Counting the Real Cost of Mary Kay

Written by Raisinberry

If you have been in Mary Kay for any length of time you are aware of a typical meeting involving a “scoreboard line up” of top sellers in your unit. The count up begins for what was sold, and generally anybody over $300 gets to come down front and tell their sales success. $300 a week in sales is supposedly a Sapphire Star Consultant, provided she ordered 1800.00 wholesale during the quarter.

The problem is, there are very few real business women in Mary Kay. Your Director will have you split your sales 60/40 as if that ratio has anything to do with actual accounting. You will note that even a weekly summary sheet does not track your real expenses and real profit. No, you are to record your 60/40 split as if the number remaining from the subtraction of your restocking amount reflected your actual profit. Nothing could be further from the truth.

In real business, the cost of doing business, every dime, is factored into its profitability picture. Mary Kay knows you will do such little business that real tracking of expenses against profit is futile. That’s why classes that are supposed to teach Money Management, are actually thinly disguised attempts to teach you to have full inventory, get all your Mk Debt on one credit card or loan, and pay it off with one set payment every month. This is taught as simple business management. Here’s the problem.

Your expenses continue. Your need to order new merchandise continues. If you are serious about your business, you will be at every meeting, every Career Conference, Every Leadership Advance, Every Pacesetters, Red Jacket Rally, Seminar, Pizza and Possibilities, Muffins and Makeovers, Meatloaf and Marketing, Omelets and Opportunities, ad infinitum.

You have start up inventory debt that hasn’t been cleared. You have reordering debt that hasn’t been cleared. You have Travel and Event debt that hasn’t been cleared, and accounting for all of it and the interest you are paying is a nightmare.When pressure comes to add more to it, like for finishing STAR Consultant or hanging on to Car Qualifications, you swallow hard, get a sick stomach and rationalize that soon you will be a Director and pay it all off.

You won’t.

So since we are no longer willing to live in denial, let’s take a hard look at real profit and loss for one month…and I won’t pick July. Let’s take October.

Don’t glaze over…I know numbers make you nuts…but that’s why you are in this mess. I’ll keep it “general”.

Monthly sales: (Example of a typical scenario)

Week one – 317.80 sold

Hostess losses ($75 for $25 coupon) – costs you $12.50

Travel- $8.00

Section 2- $5.00

Cost of inventory – 190.30

¼ of internet & website $1.00

Meeting fee- $4

Product giveaway for guests- $10

1/52 of PCP yearly costs $4

Interest on your Credit card debt (big range here, could be as high as $20 depending on your rate- Lets say $12 divided by 4)

TOTAL COSTS = 237.80

You Sold 317.80 and it COST you in reality, $237.80. You made $80.00

But now it’s time for Fall Retreat, and your ticket price is $40 to $100 depending on where it’s held.

Next week, You attempt to repeat a $300 week, but you class postpones. Some of your costs are fixed. You still have meeting fee, PCP, Interest, web , travel and if you give your guest a gift, that cost too. If you didn’t sell anything, you are now in the hole.

Week Three- You sell 500.00! Part of it contained that $400 roll up for $299.You made 99.00 on that roll up, (NOT $200 because you discounted it…) less, Hostess gift=$12.50, samples, $5, Travel, $5. You made another 200.00 from a double facial, lost some samples and product at $5 and of course your “gift with purchase for the 2 of them at $7. Now add your “fixed costs” for the week, meeting, PCP, web, interest, travel…

Week Four- Back to $250 in sales. All the same costs apply.

At month end we can also add what you gave away in warm chatter samples, Interviews that involved you picking up the tab, Other “fees” for Saturday trainings or marketing sessions, and your next wholesale order! Are you restocking ONLY what you sold?

Chances are you are not! There’s new product to try, items you think you need more of, and so you charge.

Here are your sales for the month= $ 1067.

If you think like a Mary Kay consultant and not a business woman, you tell yourself you have 60% to order! Wow that’s a $600 wholesale. Only a $600 wholesale costs you over $800 in shipping and taxes. Having $600 to spend means Your ORDER is $400! Not $600!

Based on this woman’s real expenditures, Does she have $467 in profit? If she discounted ANYTHING during the month, she has no idea what her real amount of profit is, and if she doesn’t count real costs, she is digging herself into a hole that will consume her.

The money to run your “business” comes from somewhere. It doesn’t materialize out of a hat. And every week that you don’t sell at least $300 is costing you big time. Add all the “nothing is mandatory” but you better go, events… and you are frankly, screwed.

Mary Kay has been playing “Big Girl’s in Business” for over 40 years. In 14 years, 11 as a Director, I never had a money management training class that talked actual cost and profitability, factoring debt and inventory management, and what obsolete product really costs us. When has what you have lost in product changes, packaging changes, and upgrades EVER been discussed?

And what has your TIME been worth? If a $300 week gets you $80 before your have your non mandatory events to pay for…what was your time worth? Meeting 2 hours, Class 3 hours, Saturday’s “Crustacions and Career Path”- 2hours, plus calling, confirming and coaching…

Get the real picture? Now the accountants of this forum will be irritated that I didn’t spell it out exactly, but I want my words to resonate for the non-accountant mind. What does your logic and observation tell you? Are you in fact BETTER OFF financially for being in Mary Kay, or is the whole picture much more dire?

We can hope that some have broken even, but the vast majority are paying big time for this dive into “executive income for part time hours”.

Mary Kay Cosmetics prospers on our ignorance, hopes and dreams. This Corporation is the quintessential opportunist, which, because it will not admit that these charges are true, will never cease to fuel the tide of antagonism against it.

11 Comments

  1. enorth

    A NSD said that, last August, eleven SDs in her national area did not receive paychecks. (Because of the “July” problem.)

    In MK or other MLM, you’ll always have expenses, but you can’t be certain you’ll get a paycheck. That’s a scary way to live.

    1. BestDecision

      I believe it! When you see a Director already finished with her Star by early July, you know she ordered big to finish something for Seminar. Then, her unit will come to a grinding halt in July because everybody was tapped out. If it truly is such a thriving, financially successful business model, people would see dips in July or January because a “consumable product” is always creating solid, steady reorders.

  2. MLM Radar

    She “sold” $300 this week! Let’s give her a ribbon and cheer! (No, she didn’t. She ordered $150. But let’s pretend she sold it anyway.) At 60/40 that $300 gets her $120. If you’re delivering pizzas for minimum wage plus tips, you can take home $120 in about 12 hours, or 2 nights.

    Can you imagine sitting in a weekly employee meeting at Dominos Pizza and being applauded for showing up to work for 2 nights last week?

    1. enorth

      On a Director’s website was a photo of Chrissie Consultant being recognized as “Queen of Monthly Sales.” And underneath that “According to WAS” in parentheses.

  3. pinkpeace

    Wow, Raisin, you NAILED it with this analysis. Just try plotting out Mary Kay income and expenses on a spreadsheet and see how far you get.

    How simple would it be for Mary Kay Corporate to provide an easy online Excel form for consultants to track? You would think that such a spreadsheet would be one of the first business tools that Mary Kay would provide to consultants.

    But of course, that will never happen, because if consultants truly tracked the money in their businesses, they would quit en masse.

    1. raisinberry

      You know it.

      I really never thought about why they would have us fill out a summary sheet that never told the true story. But it can only be one reason. They do not want any IBC to actually understand what her business is doing. They couldn’t motivate all the stupid ordering for recognition, prizes and qualifying for things if a thorough Profit and Loss picture was in front of her. It would be harder anyway. ( Look at how the “people and Love” is bantered about…PLEASE! Whatever you do, don’t do any MATH regarding your business!)

      Mary Kay throws a wide recruiting net because they are looking for women who love recognition and hate paperwork. If you just love ordering and boxes coming to your door like a never ending Christmas, you’re perfect.

      1. gotheart

        I was told by a NSD, the reason for the weekly summary sheet, (this was what it was called back in my day,) was so the SD could know the IBC sales and how close she was to placing a 600. order.
        With this information she should call the IBC and give her a wholesale challenge to be sure the IBC used her money to purchase inventory and not shoes for her kids.

        The Weekly Summery Sheet was never used to keep track of retails sales, just to give that impression. The SD returned it to the IBC at the next meeting with a sticker or word of encouragement written on it. :/

  4. enorth

    “SD returned it to the IBC…with a sticker or word of encouragement”

    Did she give dinosaur stickers? Woo hoo! And I bet her encouraging words were, “I’m so proud of you!”

    1. Still Breaking The Basic

      My ex-SD would have burned through the “try harder next time” stickers.

      Executive pay and a dino sticker for part-time work. Can you get excited about that?

      No?

  5. Escaping the cult

    THIS. This is what finally hit me like a ton of bricks. The fact that after “working my business” for 4 years, never missing an event, moving up to directorship because that’s where I could see the real money- I have invested roughly $50,000 and am $6,000 in the hole. So much for being a work at home at home mom and supporting my family. IMAGINE what that money could have done for my family. If I had only worked harder or bee-lieved more or raised my deserve level or prayed more or put on the armor of God to defeat the devils lies. Right? It’s absolutely deplorable!

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