Is Scentsy A Pyramid Scheme

Is Scentsy A Pyramid Scheme?

Have you heard about this company, Scentsy, lately and are wondering what the buzz is about? If you have, then you have probably heard the rumors or read the articles that say that this is a potential pyramid scheme. 

So as a new business owner, would it be safe for you to sell their products in 2021? Can you make a living out of doing a business like this? And if not, are there any other alternatives that you can look into to help make some money online?

All of these are valid concerns and I would love to address them, which is exactly what I have done in the article below. If you are interested in making money online and also want to find out if you can use Scentsy to start that, keep reading till the end because I will be giving you my recommendation for this as well. 

What exactly does Scentsy do?

Multi-level Marketing or MLM is a form of business that is dependent on network marketing. You get more and more people recruited into the business model who will in turn keep selling more of the business’s products in order to earn commissions.

This is basically what Scentsy does and to get started, you will need to purchase their starter pack which amounts to over $100 ($99 + other shipping and tax expenses) and includes all of their scented items such as candles and waxes. You will need to purchase their products first (which is what you get in the package), and then promote these products to your website visitors, friends, family, or whoever else. Once you have reached the intended sales figure, you will be paid your commission for it. Keep in mind that the shipping rate will vary depending on your location, so this cost might be much higher for some than others.

How does the business operate?

Say you want to become a part of this business, these are the steps that you will have to go through to get started:

  1. You will need to contact them and make arrangements to make that first purchase of their $99 package. This will make you one of their “essential consultants” as they like to call it. 
  2. Once you have done this, you will need to start promoting them to your inner circle and online. It is even suggested that you invite people home and have these products around your house, giving off a nice fragrance which would be appealing to some and so easier to convince to buy.
  3. They have a point system called Personal Retail Volume or PRV. For every dollar of the sale that you make, you will be awarded one PRV (So a $100 dollar sale will mean 100 PRV points). From all of these sales, you will receive a total of 20% commissions. Of course, you being paid that high will depend on whether or not you are able to reach a target of 200 PRV points at least one time during a 4-month period.
  4. Then comes the last part where your potential for making more money increases. Once you have established yourself, you can invite other people or recruit people under you to also join as an “essential consultant” and start making sales too. Except now, because they are under you, for every sale that they make, you will also be paid a commission for it. 

This is how Scentsy will make the whole business alluring to you. You suddenly have this new method of gaining more money without doing too much work. All you need to do is keep finding salespeople who would be willing to make these sales, and you will constantly be earning commissions off their sales, without even having to make your own. Now, this is where it starts to blur the line to becoming a pyramid scheme, which I will explain further down.

Is there potential to make money on Scentsy?

As I mentioned, you will need to sell these products in any way you can. The more you sell, the more money you can make. And to keep your commissions up, you will need to meet the 200 PRV point target at least once during a 4-month period. 

Do you know what happens if you don’t meet this quote during that time? You will receive nothing instead. Can you imagine that? Doing all that work, only for you to not receive any commissions at all, even if you did $150 worth of sales for each of those 4 months. 

So you know how a commission structure works in a normal sales job right? You get paid a base salary and then more commissions based on which targets you hit. Except here, you don’t get paid a basic salary and if you don’t reach your target you don’t get paid commission either. Sound like a fun place to work for?

What constitutes a pyramid scheme?

At this point being a part of the online world, I am sure you have come across this term ‘pyramid scheme’ and know what it is about. In short, it is a type of business model that depends on network marketing and bringing more and more people into the business with the prospect of earning commissions but only through network marketing rather than selling actual products. 

What Scentsy is, is not a pyramid scheme due to one reason. They sell their own products, and this means that they are a Multi-Level Marketing scheme but not a pyramid scheme. Now, this may be true in theory but that doesn’t make Scentsy any better. You are better off not being involved in a company that makes you purchase their product first instead of just selling them outright and making commissions like that as a normal affiliate marketer does.

Does this make the Scentsy business model a scam?

So, now that you have heard about all that regarding Scentsy, does that make this business a scam? Well, the answer to that would be no. Yes, Scentsy has some seemingly shady aspects, but on paper, they are a legit MLM company. 

Pyramid schemes were made illegal almost everywhere across the globe. But this new method of doing an MLM scheme while promoting their own products has popped up everywhere, as this changes the business from a pyramid scheme to a legit company in the law’s eyes. 

How much can you really earn with this program?

After finding out about the company, I did a little digging into their financials to try and find out how much the average person makes using this system, and let me tell you now, that it is not very pretty. 

On average, someone who does a normal amount of sales will usually make an average of $20/month! Yes, you heard that right. Now, this is for their first year. According to them, in the second year, you can bring that number all the way up to $166/month.

So, this shows that the possibility of you making money is entirely dependent on how many people you can bring into the business to continue making sales. Because the profits are more in the second year, we can assume that most of the consultants managed to get other consultants who were, in turn, creating more commissions for the original consultants.

Let’s look at a breakdown of your earning potential:

So the commission rate of 20% is only if you reach a target of 200 Personal Retail Volume once during a 4-month period. However, if you were to go higher and reach a 1000 PRV target then you can increase this cap to 25% commissions.

Now, they have a breakdown list of how you can earn commissions based on your own sales as well as the sales of your whole referral team collectively. So the higher the whole team makes, the higher the commission rates you will get from it. Here is a table for you to get a better idea of what it looks like:

*Insert image*

What methods should you use to be successful in selling this product?

Now, this product itself is something that would be easier to sell if seen and smelt in person due to its nature as a scented product. If you see it online, it will be harder to convince people to buy because they won’t know what the product smells like, and a description of it would only go so far as to explain it.

This is why the recommended method is to promote it to people close to you so that you can show them the product, have them smell it, which will improve their chances of buying. However, this severely limits your potential to sell unless you have a wide network or know a lot of people you can sell it to.

So does that mean you can never sell it online? Well, I wouldn’t take it completely out of the picture. It is still a possibility, albeit much harder to do. You will need to make the product seem quite appealing and manage to find a way to convince people to buy it without actually smelling it first. There is a chance that people will buy it based on interesting smells that they are already familiar with.

Should you then be promoting these products in the year?

Based on the commissions you have seen so far as well as the earning potential that you see long-term, you might be interested in going ahead with this program. And for someone who is just starting out or who really wants to start making some money, this may seem like a good prospect. Before you start on that though, let me take you through some of the risks that you will be facing, just so you can make the most informed decision about joining this program.

  • The company deals with a lot of scented products, even relating to skin and health care. Now, this may not be a problem for some, but you don’t want to usually be involved with these types of products as an affiliate without having fully trusted the company and its products. There may easily be health complications that arise for the people you sell to, and in the end, the blame is going to fall on you and the company which can be disastrous. 
  • If you don’t meet their sales quota, you don’t get anything but the company is still making money off of you. For one part, you will need to purchase the initial starter package for $99, and even if you sold the products worth $190 every month, you will still not be paid anything because you didn’t meet the quota. Whereas, the company has still earned money through the sales that you made, no matter how small it was.
  • You will need to have constant meet-ups, organize events, and get-togethers so that you can promote this product to the people close to you. As we established, it will be difficult to sell this product to people online.
  • Taking into account their financials, in the 2nd year you will only be making around $160/month, and this is based on the average meaning that there might some top earners who contributed to this high amount. Also, $160/month for the amount of work you are putting into it doesn’t seem like a fair trade. Yes, you will be making some money, but is the amount that you earn and the effort that you put in really worth it?

So this begs the question, can you really make money to sustain your livelihood by using this program? Well, let me put it into perspective with MLM schemes in general.

Something that I have seen across my research is that the early movers to a scheme such as this are the only ones to truly benefit from this type of program. When you first join a company like this, your options are open because there are many people to contact and hire as consultants. Since it is new and fresh, it is easier to convince them to become consultants. 

However, over time this is only going to get much harder. It is going to become more challenging to continue employing people as many people would have heard about it already or just wouldn’t be interested. And also having to meet the monthly quotas on a consistent basis when there are so many consultants in the business already selling to saturated markets is just going to be quite difficult. 

Also, to make some decent money you will need to have a lot of other consultants under your belt. The problem with this is that you are not able to control what your consultants are doing, how they selling, or how much they are making each month. Therefore, managing all of this plus doing your own sales seems like a lot of work for the money you are earning.

What’s there to like about this program?

  • This is definitely not some shady pyramid scheme, even though it does have the skeleton of one.
  • Most MLM businesses tend to require you to purchase their products every month regardless of the sales you make. You don’t need to do this with Scentsy as you only need to purchase the starter kit of $99 once. 
  • Also, most MLM schemes will need you to meet your quotas on a monthly basis rather than once in four months as Scentsy does. This means that you will need to meet the quota they set every month or you won’t get paid the commission for that month. Scentsy reduces this burden on you.
  • Unlike a pyramid scheme, you will be selling real working products to people.

What’s not to like about the program?

  • This sort of scheme tends to be very measly in terms of profits because it all depends on how many people you hire and how good their performance is in sales. 
  • You need to make sure these products are safe for human use because they can affect your skin.
  • There are times when you may need to purchase the products yourself to reach the 200 PRV quota, which means more expenses for you.
  • You are restricted to only selling the items of one company. If they decide to close shop, all your effort and time would go to waste.
  • $166/month is in no way a sustainable income to be making every month. You will not be able to live on an income that low.

My verdict – Should you join this program?

After having read this, I hope I have been clear about why this program may not be the best choice for you. There are too many problems and too little profits to be made for this to be a viable online business.

However, if you are still interested in making money online and want it to be similar to selling products online, then I have the perfect solution for you.

What else could you do instead?

I am going to introduce you to the platform that helped me start and build on my affiliate marketing journey – Wealthy Affiliate

This platform comes with all the training guides you will need to start and run the business, a community of experts who are willing to answer your questions, as well all the tools you will need to become successful. 

Affiliate marketing is definitely a much better business model than an MLM scheme and it is way more profitable and sustainable. You can learn more about this by clicking on this link here and exploring the site.

Before you sign up for their paid membership, you can even try out their free account just to get to know the platform and how it can help. They are even throwing in the first 10 lessons of their training for free, so you can get some use out of that as well. Take it from me, this platform changed my life and it has the potential to change yours too, with some time and effort from your end.

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