If you’re a regular BOTTLESOUP reader, welcome back! If you’re new to my blog, thanks for stopping by! Here at BOTTLESOUP you’ll find articles on parenting, pregnancy, food and working from home. This article on AdvoCare, like many posts, deals with a direct sales or MLM company. How is that related to parenting? Well, a lot of direct sales / MLM companies try to recruit parents who want to earn money and stay at home. Please note that this article and any other on BOTTLESOUP is an opinion, not to be taken in place of professional financial or legal advice.
You’ve probably read a Facebook post that goes something like this, “Make money doing something you love! #webuildchampions” Or, “Are you ready to quit your 9-5? I’m so lucky that I found this opportunity to make money from my couch. I can afford XYZ just by sharing a few posts online each day.”
We all have that friend that evangelizes the latest and greatest direct sales or MLM company, in hopes of finally getting that million dollar work from home paycheck. And maybe you’re one of those people. There’s no shame in dreaming or hoping for a better future. But is AdvoCare, a multi-level marketing company selling vitamins and energy drinks, your ticket to financial freedom? Let’s take a look.
Oh – let’s get something out of the way first: I am not, nor have I ever been, an AdvoCare Advisor, Distributor, Preferred Customer, or retail customer. I am not affiliated with AdvoCare at all.
What does AdvoCare sell?
AdvoCare sells a variety of products including energy drinks, supplements, preferred customer memberships and distributorship memberships.
Where can you buy AdvoCare products?
The only way to buy AdvoCare products is through a distributor. However, if you don’t know a distributor and want to purchase a product, AdvoCare will find a local distributor for you to buy the products from.
Is there any way to get a discount on AdvoCare products?
Yes. AdvoCare has an option for customers to become Preferred Customers. It costs $19.95 annually, and the discount ranges from 20 – 30%, depending on how much money you spend on AdvoCare products.
So the more you spend, the more you save. Here’s what the AdvoCare Preferred Customer discount tier looks like:
Can I sell AdvoCare for a profit?
Here’s where things get tricky. According to the AdvoCare site, there are four ways for you to “get involved” with AdvoCare:
Now, let’s take a deep look at how you, as an individual, can potentially profit from AdvoCare sales.
So, you decide to leap into the Distributor role. As a Distributor, you get a 20 – 40% discount on products. But the profits you get are based on the retail price margin. So what does that mean? It means that if you purchase a $10 product for a 20% discount ($8) you can earn up to $2 in “profit” as that is the margin between the retail price and your discount. But as with other MLMs and direct sales companies, your actual earnings will depend on a lot of factors.
How much does it cost to be an AdvoCare Distributor?
The Distributor kit is $59 + $7.95 in shipping and handling. So the total initial startup cost is $66.95 + tax. However, when researching selling AdvoCare, we’ve found that many people are encouraged to reach the Advisor level. To become an AdvoCare Advisor, you need to:
But this is in direct conflict with the AdvoCare Policies, Procedures and Compensation Plan, which stipulates:
So, it’s hard to tell if this is something you’re not “supposed” to do, but is encouraged by Independent Distributors. If you decide to go this route, your compensation is supposed to look like this:
If this is accurate, it means that you purchase $3,000 in products at a 30% discount. So you pay $2,100. The assumption is that retail price = personal volume, and you qualify for the discount. Ok, now what? To make money, you’ll need to sell your product at retail price to make $900. So, you spend $2,100, you sell all the products for the retail value of $3,000, and you make $900. That sounds really simple, but selling $3,000 worth of product is tough. Right now, one of AdvoCare’s most popular products is the Meal Replacement Shake, Iced Lemon Cake. It retails for $44.95. The Preferred Customer price is $35.96. But let’s not make this harder than it has to be. Let’s assume you can sell $3k worth of Iced Lemon Cake shakes for $44.95. Each box has 14 servings. That’s approximately $3.20 per shake. And that has nothing to do with anything, just pointing out the cost to your customers. Ok, so back to the point. $3k worth of Iced Lemon Cake shakes is 66.74 boxes of shakes. Let’s round up and call it 67.
So you need to sell 67 boxes of Iced Lemon Cake shakes at retail price to hit the $3k mark and earn $900.
How much AdvoCare do I need to sell at a Distributor level to earn the equivalent of a minimum wage job?
So, the Federal Minimum Wage is $7.25. A typical full-time job has a 37.5 hour work week, with 2.5 hours of unpaid breaks. $7.25 x 37.5 hours = $271.875 (round up or down, your choice), before taxes, per week. There’s 52 weeks in a year. That’s $271.875 x 52 weeks = $14,137.50 per year, before taxes. Or $1,178.12 per month. Great, so we have a goal.
Hang on, won’t i become an advisor if i sell this much?
True. So, let’s assume, for simplicity, that you’re an Advisor earning 30% from the start.
back to the weird math
Ok, so you know from the example above that you need to sell 67 Iced Lemon Cake powdered shakes to earn $900 in a month. But you don’t want to earn $900. You want to earn $1,178.12.
$1,178.12 is 30% of $3,927.08. So, you need to sell a retail value of $3,927.08 or more to earn the equivalent of a full-time minimum wage job. That’s 87.36 shakes. Let’s round that up to 88, because you want all the money possible. So, 88 shake boxes per month to earn $1,178.12 before taxes.
That’s approximately 3 boxes of shakes sold each day. Oh, and remember: you must purchase the products and then sell them at a profit. Meaning you’ll need to shell out the $3,927.08 at your discounted price of $2,748.96, then sell them at a 30% markup to earn the money.
Don’t forget the other costs
We know it costs $66.95 + tax for the Distributor kit. There’s also a website you can pay to have, but I don’t know how much that costs. But, let’s assume you want to recoup the Distributor kit costs. You’ll need to sell 5 more boxes of Iced Lemon Cake shakes to earn back the cost. (Each box sold for $44.95 * 30% commission = $13.48 per box.) So make that 93 boxes you need to sell your first month. Plus whatever costs you incur due to…oh.my.goodness. I almost forgot shipping costs! You have to ship your product by yourself, so add $7.95 shipping and handling to all your orders. You need to front the money, or ask your customers to pay for shipping and handling. That means you need to ask your friends & family to pay you $52.90 for some shakes. Just FYI for comparison, you can purchase ready-to-drink meal replacement shakes on Amazon for like $12, free shipping.
won’t i be eligible for advocare bonuses?
Sure! Here’s an example of their bonuses straight from the Policies, Procedures and Compensation Plan on their website:
But there are a lot of people making significant money with AdvoCare, right?
So here’s the deal: many people who get involved with MLMs or direct sales companies are facing a tough financial situation, or a financial situation they want to improve. Instead of taking a minimum wage job, they opt for the “opportunity” for “financial freedom” through selling an MLM or direct sales product. To be clear, this is not some fantasy they’ve invented. This is a narrative pitched to them by these companies. Here’s an example from AdvoCare’s website:
If you visit this page, you’ll find videos that tell you how great their lives have become since joining AdvoCare. You’ll also see this disclaimer at the start and end of each video:
That’s from 2014. What about advocare distributors now?
Guess what? Direct sales and MLM companies are required by law to provide Income Disclosure Statements. AdvoCare’s Income Disclosure Statement shows the likelihood you have of breaking into one of those top tiers and actually earning an income.
If you scroll down on the Income Disclosure page, you’ll find a chart with 2016’s income ranges:
Note that the chart above is annual income. So, 8.96% make $0.01 to $50 for the entire year of 2016. Another 9.01% made between $50.01 – $250 for the entire year, and so on. Only 0.12% are in range to make the equivalent of a full-time, minimum wage job.
Bottom line on AdvoCare
In my opinion, the amount of time and effort you would need to take in order to achieve “financial freedom” is a game of risk. There’s no clear path to success, and as the income statement shows above, very, very few people achieve financial independence by selling these products. I’m defining financial independence as able to pay for your cost of living (housing, food, utilities, etc.) on your own. Even if you just wanted to make an extra $100 per month, you’d need to sell 8 boxes of Iced Lemon Cake shakes. Be realistic: do you know 8 people who want to spend $44.95 on meal replacement shakes, so you can make $100? And, would these people just buy from you once, or would you be able to sell them these shakes every month? The choice is ultimately up to you, but be sure to read all the policies. Be realistic. And, if you’re truly looking for extra income, believe in yourself. You don’t need a direct sales or MLM company to hide behind – start your own business. If that doesn’t appeal to you, than look for a traditional part-time or full-time job. Starbucks has great benefits. Just saying!
Data Junkie says
Yay! Great work once again Mrs. Bottlesoup. You are providing such a valuable service to folks looking for ways to make ends meet…the ones most likely to be attracted to these companies. Note: When you mentioned that 0.12% of AdvoCare distributors are in the range of minimum wage earners, that’s only gross revenue, and does not include all the costs associated with being a distributor for AdvoCare. This means the percentage of AdvoCare distributors that actually “net” at least as much as minimum wage workers “take home” is far, far less than 0.12%. These MLM and direct marketing schemes should be outlawed.
Mrs. Bottlesoup says
Thanks, Data Junkie! Great point. It’s hard to determine true take home pay from what’s publicly available. But even if it was 0.12%, that’s still outrageous and sad.