Real Mary Kay Math

Written by Diana

There’s an ongoing debate out there whether or not a new Mary Kay consultant should start her career off on the right foot…. meaning with a full store. But depending on which side you’re on, for or against, the “right foot” could mean without any inventory at all.

Suffice it to say, both sides are as emphatic as the other. Some successful Mary Kay ladies have no problem maintaining inventory at profit level ($3,600 wholesale or more). Easy (lucky?) for them. Others find it difficult to turn over $600 every six months. Could it be that these ladies are living in a saturated area or are they just plain lazy?

It all boils down to how hard you want to work your business, right? Whatever that means. From the Kaybot perspective, if you’re not going to go out and “sell it,” then chances are you will be dusting those pretty pink and white boxes off every Saturday morning. (Now don’t get mad at me just yet. Play along.)

Well, say you’ve never sold anything before, but are willing to give it a go. You have a fairly large warm market to tap into, most which wear make-up and use skin care, and they’re social. So there’s opportunity for you to even expand on your immediate customer base!

Alright! So let’s take a look at the profitability of a conservative consultant in her first three months. She’s enthusiastic but cautious; therefore, she purchases an $1,800 inventory package. That would be $3,600 retail. In order to help warm her market, she’s going to need some samples. So she buys $92.50 worth of Section 2. That’s not bad. Let’s not forget that she’s prepaying her taxes on the product and then there’s shipping costs, too. In Canada those tax dollars will run you $572.50. (Hey! “Free” health care costs, you know!) So she’s roughly looking at $4,300 worth of Mary Kay, retail, on her shelves ready to go.

This lady was recruited in mid October so she really didn’t get an opportunity to get out and sell before the end of the month. She needed to get organized and try to learn as much as she could about selling the products that were chosen for her. So early November rolls around and finally she feels prepared to send out an invitation to all her friends and family to her debut party. It’s a busy time of the year.

It’s nearly Christmastime you know. Corporate parties? At least two per household. Secret Santa shopping, open houses… the fun ones where there’s drinking and no selling involved? People are busy! Alas, four people say they’ll come and another two respond that it would be better “next month”. The rest are NOT interested. Miffed at having supported [them] through the years, she puts her big girl panties on and moves on.

Her debut comes and goes and she manages to sell $440.45 minus “incentives” to purchase (gift certificates). Not bad for seven hours work! Exhausted, she packs up her stuff and shuffles off to bed thinking that it will be much faster the next time.

December rolls around. She manages a few facials here and there with friends and family. One girl offers to host a party at her place. Thrilled she packs everything up and off she goes in a snowstorm. She has to get there early, though, to set up. The problem is, the hostess and one of the attendees have decided they wanted some girlie time at the restaurant up the road so she’s only going to get 15 minutes to set up “like a retailer” before the rest of the ladies show. That’s if these two decide to get back on time.

After having idled in visitor parking for 20 minutes, everybody arrives at 7:00PM and the consultant is left scrambling to set up, profile, etc., whilst they all sit “patiently” waiting for the show to begin. Although things begin a little tensely (it’s a work night!) she manages to sell nearly $700 worth of product. She gets home around Midnight, exhausted, but thinking that the next party will be much better now that she knows what to expect.

She’s a bit frustrated, though. Even with all the inventory she has on hand, she didn’t have everything that people wanted. So now she will have to put in an order tomorrow and then order a little extra just so that that doesn’t happen again.

That’s an important point to note. It doesn’t matter how much or little you have on your shelves. You can’t possibly know, with complete certitude, what people will order.

By the end of December, she has sold approximately $1,400 worth of product for the month but has had to order $265 more in skin care and another $20 in Section 2 supplies. Looking at her balance sheet, now, nearly three months into it, she’s still looking at roughly $2,780 she needs to recoup in order to break even.

January rolls around and the new Look Book comes out. Fingering through the book she notices that NONE of the gift boxes she has on hand, which are a lot!, are in there. Other limited edition stuff, besides what she has in her inventory, are being marketed and, the six mascara on hand have been discontinued and replaced with a more expensive formula.

She had no idea.

Having a business background, the consultant pads off to her at-home office to work. She turns to her books to reconcile them and finds out that as of January she is looking at NEGATIVE $2,780 in product (inventory waiting to be sold a third of which is now obsolete) and $1,230 in overhead costs, i.e., banking fees, cell phone, gas, supplies, breakfasts, lunches, shipping and handling, promo and hostess gifts, etc., etc.

Let’s back up a bit. What if she had not invested in inventory at all?

If she hadn’t and her total sales still stood at $1,814, she still would have lost money! Her “profit” on those sales would be $907 (assuming she gave no discounts, hostess credits, or gifts). That’s not even enough to cover the $1,230 in out-of-pocket expenses she had since she started. She’s over $300 in the hole, and that’s without “investing” in any inventory!

That’s what she’s spent in the first three months for the “opportunity” to sell Mary Kay. This is the real Mary Kay math. Can you get excited about that?!?

Lurkers, you can sit there and say, “Yeah, but it’s just her first quarter! She’s just beginning! All business owners lose money when they start!”, etc., etc., etc. But the reality is, this is her soft market. This is the easy stuff — the crème de la crème. It doesn’t get any sweeter than this, baby.

It’s all downhill from here! We’re talking cold calling (let’s call a spade a spade, it’s not ‘warm chatting’ you’re practically accosting complete strangers to try and convince them to let you into their homes for a ‘pampering session’), recruiting, DIQ…. In other words she’s facing having to invest big money, now, in order to play.

It gets worse. This Mary Kay story does not reflect a consultant’s payment on her credit card or line of credit used to invest in the Mary Kay opportunity. I’m pretending that this consultant had the cash. So what if she had to borrow money to get started? She would be out even more than the $300 because she would be paying her loan plus the interest on principal. Cha-ching!

And if she does the recommended “reinvestment” into more inventory, how much do you think she’s going to be making? I’ll give you a hint. It won’t be executive pay.

One Comment

  1. Anna

    Speaking as someone who’s been part of a party-focused MLM in the past, and who now owns a legitimate small business, I think your scenario is extremely realistic. The MLM I was part of did not pressure consultants to purchase inventory. There was a reasonable starter kit and every party thereafter was profitable. That doesn’t mean it was easy to drive all over the place and do parties, deal with hostesses, etc. it turns out you actually can sell from an empty wagon! paying off the cost of the starter kit and starting to make a profit was actually fairly straightforward. our accountant at the time actually commented on how surprised he was that I actually made a profit in that MLM because he so rarely saw people make money at these things. However, the point I wanted to make here is that reading about how MK operates, I’m absolutely shocked and dismayed at how much consultants are pressured and expected to purchase in terms of inventory. How on Earth can the average person expect to sell through that much inventory in a short period Of time, and then have to buy even more? And as you so skillfully point out, having items a through f on hand in no way guarantees that the people you sell to won’t want items g h & z. Makeup and skincare products can be purchased so many places and for such reasonable prices! Thinking and hoping that these products are just going to sell themselves and in such large quantities–this whole scenario scares me to death. The whole MK setup makes me think of some sort of a sick and twisted buying club. Imagine if people joined buying club where they were asked to buy hundreds and hundreds of dollars worth of CoverGirl makeup or Aveeno skin care every month or every quarter. oh you might be able to go out and sell those, so it’s all good .actually those products will magically sell themselves, so there’s nothing to worry about.oh you already have a room or a basement full of these things? Well, you have to buy more otherwise your director will lose her car. Sick sick sick.

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