Written by PinkPeace
Nobody tells you what it costs to be a Mary Kay sales director. If they did, no one would want this position. It’s the sales directors I feel sorriest for in this business, because they are squeezed from both sides in order to try to be successful.
The minute you finish DIQ (and girlfriend, I know you put in a whopping amount of personal production to make it happen), you are confronted with expenses you didn’t realize you’d have.
First of all, you are instructed to go to DIT (Director in Training) week in Dallas. I was all excited to go to DIT until I realized that I would have to pay for all of it. I assumed that Mary Kay was like another company, and they would pay for management training. Silly me, I forgot I was an independent contractor, so I paid for airfare, hotel and related expenses to go to DIT week. I wasn’t making the big Mary Kay director money yet – heck, I barely had my new unit number! So everything went onto the charge card.
While at DIT, I cannot tell you how many times it was stressed that I quit my regular job to be a director full-time. I wasn’t “painting the picture of success” if I didn’t leave my old job. I wouldn’t be able to devote the time I should to my consultants if I had another job. I wouldn’t be able to focus and make the real “big-girl” money in Mary Kay if I had the distraction of another job.
As I look back on it, that was a very clever tactic on the part of Mary Kay. If I had no other paycheck that I could rely on, I would have to view Mary Kay as the only way I could make money. I would buy into the “find a way/make a way” mentality that kept me hooked into the system. It worked. I came home and quit my job, because Mary Kay was my destiny. All my NSD teachers told me so!
But I digress.
You know what I was most excited about in my new directorship? The suit! For months I had wanted the suit so badly. I wanted to be like the successful women who wore the suit. I wanted to be the one in front of the room in the suit. I wanted everyone at Mary Kay events to see me in the suit. Yay, the suit!
Boo, the cost of the suit! I owned many nice suits from top stores and top brands. Not ONE of them cost me the $300 to $400 the Mary Kay suit did. Every year of being a director, I got more and more peeved at the cost of the suit, especially when there were some ugly, poorly constructed ones. And it was just another big expense to go on the credit card.
But let’s go on to the average director income and the average director expenses, and see why directors might have to rely on credit to get by… I’ve run these numbers before, so forgive me if I repeat myself.
I’m going to run the very best case scenario for the average director, so that I can’t be accused of exaggerating the numbers. Let’s say a director is in Premier Club production, which is $9,500 wholesale a month. For her to get the maximum commission, she has to order at least $600 wholesale a month. (Many directors don’t sell near that, so they’re adding to their credit burdens right there). Let’s also say that the $8,900 production remaining is entirely from her own personal recruits (which will never happen, but work with me here).
She will receive a maximum commission of 26% on $8,900, which is $2,314. She will also receive a $900 production bonus, so her total commission for the month is $3,214. Remember this is VERY BEST CASE scenario. Ladies, multiply this by 12 months and you get . . . wait for it . . . $38,568 a year! (And remember that most directors are well below this level!)
Oh, but wait – that doesn’t include sales income.
Okay, let’s roll with that. Let’s say the director makes Queen’s Court of Sales. (Lurkers – is YOUR director on Queen’s Court? And if she is, is it because she’s selling or because she’s ordering to save your unit?)
ANYWAY. If she’s on Queen’s Court, she’s ordered $40,000 retail. At the MK recommended 40% profit, she’s taking in $16.000 – IF she’s never held a sale, given a discount, or given any hostess credit. Again, I’m making this the best scenario possible.
Also the best scenario doesn’t include director chargebacks . For any of you who haven’t been blessed with that phone call from corporate telling you about someone in your unit sending her product back, it’s really a treat. I had months when my chargebacks exceeded my check. Good times, good times.
So our perfect director in a perfect world is bringing in $54,568, or $4,547 per month. (So few directors are at Premier Club or above, but let’s just pretend.)
Okay! Wouldn’t that be great extra money if it were free and clear? You bet! But wait.
Mary Kay doesn’t give benefits to directors. Mary Kay doesn’t contribute to a 401(k) or other investment. So we’re going to have to do that ourselves:
- Insurance (bare minimum) – $250
- Investments (5%) – $227
That leaves you with $4,070. Okay, that’s still not too bad, I guess.
Now let’s talk about the real monthly director expenses. These were mine. Feel free to add yours if you like!
- Training center rent – $200
- Unit website – $50
- Unit newsletters and other mailings – $50
- Telephone – $65
- Mandatory attendance at all company functions, such as Seminar, Leadership, Career Conference, director debuts, regional events, etc. – about $2,750 for the year, monthly – $229
- Recruiting expenses (coffees, lunches, materials) – $30
- Director products, unit sales aids, consultant Look Book mailings – $20
- Travel to unit members in outlying areas – $75
- Slammin’ haircuts, manicures, etc. – $50
- Monthly unit prizes and Seminar prizes – $30
- Supplies for training center and consultant training – $20
Okay – there’s another $819 in monthly expenses for a moderate unit. I didn’t have other expenses that other directors did, such as personal coaches, virtual assistants, office help, etc. I actually was pretty frugal with my money, to the best of my ability.
So now the perfect director in a perfect world is left with $3,251 in income for the month,or $39,012. Let’s take off 7.65% in self-employment taxes, something you wouldn’t pay if you were an employee. We’re now down to $36,027.
Let’s stop and think about that. Income of $36,000 a year is being referred to as EXECUTIVE level. This is for a Premier Club director, one of the upper tiers of directors. After income taxes, we’re talking about $27,000 of spendable income, or $2,250 per month. Can you get excited?
In my case, many of the director expenses were to “paint the picture of success” so that consultants would want my job. It was very costly to put on that facade, but it was considered essential to being a good leader in Mary Kay. My NSD used to say over and over that we had to do whatever it took to make our position as sales director seem desirable. We always had to look and act like we had all the money in the world. Who would want our position otherwise?
I certainly didn’t have the cash in my bank account to pay for these things, but I had great credit. So I charged everything I could. Director suit? MasterCard. Airfare and hotel at Seminar? VISA. Slammin’ outfit for the area retreat? Macy’s. You get the picture. I made the minimum payments, and the debt kept climbing.
But it didn’t stop there. Any director who is not one of the top 100 or so in the company knows that she makes nowhere near “executive income” in the business. (Our example above proves that.) But I was brainwashed into bee-lieving that the only way to fail in Mary Kay was to quit, and my biggest success was just around the corner! So I stayed for many more years than it made sense to, and meanwhile I got into more and more debt.
And the cost of Leadership and Seminar. They’re only giving $50 wholesale free with the next order within a month of LC. Huge expenses!
Yes, she figured $2,750 for the year for those events, and divided it by 12 to come up with a monthly cost.
Ugh. I tend to forget about some of this stuff… and then it all comes back. 🙁
I can hear my former SSDs voice in my head saying: “we’re independent contractors. There’s always a cost of doing business.” They condition you to believe that we are just like any other business owner and that self-employment taxes and expenses are just part of the deal. To complain about it is just that: complaining and whining. When I was on my way out she told me that I needed to start a gratitude journal because apparently I wasn’t thankful for my blessings. How condescending!
The truth of the matter is that MKers are anything but independent! Entrepreneurs aren’t required to pay $400 for an ugly suit every year so they can look just like the thousands of other “entrepreneurs” who’ve “made it”. If you’re so “independent” and so successful, go ahead and stop recruiting. That’s right, you can’t. Your entire empire relies on new blood to purchase large inventory packages. Stop bringing in the “new” and your precious business collapses.
Wow. What years were you involved with MK? While I only did MK for 90 business days in 1986 I saw too many ‘red flags’ beginning with my seeming inability to ‘flip product’ in a timely manner! I thought surely by the end of my first month at least half the product would be sold. I got my ‘taste’ of MK ‘pressure’ after receiving my next door neighbor’s/consultant’s files of 200 or so regular customers (because they were moving) that indicated to me that someone was more ‘invested’ in my decision to return my remaining inventory.
Since only 45% of it sold to my former neighbor’s regular customers during that time I made my business decision and stuck with it. The persistence of the NSD who was also a good friend of my neighbor who moved away had me ‘on guard’ since I’d been in commission sales since age 19 up ’till then (Macy’s shoes, real estate, new home sales for SHEA Homes) She insisted I meet with her at her home at a scheduled appointment the next day that began with a warm welcome with a platter of cookies and coffee with some ‘warm chatter’ before launching into the purpose of my visit.
She used several questions, alternate of choice scenarios concerning what my future could be including the final one that once I return everything I can likely never sign up again (if I recall right, it used to be 10 years plus MK’s internal decision to allow it) and are you really sure this is the best decision? Think about what you will be missing out once you leave our team!
I’m glad I did because only one out of several recruits over the years from that team became an NSD, Janice Moon who is now Janice Trude. As far as I can tell via Internet searches my old NSD is nowhere to be found in past references (not listed in MK museum though Carol Anton is) but there is a site online for a business with her name with no photo of her for some company having to do with building a positive life/possibly motivational. I tried searching obituaries for her too since I’m guessing she’d be in her 70’s.
In closing, the fact is she too eventually quit, but for those who continue on and are ‘stuck’ and unhappy this site and true stories like yours are great examples.
Thank you for sharing!
Linda Toupin is hanging with her this weekend! Her name is actually Janis Trude and she’s still an NSD
Another NSD with a failed marriage!
Are reps allowed to sell on Facebook like LuLaRoe does ?
They do it, whether “allowed” or not. Constant promoting of “events” all over the place. Mention ANY sort of skin problem or make-up need on most pages and you will get multiple ads from IBCs.
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Let’s not forget the HUNDREDS spent on meeting rooms and training center rent. My Sr pays a ton for hers.
I think what bothers me the most is that MK, and other MLMs, make it seem like this is the best women can do financially. I make way more money than my husband. And while, yes, it may be more convenient to “set my own hours” or not be tied to the 9-5, there are no MLMs that could even come close to generating the salary that my 9-5 provides.
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Arent you forgetting that most of these expenses are eligible to be tax write offs/deductions? Anything that you personally spend money on in your business you can file to get returned i believe.
You believe wrong. You don’t “get returned” (i.e. get your money back). If you spend $100 on a business expenses, you may save about $25 in taxes. You’re still out $75. Not a good deal.
Mary Kay, and other MLMs, deliberately lie about business deductions. They pretend it’s good to get a big refund because you had “paper losses” … ooooh look at how much tax money you get back from that evil IRS.
Here’s the truth: If you lost enough money in your “business” to get back $2,000 from your or your spouse’s withholding, you spent way more than that $2,000 …. spending $8-10K to make back $2K is just siphoning money from salary to Mary Kay.
If a business consistently has to be propped up by transfusions from the household budget, it’s not an income, it’s a hobby.
Here’s what the IRS says: “Tax credits provide a dollar-for dollar reduction of your income tax liability. This means that a $1,000 tax credit saves you $1,000 in taxes. On the other hand, tax deductions lower your taxable income and they are equal to the percentage of your marginal tax bracket.”
A number of those expenses are not deductible at all. They do subtract from your take-home bottom line, but the IRS makes you add them back and pay taxes (including self-employment tax) on your recalculated higher income:
— The Director Suit: not deductible at all. No Mary Kay clothes are deductible.
— The slammin’ haircut and manicure: not deductible.
— Business mileage: deductible at the standard mileage rate, if you keep detailed records (more detailed than the inventory records kept by most MK consultants, so not likely to happen).
— Business travel: the IRS has strict rules about what you can deduct
— Business meals and entertainment (aka recruiting expenses): same problem. You only get to deduct 50%, and even then your expenses have to be “reasonable.”
One more think, Leah. If you’re in the 15% federal tax bracket, like so many Americans, and you increase your tax refund by $150 with your Mary Kay deductions, it means you really lost $1,000. The other $850 you’re not getting back. I don’t know about you, but I know that for myself $850 will buy a lot of school supplies and clothes for my kids.
Do you realize how many people in MK don’t report their income or expenses on taxes? You’re taking advice from someone that I’m sure you wouldn’t “gladly exchange places with”. My Director never kept receipts and just kept spending and spending, saying she was “doing Mary Kay’s work”.
Just remember this, if you’re not making what you would with a job elsewhere or if you have no net profit, you have an expensive hobby. The discussions at Director meetings and at Leadeship Conference would make your skin crawl.
Dear Leah. My loved one was “sold” on all the tax write-offs of the “opportunity”. I suggested that since she was in business for herself she should pay the IRS quarterly estimated taxes, like real businesses do. She told me “no one in Mary Kay pays taxes because of all the great tax deductions!” What she doesn’t understand is if you don’t pay taxes, you are either cheating the IRS or you are NOT making ANY money.
At the end of the day, it’s not how much you make, or how much you deduct. It’s how much you KEEP after deductions AND taxes. Please familiarize yourself with the IRS Schedule C Profit/Loss for Business. https://www.irs.gov/pub/irs-pdf/f1040sc.pdf
(Apologies regular readers – I know I’ve posted this link a lot lately. It just seems to be needed.)
Im not quite sure i get what you guys are saying. I’m only 20 and not very familiar with the tax system or IRS. Someone please simplify so i can understand
No. You should speak to a qualified tax preparer.
Here’s the simplified version:
1. If you get a bigger tax refund because of Mary Kay expenses, it means you’re losing money. You’re losing a lot of money.
2. Your inventory is not a Mary Kay ATM. If you’re short on cash you can’t just sell a few more mascaras. First you have to find buyers.
3. Tax advice you get from a Mary Kay sales director will always be wrong. Even when the give you some correct advice, it will be incomplete. This how Mary Kay sales directors are trained to work.
4. Yes, your Mary Kay sales director did take illegal tax deductions. Yes she did get away with it, for a while. Yes, she did brag about it. But when her audit notice arrived she did NOT tell you or anyone else.
5. When the IRS comes after you for unpaid taxes, your Mary Kay sales director will be nowhere around.
To quote my younger sister – an accountant and small business owner – “If your business is not making enough money to owe taxes, you are losing money.”
And in every real business I have worked for – companies like Intel, American Express and many smaller ones – the path to profits was minimizing expenses, minimizing inventory, and maximizing sales.
Take a course in small business management from a local community college, or on-line. It’s eye-opening.