Here is an estimated income calculator for the YTB program. All you need to do is put in:
- The amount of travel you think you can sell in a year
- The number of people you feel you can recruit
- The number of people you feel they can recruit
- How much commission you think you will earn as a percentage
The spreadsheet calculates it all for you. Does not go below that level and does not take into any director bonuses, but it really highlights the money.
What I found very interesting was how little impact travel commissions or sales impacted the earnings. But boy when you recruit, you can see the difference. It was interesting--not surprising!
I kind of used the $3600 number for travel sales (the average per YTB) and then 10% commission and figured on 6 friends and family recruits each recruiting 6 more. I can definitely see why MLMs tend to ruin relationships. The top dog makes the money and the downline is so far removed. No wonder most don't make anything!
Anyhow, I uploaded the spreadsheet to a free hosting site. It is good for 100 downloads over the next 7 days. If there are issues, email me and I will send it to you if interested.
Ok come on now!!!! You left out some important aspects of the comp plan.
ReplyDeleteTalk about some MAJOR assumptions.
First off, what about going beyond the second level. Those 10% overrides go crazy. You then assume that your friends friends then DO NOTHING EVER.
John, it was an interesting attempt, but in reality a silly exercise.
Herre's another problem, the program assumes that each member that you personally sign up will sign up equal amounts of newer people. It would never work that way. Let's take my closest friends. I have signed up 7 of them, 4 of which have no intention of working the REP side, just selling travel to themselves and their coworkers. the other 3 are working the rep side, one has a huge network and will "work it" the other 2 will likely get 6 and then slow down. SO, for those 7 people, I could see a total of 30 or so in the first year, but you can't accurately input that in the spreadsheet.
ReplyDeleteAlso, not going beyond the 2nd level is silly. The depth of the power team is infinite. As an example I brough in an RTA/REP last Thursday and we had a meeting yesterdday at Starbucks with her and she brought 2 people for me to present to them. Well, one of the people brought her sister. Well, that sister would already be beyond the spreadsheet's parameters and that is just in one week! That sister is in my power team, I will generate income from her and whoever she brings in along with the potential for more 10% overrides on travel sales and nNONE of that would be reflected in the spreadsheet.
Going along with the assumptions of stopping at the 3rd level. It assumes that those people don't do ANYTHING and then uses their zero income to compute the average of the whole team. Again, bad math.
And, the average travel is also a silly assumption. I have an RTA who came on board to book the travel for his company during the year. They do about 75K. That's ALL he is going to do with YTB. Buy that travel from himself and get the comission back. Well, that person also wouldn't work in the silly spreadsheet.
I could go on and on with very specific examples in just my team alone from just the last 2 months alone...
Also, the math is wrong.
ReplyDeleteHow can you have the lowest annual income of 540 bucks on the team and the "average' annual income for the team be 119 dollars??????
Here is another flaw with the spreadsheet. You are only using one year. So, even with modest recruiting, a REP who signs up 3 friends who sign up 3 friends each START the next year with 10 people on the team. SO if those 10 follow the same pace of 3 and 3, then you have 90 on the team at the end of the 2nd year, then the 3rd year of each person signing up 3 who sign up 3, then 810 people at the end of the 3rd year. Should I go on?
ReplyDeleteHey I am assuming it was not written by YTB so I assume there are some flaws.
ReplyDeleteI just put it out there to review.
The basic math is fine. And Doug has said that 6% of the people in YTB do not recruit, so take that for what it is worth.
But, I have been told that if I recruit 6 I am "on my way" and if they each recruit 6....that gives me a $10K income and the next level a $500 income, and the third level a $216 income. Based on selling $3000 at 10% which is fact and has been agreed upon.
I agree the average calculation is incorrect.
But if you play with it, you can really see how important travel is to to YTB. If no one sells any travel, your income only drops $954 for the year. But still selling no travel, and you recruit one more person who also does not sell travel and they also recruit one more the income rises from $8366 to over $11K.
Look at a big team. No travel, 75 recruits and each of them recruits 12. Fallse below director status with 976 members. Income is 286K. Add in 3000 of travel and the income only rises to 304K or $17K or a meager 6%.
So that is pretty meager. Now just ass another person to the recruitment to 76 (just over 1%) and the income goes to $331.8K or a 9% increase.
Whether the math is correct or not, it clearly demonstrates where the money is and where the focus of YTB is.
Why not download the spreadsheet and use it in the next recruitment meeting?
Well, the issue of travel vs recruiting is always a big deal. However, it is important to separate the intention of the company as a whole vs each individual.
ReplyDeleteYTB as a whole makes no or very little profit in the long run from recruting. Each year it might appear that way but as more and more bonuses are paid out, the profit goes to zero.
The profit will be made as more people are selling travel, even if it is only 3000 bucks.
So, the company has its REPS recruit more people in order for YTB as a whole to sell more TRAVEL.
No, the company has its REPS recruit more people in order for YTB as a whole to sell more TRAVEL WEBSITES. The vast majority of YTB's profits come from sign-up fees and website fees. Just check the latest 10K filed with the SEC if you don't believe that.
ReplyDeleteSteve,
ReplyDeleteI just explained it, but you didn't read it. The net effect on Profit is almost ZERO from recruiting. It won't show in the financials as there will be a lag. There were 5 one million dollar recruting bonuses paid in 2006/2007 from initial fees that were paid in 2002/2003.
So, in 2007 YTB collected fees from 60 thousand new RTAs but will pay out in the comp plan to those folks over time ultimately leading to no net PROFIT from recruiting.
Yes YTB wants more travel websites sold in order to sell more travel.
Lets take John's example.
If one person comes into YTB and sells 3600 in travel in a year, YTB will bring in 450 plus 600 or 1050 in fees. The comp plan from residual to bonuses will pay out 884-1024 depending on 50% matches and some other things. The next year they will bring in 600 from that RTA and pay out between 520 and 574. making a profit (assuming no other expenses) of 26 to 80 off of 600 or a profit margin of 3 to 11%
Now on the travel of 3600, lets say 10%, they will bring in 360 and pay out between 60 and 70% of it with a profit margin on travel of 30-40%.
So, the profit margin is generally less than 10% on recruiting and more than 30% on travel.
As usual you RTA's are manipulating the figures so you come out smelling like a rose and deflecting away from the issue. The figures speak loudly for themselves. Unfortunately, you are so brainwashed you can't see the truth.
ReplyDeleteWhat's this with the net profit being zero? Are you saying that the 10K is false? If you have any reports (you know, the kind filed with the SEC) that shows the ZERO profit from website sales and rentals, please share. Otherwise, the above poster is correct. You are manipulating the numbers to wrongly try and prove a point.
ReplyDeleteI am not saying the 10k is false, I am saying that it doesn't truly represent the fluidity of the process.
ReplyDeleteThe 10k will show fees coming in that were paid during 2007 from NEW RTAs. The higher dollar bonuses that get paid out (i.e.) the 10,000 bonus (more than 60 already in 2008)would be paid to people who paid in likely in previous years.
I am not manipulating anything.
Let me get this straight. The 10K filing doesn't truly represent the YTB numbers. The 10k is not wrong...but it is not right either.
ReplyDeleteBut, an anonymous poster on an anti-mlm blog REALLY has the correct interpretation of the figures presented by YTB HQ to the SEC. Fact or fiction?
Uh huh.
This is fact:
80% of RTAs fail.
80% of RTAs lose money.
This is fact:
If I don't get to work I'll end up like 80% of the RTAs.
Have a good day!
Eddie, now you are spinning.
ReplyDeleteI never said the 10k is wrong, in fact it is correct for that year. But the financials do not show, whether accurately or inaccurately, how the comp plan works with respect to money in and money out over a several year period.
I tried filling it out as though I was someone just interested in selling travel and not recruiting. I put in that I thought I could sell $1M in travel and not recruit anyone. I put in that I would expect 10% as the commission on the sales (I figured air fares at $5 ("commission" but as we know, really a service fee) a pop would be included in the total $1M. The calculator comes back with an income figure of $60K. That's actually not so far off for a $1M TA who is an employee of a B&M when one considers salary plus bonus (or even for an on-line company) - it's low for an IC though.
ReplyDeleteHaving said that, I would be very surprised to find that YTB has even one $1M RTA - I think what it has is some RTA/REPS who might make $60k - but most of that would be on recruiting.
It simply is not a company focused on selling travel ... it is focused on recruiting and that is why it is in the most basic terms a "pyramid".
I though bonus' were paid in stock, not cash?
ReplyDeleteSo what you are trying to tell me is that YTB is not trying to make a profit from the sales of their websites? That the whole program is expected to net close to ZERO in profit? and that they expect to keep the business afloat on the 30% portion of travel commissions that they take in after paying the RTA's and paying over-rides???
ReplyDeleteYeah, right...
"Anonymous said...
ReplyDeleteI though bonus' were paid in stock, not cash?"
I was talking about a real TA's bonuses, not YTB's.
John,
ReplyDeleteGo to the annual report and sum up the fees paid by RTAs and the Travel Comissions recieved by RTAs.
You can clearly see that in 2007, RTAs lost over 90 million dollars.
That is the net result of all of the RTA's cumulative effort for the entire year. That money came straight out of the RTAs pockets.
If you go back - you will see the same thing happening each of the past couple years.
The RTA program just doesn't work. It is there to provide a cash source for recruiting comissions and bonuses.
John said "I assume there are some flaws.
ReplyDeleteI agree the average calculation is incorrect."
How come you didn't say all that when you first posted the new topic, 'The Truth About Income Claims?" Were you unaware, or was that brought to your attention by some of the commentors?
"Whether the math is correct or not, it clearly demonstrates where the money is and where the focus of YTB is."
Isn't this just a rehash of an very old sore you keep picking at? In order to keep an interest going, I suggest you come up with some fresh stories. And for Pete sakes, get rid of "This Week's Top 5" - "Wanna know what everyone is reading?" Hell no! That's just "blog filler". Don't you have something for the weekends to talk about? And, if things don't improve, I think I may just go some where else. Don't worry, I won't let the door hit me in the butt on the way out.
Well should John say he assumes there are some flaws when YTB - the creator of the form does not?
ReplyDeleteThank you for putting that worksheet out there, John! I have now decided to dump my TTA job and move over to YTB. I figure I can make millions if not more with getting my clients to buy into YTB with me as their sponsor and book their own travel. Once they start recruiting, I can become a real leech and get a cut of their commissions too! By golly, why didn't I think of this before? I'm on my way to the dealership right now to buy myself a cocaine white Bentley. Maybe John Travolta will sell me his jet too. All I can say is, Coach better watch out because I'm on my way to the top. Candi will be burned in the dust by my production. YTB director and then CEO is next for me! I guess I should get Oldcrotchkeeper to sign me up.
ReplyDeleteanon said: I have an RTA who came on board to book the travel for his company during the year. They do about 75K. That's ALL he is going to do with YTB. Buy that travel from himself and get the comission back.
ReplyDeleteI have to wonder if this RTA's company knows that they're basically making money off of their company. Seems to me that would be a conflict of interest??
Anonymous said...
ReplyDeleteWell should John say he assumes there are some flaws when YTB - the creator of the form does not?
In John's words, "Hey I am assuming it was not written by YTB"
plus chances are this RTA is probably *NOT* finding the best fares for their company. If you can't book it on the YTB site, then the personnel or company don't get to take advantage of the lower cost carriers who don't work via Travelocity...what a scam!!!
ReplyDeleteTo me there is no question that YTB does not really care about selling travel. All you have to do is read how they themselves describe the company in press releases.
ReplyDelete"YTB International, Inc. (OTC Bulletin Board: YTBLA) ("YTB" or the "Company"), a provider of
Internet-based travel booking services for travel agencies and home-based independent epresentatives in the United States, Bermuda, the Bahamas, and
Canada"
YTB is a provider of websites. They are not a travel agency or a host agency.
I did not notice the mistake in the average and that was brought to my attention.
ReplyDeleteBecause it only goes two levels deep I assume (as anyone should) that it is not precise but a good guide.
I also noticed that it calculated the bonusses to the penny and that is not the case, but again, it gets you in the ballpark.
Would the fool who made the statement that YTB earns 30% profit on selling travel please come to the head of the class--your dunce cap is ready!
The bonuses that are shown in this spreadsheet are paid in cash. I believe that it is the director bonuses only that are paid in stock.
But again, while not exact, the numbers speak pretty clearly!
Top 5--it will stay as it is interesting. I know the anti MLM crowd does not like to see the stories rehashed, but oh well...it is not your blog. Doug can censor, I can list the top five posts. And it also is an "extra" post and does not take away anything from the 5 a week schedule---you guys just are a wealth of material.
While we are on the topic of, The Truth About Income Claims, OleScore thought you might appreciate this bit of travel industry salary information.
ReplyDeleteAverage Salary of Jobs with Related Titles In USD as of May 15, 2008 (source: indeed.com)
Average Travel Agent salaries for job postings nationwide are 28% lower than average salaries for all job postings nationwide.
Tcc Travel Agent $26,000
Leisure Travel Agent $31,000
Travel Consultant Agent $23,000
Travel Agent $29,000
Corporate Travel Agent $34,000
Corporate Travel Consultant $30,000
Tcc Retail Agent $25,000
Home Based Travel Agent $255,000
Traveling? Why pay a travel agent $30 to $100 more in fees for that airline ticket when you can go on-line and book it yourself. Clik on this link...
OleScorekeeper
BUt YTB are NOT travel agents..they are Referring Travel Agents. And that is evidenced by the $102.44 earned by the average RTA last year and the $27.75 earned this quarter.
ReplyDeleteBut hey, take heart, at $27.75 per quarter, the average RTA can count on a raise this year of $8.57. Toss that in with the economic stimulus plan and that Cocaine White Bentley is right around the corner!
As far as the argument that the bulk of the revenue comes from selling websites, and not from the sale of travel, here's how the comp plan works. In this example, the Rep has sponsored only one person into their Power Team, and the Power Team has grown to 100 RTAs. Commissions and bonuses are paid through the 6th level Dream Team as follows:
ReplyDelete$50 direct sale commission for the personally sponsored RTA
$5,000 in Power Team bonuses for all RTAs in the Power team
$2,500 -- 50% match to sponsor
$16,000 for 16 leadership bonuses
$10,000 Dream Bonus
$3,000 1st level Dream Team commission
$1,500 -- 50% match to that person's sponsor
$2,000 2nd level DT commission
$1,000 -- 50% match to that person's sponsor
$1,000 3rd level DT commission
$500 -- 50% match to that person's sponsor
$500 4th level DT commission
$250 -- 50% match to that person's sponsor
$500 5th level DT commission
$250 -- 50% match to that person's sponsor
$500 6th level DT commission
$250 -- 50% match to that person's sponsor
Grand total paid out in commissions and bonuses from the sale of websites: $44,800
Total revenue from 100 RTAs: $44,995
Percentage of revenue paid out in sales commissions and bonuses from the sale of websites: 99.56661%
Percentage of revenue retained by YTB from the sale of websites: 0.0043339%
Therefore, for every 100 people that buy a website, YTB nets only $195 ($1.95 pp), because everybody is on somebody's First Team, Power Team, and Dream Team (levels 1 through 6)!
This proves that YTB makes virtually no money from the sale of websites. Nearly all the money received from the sale of websites is contributed back into the marketing budget via commissions, bonuses, and matches. They have no choice but to sell travel in order to survive. Therefore, they must have as many websites out there as they can. The more websites, the more travel sales. The more travel sales, the more retainable profit for YTB. That's stated right in the 10-k.
And when recruiting dries up and they are not able to sell the number of websites as in the past, what happens?
ReplyDeleteBingo!!! They sell more travel!
ReplyDeleteOh. I forgot to include the 50% match on the direct sale commission to the sponsor, so deduct another $25 from YTB.
ReplyDeleteNot sure where this indeed.com got this info from but it is way off. I have never heard of a corporate agent making less than a leisure agent.
ReplyDeleteBellamy said...
ReplyDeleteBingo!!! They sell more travel!
Bellamy--you are missing the point...if they are not selling the websites, they are not selling more travel. It stagnates. And honestly, with each website sold, you are eroding your potential list of clients as you will have either recvruited or turned off all of your friends and family.
1) the market will never 'dry up'. No MLM has ever shut down because there were no more prospects;
ReplyDelete2) by the time growth stagnated (if it did) there would be hundreds of thousands of people out there with their own websites, which would be generating billions of dollars in travel sales;
3) each website sold represents another family and extended family that will at least book travel on your website (especially if they are already booking online).
Oldcrotchkeeper - I have another question for you that you won't answer but I'll give it a shot anyway. Your figures are way off, but did you make anywhere close to the "Home Based Travel Agent $255,000.?" I didn't think so. Do you know anyone that only sold travel that made that much and was home based? I didn't think so. How much did you sell today? I though so.
ReplyDeleteSarah said....anon said: I have an RTA who came on board to book the travel for his company during the year. They do about 75K. That's ALL he is going to do with YTB. Buy that travel from himself and get the comission back.
ReplyDeleteI have to wonder if this RTA's company knows that they're basically making money off of their company. Seems to me that would be a conflict of interest??
Well, first off, the company is his, so he can do what he wants, secondly, I have another RTA who works for a larger company and she travels. Before she got involved she booked all of her office travel through expedia. She even asked if she could change where she books it, and their response was "as long as the prices are the same". So, she actually submits expedia, travelocity, and her site to her office director who then approves the cheapest one, 9 times out of 10 it is her own site. So, she is actually helping her company in the process. What is the difference is she gets a check from YTB down the line?
It is still a conflict of interest and if other employees knew that she was getting a cut, they woudl be pissed and also want the opportunity. I mean if it is the same price, why not buy from Bob in accounting rather than Mary in travel planning? And I will doubt your assertion that 90% of the time YTB is cheaper. It has been proven time and time again that it is not the case.
ReplyDeleteAs to the first company that does $75K a year. and that is ALL he does. He is actually losing money. At 60% of $6 for air tickets, 10% of hotels, and 5% of cars (most of what business travel is) it is not too much. If I had to guess, he probably does 30 trips a year (good estimate based on $75K) So he gets $108 on his airfare, and $90 on his car rentals, and $630 on his hotels. So he "saved" $828, but it cost him $449 to join, and $600 a year to maintain. Sure in year two he makes $228 but honestly how much does he lose by having to do all that booking through the not so user friendly site of YTB?
Not true, most of his travel is hotels and cars. We crunched the numbers specifically for this purpose based on the previous year when I showed him the business. He will net roughy 1200 AFTER the 450 and 50 per month.
ReplyDeleteAnd, it isn't a conflict of interest with the other company as she got approval from the office director. She was the one who was in charge of making the boooking anyway. She asked, they said yes, she did it, and now gets paid.
I have another guy who does the same thing and has other employees book under him. He has asked several times if they want in and they said they didn't mind if he made all the comission.
Funny thing too, is the last business trip they went on was in Vegas and he got his room upgraded at the Luxor as they were happy to upgrade a referring travel agent from yTB, and his 2 coworkers had regular rooms.
Too bad about the Luxor.
ReplyDeleteLike Doug says, back it up. Send me a receipt or something.
Well, I flew to London and becauise I am a RTA, Richard Branson called me personally (he's an influential person just like Kim) and asked if I wanted to be upgraded and even allowed me to fly the plane. He sent his private car and then sent me on a shopping spree at the Virgin Store on Piccadilly, and gave me vouchers for his space flight when launced. Of course he was able to get me the Royal Suite at the Savoy--and I had only booked a TA rate of 40 pounds but they upgraded me when I flashed the YTB card.
And to boot, I was able to deduct the entire trip on my taxes and because of Richard allowing me to fly the plane, I also deducted the cost of the fuel for the 747.
All because I showed then the little card I bought for $500.
See what I mean?
You can't buy a YTB ID card. You have to earn it.
ReplyDeleteArt---"earn" is very vague word in YTB and rumor has it that the earning part has been "suspended" for a while, so you can indeed buy it.
ReplyDeleteAs for earning it, all it is supposed to take is $1500 in sales--not commissions. SO let's see, I take my family of four on the Coach's Cruise for $394.99 each and lo and behold, I earned my card.