Young Living has been producing essential oils from their farmlands in Utah and Idaho since 1994. They have developed their own process for distilling essential oils, which they call seed to seal. Since inception, Young Living has expanded internationally and now has offices and farms all over the world.
Over the years, more than 2 million people have signed up to become members of the Young Living network marketing system. At the Finance Guy, we believe that you can't make money with network marketing, but we decided to do a full review of Young Living. We want to find out if this really is an original money making opportunity, or if it's just another MLM.
There is no doubt that Young Living is making money. In 2016, they generated $1.0 Billion in sales which earned them the No. 22 spot on the 2017 DSA Top 100 list. However we're not interested in how much profit the company is making. We want to know if it's possible for you to make money from joining the Young Living Income Opportunity.
What is the Young Living Opportunity
To find out how we can earn money, we looked at the Young Living Compensation Plan, which they say is 'designed to help you achieve abundance'. We've heard similar claims from almost every MLM we've reviewed in the past, but let's have a look at the different ways to earn with Young Living
The first benefit we see is that you get wholesale pricing and can save up to 24% off the retail price of Young Living Products. While not included in the compensation plan brochure, we assume that this also means that, Young Living Members can sell products to retail customers and earn a 24% profit
At The Finance Guy, we believe that retail sales are an essential part of any business. After all, selling to customers is how companies generate profit. Without retail sales, there is no profit. It's a little concerning that Young Living does not think that this essential part of the sales process is worthy for inclusion in their compensation plan.
This can best be explained as 'referral commission'. If you convince others to become Young Living Members, then you can earn a commission on any product they purchase. However you can only earn this commission if you personally buy enough Young Living products to generate 100 points of Personal Volume (PV). Unilevel commissions are paid on up to 5 levels in your downline as shown below:
The requirement to generate PV would be a concern for Dr Jon Taylor, as it is Red Flag 3 - Pay to Play. In order to make money with Young Living, you have to spend money with them, and that's just wrong! A PV quota is essentially a minimum spend. This means that members aren't business partners, they're Young Living customers
As a relatively new member to Young Living, you might also qualify for the 'Rising Star Team Bonus'. Young living will devote 1% of their commissionable sales each month to paying this bonus. To be eligible, you must be either a 'Senior Star', or an 'Executive Star', and build at least 3 legs. In other words, you have to recruit.. As you keep recruiting you and building legs, you can climb the Young Living ranks. This raises Red Flag 2 - Promotion Through Recruitment.
Our concern with these commissions is that they're based on the 'wholesale prices' paid by members. This means that if you join the Young Living business opportunity, then every time you order Young Living products, 26% of your 'wholesale price', is going to your upline as unilevel commissions.
This is common to the MLMs, and it is why their ‘wholesale’, prices are often higher than the store prices of similar competitor products.
If you are lucky enough to recruit enough members to generate 10,000 worth of Organizational Group Volume (OGV), then you might qualfiy for this bonus. While PV is generated by money you spend with Young Living, OGV comes from money spent by those you recruit. In other words, if you share the opportunity and convince others to become Young Living Members, then you can earn a commission from their Personal Volume spending. This also means that the people above you in your organization earn money from your spending.
It doesn't stop with the people you have recruited. You can also earn money from the people that they recruit. The recruits of your recruits would be your second generation OGV. Based on our understanding of the Young Living Opportunity, if you manage to recruit enough members to become Young Living 'Royal Crown Diamond', you can earn from up to 8 generations in your MLM downline. This triggers Red Flag 5 - More than 5 levels in the payout plan
The Young Living Generation commissions paid to the top members is shown below:
While it is possible to generate OGV from just a few recruits, we believe that to achieve real success in Young Living, you need to recruit a lot of new members.
For us this raises Red Flag 1 - Constant Recruitment of New Members. We think a business should be focused on sales, not hiring new people...
Along with the generation commission, once you have reached the rank of Silver, you could qualify for a Generation Leadership Bonus. Young Living sets aside 6.25% of their commissionable sales each month to pay this bonus to the upper ranks of their members. If you keep recruiting new members and generating OGV, you might reach the rank of Diamond. At this time you may qualify for the extra 0.5% of commissionable sales paid as the Diamond Leadership Bonus.
Once again, our concern is that these commissions are based on the 'wholesale prices' paid by members. This means that if you join the Young Living business opportunity, then every time you order Young Living products, 28.25% of your 'wholesale price', is going to your upline as generation commissions and bonuses
This is on top of the 26% which goes toward Unilevel payments. If you become a new member, then a total of 54.25% of what you spend on Young Living is paid to your upline.
This raises Red Flag 4 - Most of the Rewards go to your upline. This price loading is why MLM products are generally more expensive than those sold through regular stores. The commissions for their compensation plans are included in the prices they charge to members.
How Do You Get Promoted In Young Living
We thought we'd let an enthusiastic Young Living Member explain what it takes to climb the ranks in the video below:
As we can see from the image, the focus of the Young Living opportunity it recruitment. If you just find 5 friends, then they do the same, it goes into auto pilot. By the time you get to generation 5, there are so many people in your downline, that drawing waves is better than making circles for each of them.
Are Young Living Members Making Money
To find out if members are making money, we looked at the 2016 US Young Living Income Disclosure. The commissions paid to U.S Young Living Members in 2016 is shown below:
The first thing we notice is that 94% of all active members are at the 'Distributor' rank. This means that only 6% or 1 out of 16 members achieves any promotions at all in the Young Living business opportunity.
In the small print beneath the table, we see that the average commission paid to active Young Living Members in 2016, was $25, and the median was $0. The mean is the statistic measure of the middle point. So if the mean is $0, we can see that more than half of active Young Living members earned no commission at all in 2016
Those that did earn commission probably weren't much better off than those that didn't. Commission is not profit, it doesn't include the $100 per month spent on Young Living products to remain active. In other words it cost members at least $1,200 in expenses to generate an average of $25. So, in 2016, the average member lost $1,175 in the Young Living Business Opportunity
As part of our ongoing updates, we also reviewed the 2017 Young Living Income Disclosure Statement. One thing we found quite interesting is that Young Living has changed how they classify members. Now anyone who hasn’t recruited anyone is no longer a ‘distributor’. They are now listed as ‘preferred customers’.
We did not find any explanation as to why this change occurred. It could be that they decided that people who don’t recruit aren’t active in the business opportunity. It could also be that they want to make the Young Living opportunity look better than it really is
Under this new system, 89.5% of members are not ‘preferred customers’. This tells us that 9/10 members earned nothing at all from the Young Living opportunity in 2017
Young Living has now classified the 10.5% of members who did sponsor new recruits and earn commission, as ‘business builders’. The table of earnings shown below only represents this portion of YL members:
As we can see only 0.83% of ‘business builders’ made it past the ‘Silver’ rank. This means on average, the other 99.17% earned less with Young Living than they would with a regular job
Let’s not forget that this table only includes the to 10% of earners with Young Living. If all members were included, the real results would be 10 times worse
Why is it Difficult to Make Money With Young Living
We believe that the network marketing business model makes it hard for anyone to succeed in Young Living. MLM isn't designed to help people make money or gain financial freedom. It's a system designed to promote and sell products. MLM is profitable for Young Living, who are making money from selling products to members, but not for the members who join the business opportunity.
MLM is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions. Instead they build a network of loyal believers who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.
We believe that the best way to make money with Young Living, or any MLM, is through retail sales. As we've seen, most members aren't earning much from the business opportunity. This could be because it raised all 5 flags in Dr Jon Tayolors 5 Step MLM evaluation. According to his research, if a network marketing company raises 4 or more flags, then the chances of you turning a profit with the opportunity is less than 1%
One website we found called Stealth Secrets, claims that they can teach you to make money with Young Living. Unsurprisingly, the page was very vague, and appeared to be trying to sell us something else
Can You Recruit a Team With Young Living
If you want to earn part of the 54.5% which Young Living pays as commissions, then you need to build a large team. The only way to do this is to recruit new members and have them do the same. In theory, it's as simple as sharing Young Living with a few friends. In reality building your MLM downline with Young Living will take substantial time and effort.
If you decide to become a new member of Young Living, then recruiting new members will be essential to your success. After all, if you can't build a downline, then you'll end up in the 94% who never earn more than 13% commissions. If you want to tap into the full 54.25% offered by the Young Living compensation plan, then you need to be very good at recruiting new members.
Even if you are good at finding new recruits to sign up for the Young Living Income Opportunity, you might still struggle to build a downline. This is because network marketing companies struggle to keep members in their MLM systems.
Young Living is no different, in their income disclosure it states that '51% of members who joined in 2015, didn't make a purchase in 2016'. In other words, if you recruit new members to your Young Living team, you can expect that more than half of them will become inactive within a year of joining. If your recruits aren't buying product, then you're not earning commission
We also read that '57% of all members who joined in 2014 had quit by 2016'. This is probably because once they stop buying product, they don't renew for another year either. If you join the opportunity, then you should expect at least half your Young Living downline to quit every year.
How Good Are Young Living Essential Oils
It's important to remember that success in any MLM requires you to make a lot of sales. If you join the Young Living opportunity, then you'll be selling their products. Any salesperson will tell you that the best way to make money, is with good products.
Rather than try the oils ourselves, we decided to rely on the internet for our product reviews. First we looked at a review by Essential Oils Haven. They seemed very happy with Young Living. The review explained a bit about the company then went on to tell us that essential oils had a wide range of uses including;
- Psychological benefits
- Pain Relief
- Immunity Boosting
- and many many more
This review certainly puts Young Living in a positive light. It could be because the products are really good, or it could be because it was written by a Young Living member trying to sell us essential oils.
In our search for a more balanced review, we found a collection of FDA warnings to Young Living. Mostly the FDA is concerned with how Young Living products are being promoted to consumers. Reviews, such as the one we looked at above, claim that essential oils have a wide range of benefits. According to the FDA, these claims would qualify the oils to be drugs, however there are no FDA-approved applications for these products.
No doubt Young Living would make the standard MLM claim, that 'this is just a few rogue members'. However there are problems with the products themselves. The FDA notes that Young Living essential oils are not generally recognized as safe and effective for use under the conditions prescribed, recommended, or suggested in the labeling. are not generally recognized as safe and effective for use under the conditions prescribed, recommended, or suggested in the labeling.
We also looked at Live Science, who acknowledged that essential oils are used in some alternate forms of medicine. They then explain that there is limited scientific evidence that they provide any real benefit. So it would appear that the problem is not just with Young Living, it is with all essential oils. While they may create nice smells, that is where the benefits end.
Is Young Living an Illegal Pyramid Scam
Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.
The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?
We don't think that Young Living members are trying to scam you. It's more likely that they themselves believe that the products work, and the opportunity will one day make them wealthy.
Young Living is like any other company, they are in business to make profit. As we noted earlier, they appear to be doing quite well and are one of the most profitable MLM companies in the world. If you took a sales role with a top 100 company, you'd expect to make money. Yet if you become a Young Living member, then your chances of building a downline are less than 1 in 20.
The best way to make money with Young Living, is to get a job with the corporate office. According to Glass Door, they treat their corporate employees quite well. Becoming an employee means ignoring the MLM, so perhaps you could also look at other opportunities before making a decision to join Young Living
Should You Join Young Living
If your goal is to make money with Young Living, then we think you should probably examine all your options before making a decision. Before you join you should probably try using the products yourself for awhile. Before you try to make money convincing others to spend $100 per month on essential oils, you should do it yourself. Try the oils before there's any financial incentive. If you feel any real benefits which you think you can share, then you might be able to make money with Young Living.
As with most network marketing companies, it is possible to make money with Young Living, but it is very unlikely. Imagine if you were offered a sales job at a company where more than half the sales force quits every year, and most sales people are losing money. Would you accept the job?
There are some who’d diagree with us. For example don’t mess with mamma believe that you can make money with Young living. They’ve even written a how to make money with Young Living guide. They have an incentive to be positive they are trying to recruit you to Young Living
If you have the skills to make money with Young Living, then we believe that you'd probably make more money applying those skills to a different opportunity. That's just our opinion, as always we welcome your feedback in the comments section below. We'd love to hear what you think about Young Living especially if you can share your personal experiences with the company
For more posts like this, look at our list of mlm reviews.