MLM consultants do not have) or marry one of the co-founders.

        Reply

  • MK Taints the Color Pink

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    Although Allison was mentioned, the rest of the article seems to be about another top director. I’m curious who it is and if they are still in MK…

    Reply

    • TRACY

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      I was asked to not reveal the director’s name to protect the identity of the person who gave me the information.

      Reply

      • MK Taints the Color Pink

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        Darn. However, I admire you for always respecting people that way. I’m going to take a guess that this director IS still deep in the fog, then. How sad.

        Reply

  • KLB

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    Excuse me, but how many of you people do your taxes? All the expenses of being a consultant and/ director are deductible from your taxes. Keep your receipts. They are business expenses. I have done this all my life, even when working for a large company, if I needed game prizes and the company wouldn’t pay for them, they came off my taxes. I know that Mary Kay teaches this in her tax brochure. If they are not taking advantage of this business rule, it isn’t MK’s fault they are going in the hole.

    Reply

    • TRACY

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      Excuse me, but you’re missing the whole point. If you are spending money (which is what you have to do in order to claim a business expense on your taxes), then you are profiting less. Lots of expenses means little profit.

      Reply

    • MLM Radar

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      KLB, that’s a pretty bold statement inferring that we don’t know how to handle business math. In case you weren’t aware, Tracy is a CPA. She probably knows more about taxes than you ever imagined. But Tracy isn’t the only CPA here. I’m another. And yes, I do my own taxes. Other ladies here, after waking up from the pink, have gone on to take college courses in business math and accounting as well.

      You statement also leaves me wondering if you understand the difference between a tax deduction and the resulting reduction in your tax bill. The expenses from being a consultant are NOT directly deductible from your tax bill like a tax credit. They are deductible from your income, IF you haven’t run afoul of the IRS Hobby Loss Rule. When you’re in the 15% tax bracket, every $1000 you spend or lose means your tax bill only drops by $150. After you get your big refund you’re still behind by $850 out of each $1000 that you’re never getting back.

      Reply

    • Lazy Gardens

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      KLB –
      If you have business expenses, it does reduce your taxable income. However it is NOT a 100% rebate of the expense.

      http://www.pinktruth.com/2013/11/deductible-business-expenses-are-good/ explains it pretty well.

      It’s a way for Mary Kay to suck money from the consultant’s real job, or the spouses real job by insisting that business expenses are a good thing and that showing a loss on Mary Kay means paying lower taxes.

      First, what is your tax rate? Let’s assume it’s 20% federal and 5% state, for a total of 25%. That means that for every dollar you and your husband earn, $0.75 is spendable after-tax money.

      Now let’s assume you paid $200 to go to a conference.
      As a business expense, that $200 does not reduce your taxes by $200. Rather, it reduces your taxable income by $200. The tax savings will be 25% of $200, or $50. That business deduction lowered your taxes, but you had to spend $200 to get the tax savings. You’re still out of pocket for $150.

      Reply

  • Dhagen02

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    And, more expenses and less profit year after year will get you audited. We run a legitimate business in agriculture and we have shown a loss for the last few years due to the loss of some of our herd and since our dams have 11mo gestation it was taking it;s toll and after 11mo gestation it is another 18 months to 2yrs before they are ready to breed, we were audited because they thought our livestock might be “hobby” v “business” However, because we were able to show a loss of several of our herd, meaning less fiber, and less profit, we were cleared very quickly. I highly doubt that several years of losses in an MLM is going to be cleared quite so easily.

    Reply

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