Facts, opinions, and the real story behind Mary Kay Cosmetics.
 

$10,000 Unit Production Doesn’t Give You Executive Income

Written by PinkPeace

Who still thinks that directorship is the way to real money in Mary Kay? There are lots of beauty consultants who think that if they just can make it to the “elite 2% of all those in Mary Kay” they will have their ticket to financial freedom and flexibility.

I’m going to show you how a unit with production of $10,000 in a given month STILL isn’t much of a wage in Mary Kay. The vast majority of sales directors do not have production of $10K in a given month. They DREAM of $10K production, but they are probably going between $4,500 (the bare minimum to keep their units) to $9,500 (the bare minimum to have the sales director car without copays). Let me stress again, production of $10,000 in a month is very unusual in Mary Kay.

In the very best case scenario, all of the consultants ordering to make up the $10K are the director’s personal recruits. We know that this never happens, but I’m showing the most she could possibly get.

The unit commission for a director is 9% if production is below the required minimum of $4,500 wholesale, 13% if production is between $4,500 and $5,499, and 23% if the wholesale is $5,500 or more. (There used to be a bonus structure, but MK eventually rolled that into the 23% figure to make it simpler.) With $10,000 wholesale production, the unit commission will be $2,300.

The director also gets commission on her personal recruits. Let’s pretend that all of the production came from her personal recruits, even though that doesn’t really happen. In that case, her team commission would be 13%, or $1,300.

This is a total of $3,600, which is the very maximum the director could get. That’s it. She has what is considered a high producing unit in the MK world, and her income (before any business expenses are paid) is $3,600.

Let’s suppose that she makes $10K in production every month for 12 months. (We can also suppose that I can look out my window and see pigs in the air, flapping their wings, but humor me here).

$3,600 x 12 months = $43,200

Is that an executive income to you? Not to me, it isn’t.

But wait, there’s more. Let’s talk about all the expenses.Let me run down only a few of them, and again, I will estimate on the low side to give this poor sales director a fighting chance:

  • Meeting space rental – $1200 (I know fellow directors reading this – you WISH it were only $1200 for the year!)
  • Seminar/Leadership/Career Conference fees, travel and expenses – $2,500
  • Director suit – $375
  • Unit prizes and promotions – $500
  • Training materials/flyers, etc. – $200

There are more expenses, but I’m going to stop here, because it just makes me sad and tired.

Those add up to $4,775. And we’re not even counting the gas to drive all over town, the fees to attended NSD events, office supplies, and all the little things.

The director has $38,425, but has to pay taxes on that. Sure, the income taxes are no different than if you have a job. But the self-employment taxes take a bigger chunk than if you were an employee. Let’s estimate that she’ll pay about 35% in taxes (20% income taxes, 15% self-employment taxes). She’s left with just under $25,000.

That’s about $2,000 per month available to spend on mortgage/rent, utilities, groceries, school bills or other things for her kids, insurance (oh, did I mention insurance? Mary Kay does not provide health insurance, so good luck with that if you get sick).

Simply said, a unit with $10,000 in production will not even give a sales director enough to cover the basics, even in the very best case.

Let me assure you that it is extremely difficult to maintain $10K in production month after month. Some directors hit it once, and it’s the highlight of their careers. Any one or all of these factors will apply:

  • The director put her own order in to hit the $10K, in order to get the extra bonus. She will add that product to the other unopened boxes in her basement.
  • The director will not put money aside for taxes, because she can’t pay her monthly bills as it is. When the tax bill comes due the next year, she will pay for it on a credit card.
  • Speaking of credit cards, she will have several open, because she has no option regarding attending Seminar, Leadership or Career Conference. Those events will be responsible for a great deal of debt over time. Airfare, staying in top hotels (we have to paint the picture of prosperity for our consultants, don’t we?), NSD events, meals, etc. cost a LOT. And a director cannot afford to “look poor” in front of her consultants and other directors.

The amount of time and mental energy it takes for a director to have $10,000 in production in a given month is huge. It’s a LOT warm chattering, recruiting, new consultant inventory talk/orientation, business debuts, meetings, e-mails, etc. It’s exhausting and numbing after awhile. And for what? For barely more than minimum wage.

I could go on and on, and I hope others on Pink Truth will add their experiences to this thread.

7 Comments

  1. Cat Ballou

    Thanks for explaining this. I’m still in my director’s Facebook group, so I took a look at the numbers she had posted for August. The unit did slightly less than $5800 wholesale. So she keeps her unit, and gets $1334 in commission. Most, but not all, of the consultants ordering are her personal recruits. So another $626 in commissions from them for a grand total of $1960 in commissions for the month or $23,520 for the year. Now assuming that production is consistent, she makes $452 per week. If she works 40 hours (conservative estimate), she’s making $11 per hour or slightly over minimum wage in my state. She drives the MK Chevy Malibu, and if these numbers are consistent, she has a monthly copay.

    Yet she’s still promising “executive income in a few hours a week” and “free cars” to potential recruits. 😔

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  2. NayMKWay

    Interesting how a relatively small change in production ($4,500 to $5,500) is enough to increase the commission rate by 77% (from 13% to 23%). It put me to wondering where the break-even point is: where the extra commission would pay for the garage qualifying to hit $5,500.

    The answer is $4,867.82. (More precisely: $550/0.87)

    If production is $4867.82 and it’s the last day of the month, chipping in $632.18 of your own money to hit $5,500.00 will get you $1,265.00 in commission (23% of 5,500) instead of $632.81 (13% of 4,867.82). The difference ($632.19) means you get $632.18 of free make-up, with a penny left over to put in your piggy bank.

    But, hey, everyone pays the same for their make-up, right? That’s what Mary Kay Corp says, and they always tell the truth!

    CAUTION: Charge-backs will spoil the whole scheme. Your free make-up will no longer be free.

    My point (and I do have one) is this: there can be little doubt the commission rates were set up this way to encourage more garage qualifying by the Directors. Which just shows who the real customers are.

  3. Charles

    Sounds like Director in Mary Kay is the equivalent of the “Diamond”, one the highest “pin levels” in Amway, where the distributors are supposedly making some real money, but really aren’t, and barely 1% of all the Amway distributors ever make it to Diamond. Just another case of fake it ’til you make it. Anyone in Amway who makes it to the pin levels above Diamond are even fewer and far between – they are a small handful of people who speak at the Amway conventions – and even some of them have had some serious financial problems recently with a lot of their luxury vacation homes being foreclosed on in recent years as the Amway pyramid crumbled.

    Was recently walking with my wife and son once in a parking lot to his doctor’s appointment when a woman got out of a Mary Kay pink cadillac and commented on how cute our son was, and began trying to “warm chat” my wife. We smiled, thanked her and walked faster.

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