True or False: You earn 50% of everything you sell in Mary Kay
Written by L J on May 15, 2008 – 10:20 am -FALSE
Mary Kay Directors are fond of telling potential recruits that in Mary Kay, you make 50% of everything you sell.
While it’s true that the suggested retail of MK products is double what the Consultant buys the product for from the Company, before you get too excited about that 50% “profit,” you need to be aware of a few things:
- Many times you will not be selling the products for the full suggested retail. You will be discounting for various reasons: to get discontinued products off your shelf; to offer incentives to your Hostesses; to rid your inventory of limited-edition items; to encourage customers to purchase more.
- If you choose to participate in the Preferred Customer program, which most Consultants do, one benefit of the program is giving your customers a gift with purchase. YOU have to pay for these gifts, and they’ll cost you $4.00 each.
- There are many expenses that come out of that 50% profit: shipping charges to get the product to you; meeting costs; samples and business supplies, like catalogs; costs of training, workshops and Seminar. And don’t forget one important expense: TIME.
Some of these expenses can be managed or avoided, but some are just part of the Mary Kay “opportunity.”
Tags: Mary Kay profit
Posted in True or False? |
May 15th, 2008 at 6:15 pm
Plus the rising cost of GAS - two (2) round trips per class, 1 for the class and 1 for delivery!
May 15th, 2008 at 7:33 pm
You’re right, it is not 50%.
What is calculated at the front of the room for a meeting is not the full story.
But, a lot of what you hear at the front of the room for a meeting is not the full story.
Suzie Z sold $400 for the week. She did a scc.
She worked 5 hours. “Ooh, Suzie made $40.00 an hour!!!”
Before the rest of her expenses…
(If Suzie worked 40 hours a week, that might be great money. But she didn’t-she worked 5. It’s not a living.)
Yes, the math is fuzzy.
Keep your J.O.B.
May 21st, 2008 at 5:45 pm
What’s most interesting is that any business has it’s business costs. Mary Kay is no different and as a consultant you have tax deductions because of having an in-home business. If the consultants attend new consultant training and business money management whether at a meeting or online, all of that information is shared. There is nothing hidden. The math is not fuzzy. Whether MK, an in-home daycare, lawn business, pool cleaning, etc., it just doesn’t matter…, it’s the cost of being an entrepreneur. Consultants are not employees and if you can’t handle the reality of owning your own business, don’t.
May 21st, 2008 at 8:17 pm
Mary Kay consultants work their business on a 60/40 or a 70/30 basis - they choose how much they reinvest back into their business. There is no such thing as earning 50% for every product you sell. The recommendation is to sell a product for 100% retail value and use 60% of that money to rebuy it back so you have that item on your shelf again ready for the next customer. 10% goes towards expenses and 30% is clear profit. If you run your business smartly, then there is always money in your business account and you always have what your customers need.
As Mim says, it’s a business and it always has its costs, but it depends how serious you are about your earnings. Tax deductions will always be there no matter what kind of work you do.
To clear up the issue of money earned: Suzie sells $400 of product. 60% of that ($240) is reinvested back in her business. 10% ($40) is invested in expenses (i.e. travelling, postage, fuel etc) and then 30% ($120) is clear profit. Just imagine taking home $120 in one week for 5 hours work! And yes, there is tax, but when you can consistently bring home that amount of money or more, you don’t even notice the tax you pay. Plus, you get tax breaks so you actually pay less tax than you would do being an employee in a company in the city.
So, If Suzie worked 5 hours, then her earnings are $24 per hour. That is a reasonable expectation for a consultant and it’s not unheard of to earn more than that.
May 22nd, 2008 at 3:48 pm
“and then 30% ($120) is clear profit. Just imagine taking home $120 in one week for 5 hours work”
FALSE.
She does not have $120 “clear profit.” Many expenses still have to be deducted from that $120: hostess incentives, time and cost of travel, to name just a few.
Your math is over-simplified. This is typical of the examples presented by the Company as well. Leaves out a lot of important details.
May 25th, 2008 at 4:17 pm
Ok… so you don’t make 50% profit all the time… What’s the big deal? Who makes $300 PROFIT , yes ACTUAL profit AFTER buying inventory, taking the stuff to the customers, etc…
In just 2 HOURS! and its FUN, unlike my “job” right now….
Because of Mary Kay I can quit my job, and have fun selling stuff that I love… Skincare and makeup… have awesome friends, and people who really and truly care about you and want to help you succeed.
And where else can you make 4, 9, 13 and MORE % commission just for having someone signup under you?
Where else if you have so much inventory… you get AWESOME prizes!!!
Mary Kay has worked… there are more than 200 people who made more than 1 million dollars… I don’t see ANY other company who has that many millionaires, do you????
May 25th, 2008 at 8:20 pm
Sabrina….Sabrina….Sabrina. That fuzzy MK math and those inflated million dollar checks have blinded you to the FACTS! 200 people who have earned a million dollars + (OVER THEIR LIFETIME IN MARY KAY AND BEFORE DEDUCTIONS, EXPENSES, ETC.) out of 1.6 million actual consultants, directors and NSD’s….You do the math, girlfriend!!!
May 26th, 2008 at 11:12 pm
Amore: “Suzie sells $400 of product. 60% of that ($240) is reinvested back in her business. 10% ($40) is invested in expenses (i.e. travelling, postage, fuel etc) and then 30% ($120) is clear profit.”
Where’s the $ 224 that Suzie used to purchase the $ 400 in product? + shipping + tax on shipping?
Where’s the cost of “sales meeting” and gift that Suzie has to take, if a guest night?
$ 40 for expenses? I hope these people live close with $ 4 a gal for gas, because unless she took her entire inventory with her, she’ll have to make 2 trips, 1 for the class + 1 for delivery - plus did Suzie leave any books or pass out any choices cd’s? What about business cards, website, PCP gifts, hostess credit, cost of product used at the SCC, samples used at SCC or given to customers? All for $ 40?
And only 2 hours? They must have lived close - traveling to/from house to SCC location, and doing a SCC. Did Suzie have all of her stuff packed and ready to go to a SCC? What about time for preparing the orders, placing an order to the company, delivering the orders? Then you have to clean all your mirrors, re-stock your “ready to do a SCC” luggage, replenish your samples and applicators, all in 2 hours?
$ 120 clear profit - ugh, again, where did the $ 224 that Suzie used to purchase the $ 400 in product? + shipping + tax on shipping come from and who’s paying that?
And Sabrina, “Where else if you have so much inventory… you get AWESOME prizes!!!”
Google those “awesome” prizes and you’ll find out that you can purchase them yourself for a HECK of a lot less than purchasing inventory out the ying-yang! Our SD offered a prize for ordering $ 600 - I googled it and found it for $10 online. Heck yeah, you give me $ 154 and I’ll buy or give you $ 10 back - every day of the week!
May 26th, 2008 at 11:14 pm
Oops, forgot about pre-profiling and calling all of the people invited to the SCC - Of course, Suzie would have done that and follow-up calls as well! Tick-tock, …
May 28th, 2008 at 8:41 am
Tam, you are telling it like it is! Don’t forget to add in Preferred Customer mailings, samples, class supplies, recruiting literature, Hostess gifts, the cost of unit dues and all those extra MK events that cost the IBC, but not her guests!
All of the above line the pockets of MKC or help your SD offset the costs of her unit.
You’ll be lucky to make 10% when you add up everything!
New IBC’s or those who are comsidering a career, ask your recruiter or her SD to show you their Schedule C so you can see how much money their business is costing them in comparison to what they are selling. I will bet you that 95% are showing a loss ( a tax write off) year after year!
Then after 3 years you are between a rock and a hard place. The IRS says if you don’t make a profit in 3 years you can consider MK a hobby , not a business. So do you continue to file your taxes and claim a write off, risking an audit? Or do you not claim your MK at all and risk the IRS auditing you because you bought enough or earned enough in prizes for MK to turn in a 1099 and you didn’t claim anything on your taxes!
That my friends is a double edged sword and believe me the IRS always wins! You lose!!!
June 2nd, 2008 at 12:27 am
WOW
This company has been around for 45 years & I truly believe it does enrich women’s lives.I am 19 years old & have been in the company for 7 mos.i quit my job & working MK full time-whats full time?4-6hrs a day with an average of $200-$300 dollars a day(includes scc,facials,website orders & catalog sales.I f u are not motivated & don’t do the work then u can’t accomlish anything.nobody said u wouldn’t have to work but what could be more motvating than working for yourself?
also I forgot to mention those $200-$300 a day don’t include my 9 percent commission
June 13th, 2008 at 6:26 pm
Are you selling $200 - $300 a day, J.E.T, or MAKING that much?
I’m betting that it’s the former. Which means your GROSS profit is $100 - $150 a day.
July 12th, 2008 at 1:58 am
Wow, MK math at it again. Poor poor folks. You have no clue.
July 21st, 2008 at 6:24 pm
In response to:
Mim Says:
May 21st, 2008 at 5:45 pm
What’s most interesting is that any business has it’s business costs. Mary Kay is no different and as a consultant you have tax deductions because of having an in-home business. If the consultants attend new consultant training and business money management whether at a meeting or online, all of that information is shared. There is nothing hidden. The math is not fuzzy. Whether MK, an in-home daycare, lawn business, pool cleaning, etc., it just doesn’t matter…, it’s the cost of being an entrepreneur. Consultants are not employees and if you can’t handle the reality of owning your own business, don’t.
The “reality of owning your own business” is not shared to new consultants in black and white and isn’t fully understood until a person takes the plunge and begins consulting. Keep in mind that most entrepreneurs have education/degrees and necessary capital to start a business . MaryKay consultants are women picked up off the street who get glitter thrown in their eyes that they too can have a home business and be a salesman and it’s easy. Yes, the directors mention it takes work. Well duh, job’s do that. But what do you do when you don’t know anybody to sell to or the people you do know aren’t interested in buying and you are too honest a person to be pushy with your friends by telling them “please support me as your friend, this is my business.” Well, real businesses don’t rely on the pity of family members. It’s not just about can-do attitudes and credit-cards to buy inventory. Not everyone is cut out for this kind of work. Warm chatter and procuring new team members just gets people to “buy it before they try it” and when it doesn’t work they get accused of not working hard enough or knowing what they got into. Not fair!