Is Pampered Chef a Pyramid Scheme? What You Should Know
If you are looking to become a Pampered Chef consultant there are some things you should be aware of beforehand. If you have been approached by another consultant trying to get you to join in, the information given to you may have been misleading.
Pampered Chef has what you call a mlm style business model. This means that independent consultants can go out and recruit other people to become consultants and make money off of their efforts. This recruitment aspect is why many people are questioning the legitimacy of this business and are even asking is Pampered Chef a pyramid scheme, which is what I’ll be going over here.
How This Could Be a Pyramid Scheme
Its first important to know what a pyramid scheme is and how Pampered Chef could possibly be one. So the first thing I briefly want to go over is exactly this.
Ok, so we know that recruitment of new members is a big part of the business. But the real questions is how big?
In order for this to be a pyramid scheme Pampered Chefs revenues would have to be overly dependent on recruitment rather than product sales to the general public. If this were the case they could still have and sell legitimate products but would be considered a product-based pyramid scheme.
So what you have to look into here is how much they push new members to go out and recruit other members vs how much they push members to sell actual product to the general public. And to find this out we have to take a look at their compensation plant to see how distributors get paid.
Note: I might use the words distributors, members, consultants, somewhat interchangeably. I’m talking about the same thing with all these words, which is the people that are working independently, going out and selling Pampered Chef products and recruiting new people into the business.
The Compensation Plan
First off, before you can even become a consultant you will have to purchase a starter kit. This is a kit of business tools and products to help get you started and give you a little kick-start to get going.
Right now there are 3 different starter kits you can choose from ranging in price from $109 to $249.
After you buy a starter kit you are then officially a consultant and can make money in 2 main ways, selling products directly to consumers and/or recruiting new consultants and earning money off of them.
These sales are going to come from you selling directly to consumers.
Many of these sales will come from parties that you host, where basically you invite a bunch of people over, cook foods, and show off how awesome the Pampered Chef products are.
Alternatively you will also have a personal Pampered Chef website that you can send people to and earn commissions off of the sales generated.
The amount of commission you will make per sale depends on the amount of sales you have made for that month. The more sales you make the higher commissions you earn.
- $1-$749 sales/mo earns you 21% commission
- $750-$1249 sales/mo earns you 22% commission
- $1250-$2499 sales/mo earns you 23% commission
- $2500-$3999 sales/mo earns you 24% commission
- $4000+ sales/mo will earn you 25% commission
The compensation plan is very much focused on recruitment. The more you recruit higher up the ranks you climb. And the higher up the ranks you climb the more commissions you can earn from the people beneath you.
There are 9 ranks that you can have in this business and moving up the ranks is mostly about recruiting other members. The 9 ranks and the requirements for each rank are as follows…
- Consultant – $150 in personal sales/mo
- Senior Consultant – $150 in personal sales/mo + 1 recruit
- Team Leader – $750 in personal sales/mo + 2 recruits + $2,500 in team sales/mo
- Director – $750 in personal sales/mo + 5 recruits + $5,000 in team sales/mo
- Advanced Director – $750 in personal sales/mo + $5,000 in team sales/mo + one of your recruits must reach the rank or Director + $12,000 in organization sales/mo
- Senior Director – $750 in personal sales/mo + $5,000 in team sales/mo + three 1st generation directors & one 2nd generation director under you + $24,000 in organization sales/mo
- Executive Director – $750 in personal sales/mo + $5,000 in team sales/mo + six 1st generation directors & two 2nd generation director under you + $48,000 in organization sales/mo
- Senior Executive Director – $750 in personal sales/mo + $5,000 in team sales/mo + nine 1st generation directors & five 2nd generation director under you + $100,000 in organization sales/mo
- National Executive Director – $500 in personal sales/mo + $5,000 in team sales/mo + twelve 1st generation directors & nine 2nd generation director under you + $200,000 in organization sales/mo
OK… so I know that might be confusing and you don’t have to take all that in. Basically all you need to know here is that moving up the ranks is about recruitment. As you can see at each level from Team Leader on up, you are only required to stay at $750 personal sales per month. The difference is that you need to recruit more people and get your Organization Sales higher and higher.
Once you move up the ranks you unlock parts of the mlm commission structure. I don’t want to get into this too much because it is very confusing. But what you need to know is that the higher you climb the more money you can make on the people beneath you.
So Is This a Pyramid Scheme?
Ok, so the compensation plan is definitely focused on recruitment. Its mostly about building up your team and earning more organization sales. This means you need to recruit.
HOWEVER, the commissions that you will be earning from consultants in your downline all come from product sales somewhere along the way. You are forced to sell products each month to stay active and this selling of products is that you make money off of, whether it is you selling them or those that were recruited beneath you.
This just isn’t a pyramid scheme. It may seem somewhat “scammy” that recruitment plays such a big part, but there just isn’t enough to call it a pyramid scheme.
Final Thoughts & My Advice
Pampered Chef is not a pyramid scheme or a scam. They are a legitimate company and know what they are doing. They are well aware of the legality of their business and aren’t going to dare step passed the line between a legitimate mlm and an illegal pyramid scheme.
But just because this is a legit business opportunity doesn’t mean it a good one. The fact of the matter is that with a mlm business model like this it will be very difficult to make good money. Those that make really good money are the ones that recruit like crazy and build up a massive team beneath them, earning off of their efforts.
I couldn’t find an official income disclosure from Pampered Chef to prove this point but I have reviewed enough mlm’s to know that with a compensation structure like this only those at the top are going to be making really good money.
Usually the people that end up making good money are those that have that recruitment type of personality where they can sell anyone on anything.
Personally, I don’t have anything even close to the personality it takes to make it here. I just wouldn’t be any good at it. If you are like me then I would recommend you take a peek at how I make money online.
I make a living working for myself online, which I think is a pretty awesome job. You can learn more about it by clicking the link below that will take you to a post I wrote.
In the post I wrote I explain what it is that I do, how it all works, and how others can do the same.
Comments, questions, concerns??? Leave them below in the comment section and I’ll get back to you soon 🙂