Amway is one of the world’s largest direct-selling companies, offering a wide range of health, beauty, and home care products. Founded in 1959 by Jay Van Andel and Richard DeVos, Amway operates in over 100 countries and has millions of Independent Business Owners (IBOs). However, the business model has been both praised for its entrepreneurial opportunities and criticized for its MLM structure.
In this detailed blog, we will explore key aspects of Amway, including its compensation plan, rules, legal issues, and earning potential.
PC stands for “Personal Consumption” in Amway. It refers to products that an IBO purchases for personal use rather than for resale. Amway encourages IBOs to use the products themselves to better understand and promote them to potential customers.
BV (Business Volume): This is the monetary value assigned to products sold, which determines commissions and bonuses. BV varies by product and region.
PV (Point Value): This is a metric used to measure an IBO’s sales performance and rank advancement. Different products have different PVs, and accumulating PV helps qualify for bonuses.
While BV is tied to actual earnings, PV is more about achieving ranks within the Amway hierarchy.
The Ruby Bonus is an incentive for IBOs who achieve a certain level of sales and team performance. To qualify, an IBO must:
Maintain a 6% performance level (minimum PV requirement).
Have a certain number of active downline members.
Ruby-level IBOs receive additional bonuses based on their team’s sales volume.
Rule 4.12 (also known as the “70% Rule”) requires IBOs to sell or use at least 70% of previously purchased inventory before placing new orders. This rule prevents stockpiling and ensures that IBOs focus on actual sales rather than just buying products to qualify for bonuses.
Amway has faced multiple lawsuits over the years, including:
Pyramid Scheme Allegations: In 1979, the FTC accused Amway of operating a pyramid scheme but ruled in Amway’s favor, establishing the “Amway Rules” (including the 70% Rule and 10-customer rule).
Misleading Income Claims: Some lawsuits claimed Amway exaggerated earning potential.
Product Claims: Legal actions were taken regarding unsubstantiated health claims about certain supplements.
Despite these challenges, Amway has remained operational by complying with regulations.
According to Amway’s own income disclosure statements:
Less than 1% reach the highest income levels (Diamond, Crown Ambassador).
Around 30-40% of IBOs earn some income, but most make only modest amounts (often less than $1,000 per year).
The majority (60-70%) earn little to nothing after accounting for expenses.
The Rule of 70 (or 70% Rule) in Amway mandates that IBOs must sell or personally use 70% of their inventory before reordering. This prevents excessive stockpiling and ensures genuine sales activity.
Yes, but success depends on:
Sales Skills: Ability to sell products directly.
Recruiting: Building a large downline team.
Persistence: Most who succeed work full-time for years.
However, most IBOs earn little due to high competition and market saturation.
Earnings vary widely:
Average Part-Time IBO: $50-$500/month (before expenses).
Full-Time High Performers: $50,000+ annually (top 1%).
Diamond-Level IBOs: $150,000+ per year.
Amway’s Income Disclosure shows that most earnings are modest.
Some of Amway’s best-selling products include:
Nutrilite Supplements (vitamins, protein powders).
Artistry Skincare & Cosmetics.
XS Energy Drinks.
LOC (Liquid Organic Cleaner).
Nutrilite is often the top revenue generator.
Starter Kit: ~$50-$100 (varies by country).
Monthly Website Fee: ~$10-$20.
Initial Inventory Purchase (optional): $100-$500.
Total startup costs are relatively low, but ongoing expenses can add up.
Amway pays commissions based on:
Personal Sales (3-25% profit margin).
Team Bonuses (3-21% of group BV).
Leadership Bonuses (for higher ranks).
Exact percentages depend on rank and sales volume.
Amway’s compensation plan includes:
Retail Profit (20-30% markup on products).
Performance Bonuses (3-21% of BV).
Leadership Bonuses (Ruby, Emerald, Diamond levels).
Residual Income (from downline sales).
Higher ranks unlock more lucrative bonuses.
As mentioned earlier, the 70% Rule requires IBOs to sell or use 70% of their inventory before restocking. This prevents excessive purchases just to qualify for bonuses.
A small percentage (top 1-5%) make a full-time living, but most IBOs earn only part-time income. Success requires significant effort in sales and recruiting.
The 70 Rule in MLM (not just Amway) ensures distributors focus on selling rather than hoarding inventory. It’s a compliance measure to avoid pyramid scheme accusations.
The 3 PC Rule requires IBOs to make sales to at least three different retail customers in a month to qualify for certain bonuses. This ensures genuine sales activity beyond just personal consumption.
Amway offers entrepreneurial opportunities but requires hard work, sales skills, and persistence. While some achieve financial success, most earn modest or no profit. Understanding the rules (like 4.12 and the 70% Rule) is crucial for compliance and sustainable growth.
Would you consider joining Amway? Let us know in the comments!