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finance-guy · 1 year

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Can You Make Money With Optavia

Optavia is a Baltimore based health and wellness company. There is a wide range of Optavia products, ranging from muesli bars and snacks, to pre-made meals.

They were formerly known as Medifast, but have now decided to rebrand themselves as Optavia, and sell their weight loss and dietary products through multi-level marketing. Here at The Finance Guy, we have the opinion that you can’t make money with MLM, but we are happy to be proven wrong, so we’ll have closer look and ask can you make money with Optavia

How do you make money with optavia

To find out how you can make money in this MLM, we looked at a copy of the Optavia Compensation Plan. This document explains all the ways you can make money as an Optavia coach, as well as what you need to do in order to qualify for commissions.

The first thing that stands out is that they tell us that this compensation plan gives Optavia coaches the ability to shape their destinty and create a life of greater momentum. It’s not the first time we’ve heard similar claims in a compensation plan, but we’ll keep going.

They tell us that to earn from all 9 of their potential income streams, Optavia coaches need to be competent in 3 areas which are: - Client Support - Team Buiding - Leadership Development

Before they go into 9 ways Optavia coaches make money, they first explain that with Optavia, there are 2 types of Volume. Compensation Volume (CV) and Qualifying Volume (QV)

Compensation Volume is used to calculate how much commission coaches can earn. All Optavia products have a CV between 0% and 100%. Commissions are based on these values. Coaches will also earn CV from people they sponsor. Coaches they personally sponsored are shown as Frontline Compensation Volume (FCV). Coaches sponsored by others in their downline will contribute to their Group Compensation Volume (GCV).

Qualifying Volume is used to help determine coaches rank in the Optavia system. Their rank will determine which commissions they do or don’t qualify to earn. Just as with CV, coaches can also earn Frontline Qualifying Volume (FQV) and Group Qualifying Volume (GQV).

Client Support Commission The amount of commission Optavia coaches can earn is shown in the table below:

As we see from this diagram, coaches can earn commission from their frontline volume. That is the people who they have personally sponsored to join Optavia. It starts at 15%, but increases if the coach is able to sponsor 5 different éntities’.

If you do sponsor 5 or more front line coaches, then you will qualify for the client support bonus. This will increase depending on the monthly volume ordered by the people in your frontline. If they order a combined volume of 6,000 points, you will earn the maximum bonus of 13%, taking your total Optavia client commissions to 28%

Coach Consistency Bonus If your frontline achieves certain qualifying volumes for 3 months in a row, then Optavia will pay you a lump sum bonus. The amounts your can earn are shown below: - 2,000 FQV = $250 - 4,000 FQV = $500 - 6,000 FQV = $1,000

While these bonuses are all well and good, it’s important to remember that the person who sponsored you into Optavia can also qualify for them. In other words, the person who sponsored you has a vested interest in making you spend large amounts on Optavia every month

Coach Accelerator Bonus This is what most MLMs refer to as a ‘fast start bonus’. Optavia makes this available to new coaches for their first 3 months. If you personally sponsor 3 frontline Optavia coaches, and they each buy 345 QV worth of product in a month, you will get a lump sum payment of $150. If you manage to do this with 5 new coaches, then they’ll give you $250.

Accelerator Assist Bonus If someone you personally sponsored earns a Coach Accelerator Bonus, then you will also get paid the same amount.

These accelerator bonuses are a nice way to reward new coaches who ‘hit the ground running’. Having said that, they also create an incentive for the person who sponsored you to make you spend as much as possible as soon as you join. After all they need you to spend 345 QV or you won’t be eligible for their accelerator bonus. The person who sponsored them will be equally enthusiastic to make you spend because they too will get the bonus.

We might think that the Optavia accelerator bonuses are designed to make people sponsor new coaches and get them spending as much as possible as quickly as possible.

Team Growth Bonus This is Optavia’s version of what other MLMs would call ‘downline commissions’. Optavia coaches can only start earning this payement once they achieve the rank of ‘Senior Coach’ with Optavia. The amount of commission they earn from their down line will depend on their rank as shown in the table below:

While it’s nice that Optavia is willing to pay all these commissions, it does mean that 32% of the price Optavia Coaches pay for any products goes to their upline as a team growth bonus. On top of that up to 28% will be paid to their sponsor as a client support commission.

While they may tell you how exciting it is that you can earn all these commissions, we think it’s important to remember that 60% of what you pay for your Optavia products, goes to your upline as commission. You should also keep in mind that this is before Optavia has made any profit for themselves.

A universal challenge we find with all MLMs, is that their products or services have to be very expensive in order to include all the layers of commission offered by the MLM compensation plan.

Fully Integrated Business Coach Consistency Bonus The compensation plan tells us that you can reach a level of mastery with Optavia if you achieve their level of Fully Integrated Business Coach (FIBC). As expected the qualifications for this are volume based. To become a FIBC, you will need: 6,000 Frontline Qualifying Volume At least 5 Front Line Optavia Frontline Senior Coach Teams 15,000 in total Group Qualifying Volume for the month

If you manage to achieve all these criteria for 3 consecutive months, then Optavia will pay you a bonus for the month of $1,000. The only way to obtain this bonus is if you have a very active downline who are purchasing a lot of Optavia products.

Once again, if you have recently joined, then your upline has a vested interest in making you buy as much Optavia products as possible every month

Executive Director Gerneration Bonus To qualify for this bonus, you must first achieve the Optavia rank of Regional Director or higher. The amount you can earn will depend on how many Éxecutive Director Teams’ you have in your Optavia downline. Each time someone in your downline reaches the Optavia rank of Executive director, that leg in your downline will qualify. You don’t need to have personally sponsored the Optavia coach who reaches the rank.

The amount of Optavia Director Generation Bonuses paid at each rank are showed in the table below:

As you climb the Director ranks within Optavia, you will qualify for more and more and more generations of bonuses..

Elite Leadership Bonus These are 3 additional bonuses of 0.5% each which are paid when Optavia coaches achieve the qualifying ranks for each bonus. The qualifying ranks are National Director, Global Director and Presidential Director. These bonuses are cumulative, so an Optavia coach who reaches the rank of Presidential director, will get paid all three elite leadership bonuses.

While it’s nice that you can earn all these bonuses, it’s important to remember that they represent a total of 13.5% of the price paid by coaches for Optavia products. If we include the commissions and bonuses we looked at previously, we see that when Coaches buy Optavia products, 73.5% of what they pay goes to their upline to fund the compensation plan. And this doesn’t include the other one of cash payments that coaches may earn.

Like all MLMs Optavia will tell us how proud they are of their generous compensation plans, we see it a a problem. If they are paying so much in their compensation plan, the only way the company can turn a profit, is to include it in the price paid by Optavia coaches in their MLM

How are optavia coaches promoted

In order to qualify for all the commission available in the Optavia compensation plan, coaches will need to get promoted through the ranks of their MLM.

To reach each level, coaches must reach a combination of sponsoring and volume quotas. This is shown in the table below:

Are Optavia coaches making money

To find out if they are making any money in this MLM, we looked a copy of the Optavia Income Disclosure. All they have given us is a table of earnings for the previous 12 months, with very little explanation.

For example Optavia have not explained how they selected the coaches who are included in their table. Looking at the first line, which is Optavia Coaches who earned nothing. We see that they represent 22.42% of all coaches, and they were active for an average 13 months. This seems like a high average. Maybe Optavia is only showing us the data for Coahces who were active for the entire 12 moths. They have not told us how many coaches quit during the year, but we are guessing that like most MLMs, it is a very substantial number

While we are not convinced we have all the information, from the table they have given us we can see that: - 22.42% of Optavia Coaches earned no income at all - 2.17% of Optavia Coaches earned over $50,000 for the year (enough to replace a full time job)

Even if Optavia have given us limited information with only their most active Coaches, it still shows us that 97.83% of active Optavia Coaches earned less than a full time income

Why is it difficult to make money with Optavia

To find out why it’s hard to make money from the Optavia business opportunity, we looked at Dr Jon Tayolors 5 Step MLM evaluation. This study looks at 5 potential red flags, and Dr Taylor explained that if any MLM raises any 4 of the 5, then they should be considered a product based pyramid scheme, and not a legitimate business opportunity. They are:

Red Flag 1 - Constant Recruitment of New Members There is a strong emphasis on recruitment in Optavia. They only way to earn some commissions such as the accelerator bonuses, is to ensure that new Optavia coaches are being constantly recruited into the downline. Optavia definitely raises red flag 1!

Red Flag 2 - Promotion Through Recruitment As we saw, the only way to climb the ranks with Optavia is to meet their qualifying criteria, which includes building a downline. It is therefore impossible to get promoted without recruitment. Based on this, Optavia raises red flag 2

Red Flag 3 - Pay to Play While there is no specified quota for coaches to remain active in Optavia, there is a requirement for their downline to have Group Qualifying Volume. So even if Optavia isn’t asking you to buy product every month, it’s very likely that your upline will be pressuring your to add to their GQV. Technically Optavia didn’t raise this red flag so we won’t count it.

Red Flag 4 - Most of the Rewards go to your upline Dr Taylor warns that the compensation plans of most MLMs results in extreme inequality of payouts, he estimates that while a few people at the top make a lot of money, 99.6% of people who join MLM will lose money.

As we already noted when looking at the various commissions paid in the compensation plan, 73.5% of the price paid by Optavia coaches goes to their upline as commission. It’s safe to say Optavia has raised this red flag.

Red Flag 5 - More than 5 levels in the payout plan Dr Taylor says 'Excessive levels in a downline is another sign participants are expected to sell primarily to their downline, rather than to the general public. This makes it an exploitative money transfer scheme, or product-based pyramid scheme'.

Optavia did not mention any limitations to the commission paid on their bonuses. Their compensation plan suggests commission is paid on the entire downline in your team. Even if someone reaches the high ‘director ranks’ the coaches above them at the equal or higher levels will receive some commission from their entire downline. Optavia definitely raises this red flag.

Based on our understanding Optavia has raised 4/5 red flags from Dr Taylors MLM evaluation system. His study found that any opportunity which raises 4 or more flags should be considered a product-based pyramid scheme.

Dr. Taylor estimated that 99.7% of participants will lose money in a business such as Optavia. The reason is that there is no real demand for the products being sold. The business is an endless recruitment chain in which only the very few at the top will make real money.

Should you join optavia

The first thing to be aware of before joining any MLM, is that it is a sales job. You are not owning your own business, and it’s not as simple as just telling a few friends to get on board with you. The only way to succeed will be to sell large amounts of the product and sign up large numbers of complete strangers into your downline.

Before you join Optavia, it would be a good idea to try some of the products and see if you would be willing to pay full price for them. At the end of the day, if you wouldn’t buy the products without being part of the compensation plan, then you can’t expect others to do so.

It might also be a good idea to look into some reviews of the Optavia diet. One review we read found that their system simply put people on a diet where their calorie intake was reduced to between 800 and 1200 calories a day. That is half the recommended caloric intake for an adult. In other words the Optavia diet is simply starving the weight off your body. While this may result in weight loss, it might not be healthy for everyone.

is Optavia an Illegal pyramid scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

We also looked at the 2018 FTC Business Guidance for MLMS. The FTC explains that several activities used by MLMs to promote their business opportunities, may be misleading and unlawful.

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

Being legal does not make MLM ethical. All companies are in business with the goal of selling goods and services for a profit. Network marketing companies are able to charge a higher price because they create a customer base of loyal members who believe that by consuming these products and recruiting others to do so, they will become financially free. Keep in mind that making such promises is in breach of the FTC guidance.

As always, we’d love to hear your feedback about Optavia. Feel free to share your thoughts and feedback in the comments section below:

For more posts like this, look at our list of mlm reviews.

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