Binary plan

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The Binary plan is an organizational plan used by multi-level marketing (MLM) organizations wherein new organization members are introduced into a Binary Tree structure, or a left and a right subtree.

A typical MLM binary tree structure. The blue individual will receive compensation from the sales of the downline red members.

Normally, one subtree is referred to as a Power Leg while the second subtree is a Profit Leg.

The Power Leg structure has automatic placement of new members, even by members previously enrolled, or ancestors, to the current member. Since any new members must be placed below their enrolling member, they naturally must fall to an available leaf node of the Binary Tree. Order of placement may be any of Preorder, Inorder or Postorder as determined by either the organization or the enrolling member's nearest ancestor.

The Profit Leg of the Binary Tree normally contains those new members who are personally enrolled by the member.

Some members below any node on the tree are automatically placed by a member's ancestor, while other subordinate members are placed at a specific location in the tree by the member himself.

Compensation in a Binary plan is based upon a formula dependent upon a certain value of sales in the Power Leg matching up with a certain value of sales in the Profit Leg.

Often the stated appeal of a binary plan is that your downline or legs grow through the recruiting efforts of those in your upline, your ancestors, in addition to your own efforts and those of members in your downline. In truth this benefit is slight because the new members who are recruited by your ancestors are shared among all the available leaf nodes. For example, your immediate ancestor in the tree only puts half of his new recruits in your downline, on average. Likewise, his ancestor only puts one fourth of his recruits in your downline. Following this argument to the root of the tree, the total approaches just one person recruiting for your downline (1/2 + 1/4 + 1/8 + 1/16 + 1/32 + ... + 1/2n, where n is your tree depth). This is often insignificant in comparison to the number of people required in your downline to make yourself profitable.

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