You Make 50% Profit in Mary Kay!
Written by Parsonsgreen
One of the biggest lies told in Mary Kay is that consultants make 50% profit on what they sell. This assumes that product is sold at the full suggested retail and does not include any expenses. Anyone who spent any time in Mary Kay knows that they never, ever make this theoretical 50% profit. There are always discounts. And there are always expenses that eat into that potential profit.
Rachel Ryan recently posted that she sold these four products and she made 50%. Before she processes the order through CDS (customer delivery service), she can adjust the order to give any discount she wants – up to 50%.
Let’s take a look at the Timewise Repair Set. Rachel’s wholesale cost is $58.
The set is also available at other online retailers with free shipping. You can get it for $68.99 on WalMart’s site.
$69.99 on Ebay.
$85.00 on Amazon.
Now these products are not being sold by Mary Kay directly, of course. These are third party sellers listing MK items on the WalMart, eBay, and Amazon sites.
How are these third party sellers getting access to so many products to have so many sales? Could they be buying overstock from directors who have overloaded production to qualify for a Cadillac? Are they purchasing from consultants who have quit the business? Is there enough interest in Mary Kay for bootleggers to make their own product? Why isn’t Mary Kay working to stop these third party sellers?
Customers have so many options to consider if they truly have a Mary Kay product that they can’t live without. Plus, they don’t have to worry about Amazon, EBay or WalMart asking them to host a party or help them meet a goal.
If these products truly fly off the shelves for Rachel, why does she feel the need to brag about one sale on a Saturday? What else isn’t she being truthful about when she presents the Mary Kay opportunity?
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Here we go again misusing common business terms. For starters, if an MK rep sells at full MSRP, that’s a 100% margin. Sales do not become profits until revenues exceed expenses. If she spent $225 on her qualifying minimum order, she won’t turn a profit until she receives more than $225 in sales (and even more if she has other expenses, like her initial inventory purchase). Her sales revenue must exceed the cost of all of her orders (and other expenses) before the p-word comes into play.
Those up-front and recurring costs are what push 99.6% of MLM reps into the red. Besides…no one turning a true business profit in Mary Kay is doing so selling product to outside customers. They are “profiting” off purchases made by the reps in their own down-line.
What a great explanation! I do not have a business background myself, and I never even noticed that this word was completely misused (although I did understand that the consultant never truly pockets “50%”). I am keeping a little offline “dictionary” of terms I am seeing a lot in these posts and the Discussion Board in order to help me understand what’s really going on. Terms like “production,” “sales/sell,” and “success” have very…unique…meanings in the MK world, and my excessively literal mind needs a little extra help wrapping itself around these concepts. DJ, I have added your very helpful explanation of “profit” to my dictionary!
Other price points aside, let’s break down this sale and actual margin made on it, minus expenses.
CDS (Customer Delivery Service) orders eliminate a lot of the time invested, mileage, etc., so it’s a relatively simple calculation.
$172.00 Retail
-$86.00 (cost of goods sold)
-$9.00 (shipping, estimated. This is about what it was when I was selling around 2019. May be more)
-$9.11 (ProPay fees–based on around 5% fee once it’s all said and done. May be more or less)
-$2.00 (Samples, catalogue, other crap they “recommend” you include)
=65.89 “profit”
Now don’t get me wrong, I wouldn’t turn down an extra $65 bucks in my pocket. But that’s definitely not 50%. It’s about $20 short of that due to expenses. And the fact that she’s bragging about this all over social media indicates that this order is the outlier, not the norm.
In short, not executive income for part time work. Yet again.
Great explanation Frosty Rose! Those expenses add up!
I’d say you understated the expenses or overstated the retail sale amount. Hardly any Mary Kay sales consultants mark their products up the full 100% and sell everything. Even if they did, there are more expenses than what you listed. Remember, they throw these “parties” or “classes” at their own or peoples’ houses, that costs money. They do a lot of driving around for the business, that costs money. They go to seminar in Dallas and other supposedly important trainings and group powwows, that costs money. I’d say the profits are far more than $20 short of the supposed 50% profit margin. Your numbers come to around a 38% profit margin, and few consultants probably come close to that. The supposed 50% profit margin that Mary Kay and their enthusiasts tout is at best a “gross profit” on the sale of goods and doesn’t consider other overhead expenses, and there are a lot.
You are 100% correct, Charles. I only broke down the expenses for this single CDS order. CDS orders are the cheapest to process, because there’s no running around, mileage, additional postage, etc. USUALLY, but not always, customers pay full retail, unlike at parties and facials where consultants have to discount products or include heavy hostess rewards to get people to the table.
I did forget to include a gift with purchase in my calculation, so that takes an additional $5 or so off the margin.
And, of course, you have to allocate any and all money to seminar, weekly sales meetings, wardrobe, and everything else before you take an actual “profit” from any sale.
And of course, don’t forget, it’s totally your fault when you aren’t hitting your sales and profits goals. You need to see more faces, make more phone calls, meet more people. It’s your fault. “It’s not easy, but it is simple.”
Ick.
And no, Kbots, it’s not illegal and you shouldn’t harass MK’s legal department to get on Amazon etc’s cases for it. Anything that is legally yours – whether bought from MK, bought from a consultant liquidating her stash, found in a closet in your late aunt’s house, or it was given to you – is yours to do with what you will. You are 100% allowed to sell it, use it, set it on fire, or launch it on a rocket to Saturn. Legal knows this, and that going after them would be a waste of time and resources.
Nor can you force Amazon etc. to stop letting people sell this stuff on their platforms. They can act if the listing is inaccurate, deceptive, illegal to own or distribute, or if the seller gets up to shenanigans (I.e. taking people’s money and not sending the stuff); if the people who buy it are getting what the listing said they’d get in a timely manner, it’s all good as far as the platform is concerned.
The Friday critics like to go on about how it’s a free country and capitalism and blah blah blah. Yet it’s always a shocker to find out that that knife cuts both ways.
“How are these third party sellers getting access to so many products to have so many sales? Could they be buying overstock from directors who have overloaded production to qualify for a Cadillac? Are they purchasing from consultants who have quit the business? Is there enough interest in Mary Kay for bootleggers to make their own product?”—
Genuinely asking: Why are we assuming that none of these storefronts aren’t current consultants/directors needing production?
I’m sure some are current consultants or directors who are quietly trying to make some money and get rid of their excess inventory. My mind tends to go to “former consultant” just because the washout rate is so high, frontloading is so rampant, and because MK devotees tend to lose their marbles at the thought of buying product other than from a consultant.
I tried to both stay an active consultant and reduce my ample inventory. It was too hard to manage. I finally just offloaded all the inventory – sales, ebay, donation, dumpster – until it was gone. I couldn’t manage all the facets of “running my business” and trying to downsize my inventory.
Of course, when I would say I needed to downsize inventory to my upline, they would tell me to “use it as gifts,” or to have a big “inventory overstock sale,” or “gift with purchase,” and on and on with “great ideas,” but ultimately, it was so much work for hardly any turnaround. Whomever broke it down up above with the $186 “big sale” hit the nail on the head. It sounds amazing, but by the time you decide to direct ship or ship from your personal inventory, can I deliver it in person? when would be a good time? charge shipping (??), take it to the post office, offer a discount, make sure it gets there, deal with any problem along the way (the product was smashed and it exploded in the box – ok great, I’ll product replace it – or I’ll ship new – ugh) any “profit” you made was consumed.
LOL I am so glad I quit 🙌🏼🎉
But all that aside, people could definitely be trying to do both. I couldn’t pull it off! 🙂
It’s possible that it’s current consultants. But to sell on those sites requires a pretty complete break with “the company line.” So, in general, you’re either so morally bankrupt that you don’t care that your life/business is a complete lie. Or you’ve sorta seen the light and just need out of the mess you dug yourself into when you were blinded by The Fog.
From a recent video by the daughter of a National:
— “We buy directly from MK and sell directly to customers…we’re Direct Sales. We’re not considered multilevel marketing…not that there’s anything wrong with that. It’s set up more like a franchise.”
— “None of your income is filtered thru up-lines and down-lines.”
— “Every single consultant makes 50 percent profit.”
— “All MK products are approved by the FDA.”
— “The company gives millions and millions and millions and MILLIONS of dollars each year to trying to eradicate cancers that affect women, and domestic violence, because it affects way more women than we’d like it to.”
You can’t make this stuff up.
You can’t make this stuff up.
And sadly, we see them making all this up and more.
And this particular young woman can’t construct a sentence without adding a “you guys” somewhere in it.
It’s like watching a comedy show. A bad one.
I remember when I was still in the pink bubble becoming enraged b/c another consultant had an annual sale and gave anyone who ordered 50% off products so she wouldn’t be terminated as a consultant. Several people had been my customers and they wondered why I didn’t do this. She was able to send in a huge order, people ordered for a year b/c they knew they could order again next year. I remember telling her this was not the way MK was supposed to work and she was “stealing” my customers. She shrugged and said “OK.”
You want to know what I am doing this Memorial Day weekend? I am for sure not posting on social media about how my company is “spoiling” us by giving us, with pay, Monday off.