Company: Rodan and Fields
Price: Buy a $45 Business Portfolio
Scam or Not: Not a Scam
Overall Ranking: 3/10
An Introduction to Rodan and Fields
Rodan and Fields is a relatively popular company that specializes in skincare.
Specifically, the company attempts to incorporate scientific research into their products, creating skincare options that may be much better than what else is available on the market.
But, at the same time, the company also presents itself as an opportunity to earn money. This opportunity allows people to join as a consultant to make money by selling the products and recruiting others.
In this post, I’m going to take a look at Rodan and Fields has to offer, along with whether the company is worth signing up for. I’m also going to answer the question ‘is Rodan and Fields a pyramid scheme’, as there is a lot of debate surrounding the concept.
How Rodan and Fields Works
Rodan and Fields operates under a system known as multilevel marketing, which is typically shortened to MLM. You may also have heard it called a direct marketing company. That term simply refers to the way that consultants directly sell products to people.
For the most part, I don’t consider MLMs to be scams, especially as the company is normally fairly open about what you have to do and even about the specific compensation plan that you’ll be following.
But, the system comes with its challenges too.
For one thing, you’re trying to make sales at a one-on-one level. Most of us aren’t inherently good salespeople, especially when it comes to promoting products to friends and family members.
At the same time, the large number of similar companies out there means that most people have already heard at least one sales pitch for recruitment or to buy products. This pattern also decreases your chances to make sales.
The other thing to know about MLMs is that there is this strong focus on recruitment and team building. So, you’re supposed to recruit people who recruit others and so forth.
At the same time, you and all of your team are supposed to be making sales. This pattern is much harder to achieve than it sounds, especially as there is little that you can do to force others to be good at sales or recruitment.
Nevertheless… each MLM is different and some are better than others.
Much of that difference comes down to the specific products and the compensation plan. So, let’s see what Rodan and Fields has to offer in that area.
The Compensation Plan
The compensation plan for Rodan and Fields starts off by offering 5 different ways to make money.
You will often see claims like this with MLM companies but they tend to be misleading.
Realistically, there are just 3 ways to make money with any MLM. These are:
- Profit from your sales
- Commissions from sales within your team
In most cases, any bonuses are strongly based on the sales that your team makes and the performance of your team as a whole. This pattern also means that there is only so much income you can make from sales alone, as most of the bonuses are tied into recruitment.
One interesting thing about the commission scheme at Rodan and Fields is that there are two types of customer:
Of these two types, the Preferred Customer (PC) is considered better and you can potentially earn more bonuses through them. Now, if you just wanted to make sales through sales, the company summarizes the process like this:
How much you earn depends on how much people pay. So, profits look like this, although the values will vary depending on the prices of the products that you’re promoting.
Once you become an active consultant and start recruiting, the process gets a bit more complicated. As you can see, the plan starts to talk about earning points and commissions.
The pattern remains similar as you go up ranks with the company and the general idea is to fill out the team below you. Needless to say, a bigger team means more income. But, it will also require more organization and more effort.
Additionally, there starts to be various requirements to progress through ranks. For example, the image above specifies that you need 600 PSQV for that rank. That number is a reference to sales volume and means that you have to be getting a certain amount of sales within your team.
As with most MLMs, Roden and Fields does operate through a rank system.
With that type of system, a higher rank will involve more bonuses and more potential to earn money. At the same time, each rank has more requirements than the previous one. This means that moving up the ranks can be tricky and you have to manage your own performance and the performance of your team.
All-in-all, the compensation plan is fairly standard for the MLM industry. It’s simple enough at the early levels but as you increase in ranks it gets progressively more difficult.
In most cases, this means that people will tend to get stuck at the early ranks most of the time.
The Product Selection
The other thing to consider about a MLM is the products. If the company has appealing products that are reasonably priced, then it can be easier to get ahead in the MLM, despite the compensation plan.
For example, companies like Avon and Paparazzi Jewelry tend to have items that still sell relatively well, especially as they are fairly unusual and well-priced. In contrast, there are many health and nutrition MLMs that basically sell expensive versions of products that are common in the marketplace.
In the case of Rodan and Fields, the products are all about skincare.
Now, the company’s marketing makes these sound revolutionary so there is potential for sales that way. However, as is often the case, these products are expensive.
Now, there is nothing unusual about expensive skincare products. In fact, people are often willing to pay a lot of money for the right skincare options.
In terms of sales, the price is an advantage and a disadvantage. The advantage is that you would get a higher commission per sale. But, higher prices do make it more difficult to actually make sales – especially if your customers don’t have all that much money.
With the right audience, you might be able to sell the products if they were worth the price tag.
The problem is… they don’t appear to be.
Instead, many of the products have a pretty bad reputation if you look on Amazon and other sites that offer reviews.
Those ratings aren’t encouraging.
The distribution of those ratings isn’t great either, such as in this case, for the last product in the image above.
From this distribution, you can see that there are a lot of people that hate the product along with those that love it.
It’s hard to know precisely why this is happening.
It may be that the negative reviews are real and the positive ones are from consultants. Alternatively, the positive reviews could be from people who convince themselves that the product is working better than it actually is.
Personally, I suspect the reason is that this product works great for some people and horrible for others. After all, skincare is a fairly personal issue and people vary considerably in what they need.
As a consultant for the company, you may be able to help minimize bad experiences by matching up the right product to the right person.
But, it’s still a risk.
Do you want to be promoting products that tend to get scathing reviews from many users?
Those reviews alone may make the products hard to sell and there’s a chance that your customers may also experience issues.
Simply put, it’s not worth it.
The reputation of your products plays a huge role in your potential for success with a MLM. So, if you’re going to try and make money from any MLM company, you need to make sure that the products are going to sell.
Based on the reviews, I suspect that you’d have a lot of trouble selling the items that Rodan and Fields has to offer.
Is Rodan and Fields a Pyramid Scheme?
You’ve probably heard people call Rodan and Fields a pyramid scheme before. I’ve certainly heard the question ‘is Rodan and Fields a pyramid scheme’ quite a few times and people often ask the same thing of other MLM companies too.
With a pyramid scheme, the idea is that you pay the people above you and recruit others. If you were to recruit enough people, then you would make money, in theory anyway.
Pyramid schemes fall apart because they are unsustainable and fraudulent. Only the people at the upper levels of the pyramid ever actually make money, while the rest end up losing it. The underlying issue with this system can be seen in the image below, which uses a branching factor of 6 (meaning, each person aims to recruit 6 others).
Needless to say, schemes like this quickly run out of people to recruit, especially as most people know better than to get alone.
But, is Rodan and Fields a pyramid scheme?
Technically speaking, no, it isn’t.
I talked about the MLM model earlier and visually, there are strong similarities between a MLM and a pyramid scheme. I mean, the image below is one example of how Rodan and Fields describes their model and there is a clear similarity.
But, there are also some differences. Those differences are what makes a MLM legal and a pyramid scheme illegal.
The biggest difference is products. A pyramid scheme is just about the money, where the entire point is to get others to pay their way into the scheme.
In contrast, a MLM relies on products. Members are able to earn money from the sales of those products. Additionally, they earn smaller commissions and bonuses from the sales of other members.
Because of this, income with a MLM doesn’t just come from recruiting others. Instead, it is connected to the sales that you make and also the performance of your team. This creates an emphasis on sales rather than on recruitment.
But, the line between a MLM and a pyramid scheme is a blurred one.
In many cases, MLMs offer products but their emphasis is still strongly on recruiting. Likewise, it is often extremely difficult to be successful unless you recruit a large number of people under you.
With most MLMs, it would be impossible to actually earn a living from sales alone, unless you had an extremely large group of friends with a lot of money to spare.
There has also been an increasing focus on MLMs in recent years, with the Federal Trade Commission trying to ensure that the model is actually fair. One example of this is Herbalife, where a lawsuit was actually filed.
Eventually, it was determined that Herbalife isn’t a pyramid scheme but the debate and controversy around the case makes it clear that many people out there are concerned.
At the end of the day, Rodan and Fields is like Herbalife and many other plans, technically, it’s a MLM, not a pyramid scheme.
Even so, the emphasis on recruitment is strong and the potential to make money from product sales alone is lower than people might like.
Can You Make Money With Rodan and Fields?
MLMs always manage to sounds so great, simply because there is the potential for income. Likewise, within any MLM, you’re going to find some people who have been extremely successful with the company. In many cases, these will be the people who got on board early, but not always.
So, what does this mean for the average person?
Is it possible for you to make money through the company and become one of their success stories?
In theory, sure. But, this doesn’t always happen. For example, according to the company’s most recent disclosure statement, 41.4% if the paid consultants fall within the first rank. They earn an average of $790 per year. That’s not a lot of money, especially when you consider the amount of work that goes into earning it.
The next ranks up are a little better, where people are earning averages of either $3,062 or $4,625 per year. But again, this isn’t a huge amount of money. Certainly, you couldn’t make a living off that income alone.
Collectively, those three ranks make up 88.9% of the people that earn money through Rodan and Fields. So, only around 10% of people who make money with the company earn above that. As the image below shows, as the ranks and average income increases, the percentage of people that make it decreases.
So, it is possible to make money through Rodan and Fields. However, most people won’t.
It’s also important to note that these percentages are only from people who are successful enough to earn money. This means that the odds of actually making money with the company are lower than this table implies.
Finally, the MLM structure is biased against new members. This is because there is such a strong emphasis on recruiting. Realistically, the longer a company has been around, the lower the chances of you successfully recruiting somebody into it.
After all, most people who might be interested in joining Rodan and Fields probably already have.
My Personal Rodan and Fields Review
As an income opportunity, MLMs do work but not for most people. Rodan and Fields is no exception to that rule. The company’s compensation plan alone means that you would have to develop and manage a sizeable team to make money from the company.
Additionally, the reputation of the products suggests that you might end up with some unhappy customers on your hands.
My question is, why go to all that hassle?
Making money from a MLM means that you have to deal with recruitment and directly selling to people, while also managing a team. Yet, there are other ways of making money that are nowhere near as complicated.
The alternative that I recommend is a technique called affiliate marketing.
In many ways, affiliate marketing is a completely different technique than working for a MLM but it is also one that works better. For one thing, affiliate marketing is digital. So, you’re making sales online, rather than in a one-on-one manner. Doing so means that you have many more customers and you don’t have to rely on friends and family for sales.
Affiliate marketing also means that you aren’t dependent on a team or even on a single company. In the long-term, that is a much better strategy and gives you the power to build a business that will last.
Now, affiliate marketing isn’t a get rich quick technique (nor is Rodan and Fields, for that matter). Instead, affiliate marketing is the type of business that you can grow and expand over time.
To get started all you really need is good training and the best place to find that is a site called Wealthy Affiliate.
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