A large number of people when they hear the words Multilevel Marketing (MLM, Network Marketing) they often confuse this with Pyramid Schemes. This is completely wrong and damages the image and business of all professionals (and non-professional) that make multi-level marketing their lifestyle and their source of income.

First of all it should be clear that the Multilevel is a LEGAL business model while the Pyramid schemes are illegal businesses. As can it be seen from the outset, there could not be a greater difference.

There are now many companies (businesses) that work in multilevel system and if they do it it´s because the bosses decided the best way to succeed in the distribution of their products would do so through independent distributors (in a multilevel system). In this kind of system, each Distributor earns by making sales and also earns commissions (may vary according to the marketing plan for each company) on sales of all people presented to the company. In other words, to get income it has to be transaction of products because the commissions are paid according to the turnover of the network of Distributor. If there is no transaction of products, billing is zero and there is no gain, because the distributor does not earn anything just for registering new people.

However, in a pyramid scheme there is other logic. Firstly there is no transaction of products. The flow of money is by the entry of new elements in the scheme, since each person who enters has to pay an “input value”. Normally, this money "climbs the pyramid" and falls into the pocket of the person who is on top of the pyramid. Depending on the forms, the top of the pyramid can be fixed or mobile, or there may be a person who is always on top of this pyramid and he´s always getting something every time a new element comes in, or the person who is at the top may change when it closes a cycle. In such schemes there is only transaction of money but no supply of products or services - and here is the source of Illegality!

There are many other differences, but these are the most important and most relevant.

The Multilevel Marketing is a business model in which to make money you must work hard (as in any business), while the Pyramid schemes as the name suggests are "blueprints" - illegal schemes used to earn (and loose) money.

Do you want to learn more about Multilevel Marketing?

Check the following hubs:

• http://hubpages.com/hub/Trivial-Errors-on-Internet-Business--MLM—Affiliates  

In these hub you´ll learn how to avoid some basic errors that could ruin your mlm business. Avoid the failure and learn how to be succeed in your mlm business.

• successful multilevel marketing

Here you can find some helpful tips to put you multilevel business in the right way.

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See more hubs:

- what is mlm

- Principles MLM

- Your own domain

- Work at home

- Advantages of social networking sites