Herbalife was founded in 1980 and continues to be successful at selling a variety of health-related products. Their range includes dietary supplements, sports nutrition, personal care, and weight management items. At present, Herbalife has more than 3 million distributors and is present in more than 90 countries globally.
These statistics make Herbalife an impressive choice, especially as there are many other health MLMs out there. Some of their products are popular too, which is always good for distributors.
Despite all the positive aspects, Herbalife has a dark side too. The company has been strongly criticized for its MLM structure, to the point of being charged by the FTC.
After a 2016 run-in with the FTC, Herbalife agreed to dramatically restructure its compensation plan. Herbalife also needed to pay $200 million in fines as compensation for the way that it had misled customers about the money that they could potentially earn.
All of this history makes Herbalife a dicey proposition. Even so, the company has made changes and their compensation plan has been looked at more closely than many other MLMs. The required changes also mean that Herbalife is very up-front about what you can expect.
Two Ways To Make Money With Herbalife
Herbalife follows the general MLM pattern of earning. The simplest way to earn is to sell products directly. Distributors can increase their income potential by recruiting others and building a team.
This post takes a look at those two approaches and how they work in Herbalife’s current compensation plan. I also talk about the overall potential of Herbalife as a way to earn money.
Before we get into the products that Herbalife offers, I want to talk about the way that you’re making money. Herbalife uses a resell model. This means that you are buying the products at a discount and then selling them on.
Herbalife offers an initial discount of around 25%. This can increase to 50% if you are able to increase your sales enough.
Herbalife recommends selling the products at their recommended retail price, while also passing along taxes and shipping. They give the example of their meal replacement shake Formula 1, which has an initial distributor cost of $31.42 (excluding taxes and shipping). The recommended retail price is $41.20, which gives a $9.78 profit.
An initial profit margin of roughly 25% isn’t horrible, but the requirement to purchase the products first is frustrating. This style means that the distributor is taking more risks. It’s very easy to lose money in the process.
Additionally, the profit margin is based on the idea that you’re selling products at full retail price. Any discounts will cut into how much you earn.
This is a pretty serious problem, as competition can be fierce. You’ll be competing against other distributors and all the Herbalife products that are available elsewhere (like on Amazon). You’re also competing against any similar products out there – and there are a lot of those.
Herbalife makes the process more difficult still with its Preferred Member program. This program provides a 20% discount on Herbalife products. You might find that some potential customers are unwilling to pay full price and join the program instead.
This brings me to the second area – the products themselves. Herbalife has a decent range and is particularly well known for meal replacement shake mixes.
I had a chance to try their chocolate mint meal replacement and it was pretty damn tasty. Too pricey for me to buy on a regular basis, and the health benefits are way overblown, but I can’t deny that the consistency and flavor was pretty amazing.
They also have a variety of other items that are related to health or weight loss, such as supplements. These tend to get good reviews and people do regularly use them.
Still, none of the products are unusual. Many other companies in the industry offer a similar range. Herbalife’s products are also on the expensive end of the scale. These aspects limit your potential audience and could make it more difficult to get sales.
Building a team with Herbalife is a way to increase income. Herbalife currently offers various ranks and teams that members can be a part of. Progressing through these is based mainly on sales volume.
The initial set of ranks are the distributor ranks, which look like this:
- Distributor: 25% discount
- Senior Consultant: 35% or 42% discount
- Qualified Producer: 42% discount
- Qualifying Supervisor: 50% discount
The next part of the system involves being a Supervisor. This still provides a 50% discount, but you are also able to earn up to 5% from your first, second, and third-level downline. There are also more advanced levels after this, including the World Team, GET, Millionaire Team, and President’s Team.
While the ranks and requirements can seem complicated, the overall idea is that you need to consistently make sales and recruit people into the company. Anyone that you recruit needs to do the same.
The idea can work and some people are successful, but it’s important to be realistic. Herbalife has been around for a long time and has been linked to some pretty bad press. Are people going to be willing to invest their time and money into the company?