There Is No 50% Profit
Those of us who have been hanging around Pink Truth for a while know that the idea of 50% profit in Mary Kay is a total lie. If a consultant sells all of her product at full retail, with no discounts and no giveaways, she has a 50% gross profit… out of which all other expenses have to be paid.
There’s not 50% profit, no matter how you slice it. And when you do discounts and promotions, you can eat into any potential profits mightily. Let’s face it, with all the MK ladies out there, it’s hard to sell the products at full retail. So the question becomes whether you’d rather sell nothing or whether you’d rather give discounts and incentives. Here’s one such promotion:
When you do a reorder or even meet someone say… “How do you like to get your cosmetics? Full price, Half off or FREE?”
She will say ‘what do you mean??’ You say… “Well – it is your lucky day – you were supposed to meet me – because when you become my customer you can have all of your cosmetics FREE for the rest of your life!!!!!”
For every purchasing girlfriend you get together for a makeover – you will get $10 of FREE MK! 8 girlfriends who purchase from me at a get together – you get $80 FREE!! So anytime you want cosmetics –just have a get together and you can get yours for free anytime- all year long!!!
Or… Half Off – Take the Look Book to work with you and get 10 orders for me and you get a HALF-OFF shopping spree!!! You can do this as many times as you want to!!!! Or – of course – my favorite – you can just purchase at FULL PRICE!! The choice is yours!!!
I realize that retailers all run sales and special offers that cut into their profits. It’s a gimmick used to get people in the door and get them buying. I’m not opposed to that basic marketing tactic.
Unfortunately, it seems so few sales in Mary Kay can be made without some sort of discount or giveaway. Every time you turn around, your director is telling you to give away a lip gloss, or offer a $10 free certificate, or give away hostess gifts, and do a buy one / get one free, or discount the discontinued products. There are women having going out of business sales and there is Amazon and eBay. Any Mary Kay customer who pays full price is a fool. But the consultants pay the price, and they will never see a 50% profit.
Visit the
“retailers all run sales and special offers that cut into their profits.” Yes, but they have a 200-600% markup as a starting point, not Mary Kay’s paltry 100%. So they can give a 75% off retail and still break even.
(Consultant’s additional thoughts put in brackets.)
“When you do a reorder or even meet someone say… “How do you like to get your cosmetics? Full price, Half off or FREE………[All you have to do is get your friends to overpay for mediocre cosmetics they don’t really want, and you’ll be rewarded directly from their pockets. We don’t even have to tell them. Does that sound enticing to you?]”
“[So here’s how we take advantage of your girlfriends at home], For every purchasing girlfriend you get together for a makeover – you will get $10 of FREE MK! 8 girlfriends who purchase from me at a get together – you get $80 FREE!! So anytime you want cosmetics –just have a get together and you can get yours for free anytime- all year long!!!”
“[We can work the scheme at your work too.] Or… Half Off – Take the Look Book to work with you and get 10 orders for me and you get a HALF-OFF shopping spree!!! You can do this as many times as you want to!!!!”
“Or – of course – my favorite – you can just purchase at FULL PRICE!! The choice is yours!!!”—
(My answer to that.) Okay, Karen! Do you really think women are that stupid? If I thought my FRIENDS and co-workers wanted MK cosmetics, I’d just sign up myself and easily order everything at half off. I can do that, ya know! If I’m going to be gathering my friends for parties, we could easily reach the $225 quarterly minimum. I’ll be passing the savings onto my FRIENDS or co-workers, so we can all benefit. Friends don’t try to make a buck off each other, Karen.
Oh and I won’t be signing up under you; that’s a “choice” I’ll be making. Yeah, but I won’t be buying the old-lady MKrap anyway. Plus, everyone I know shops at Sephora and Ulta.
What kind of friend would do what Consultant Karen is proposing? Host a party and expect a friend to buy overpriced junk so you can get free stuff? Seriously, who does that? I’ll bet they even try to take advantage of family members too. Gross.
Char, I agree with the substance of your post. This is more of a general statement.
I’m respectfully asking people to quit using “Karen” as an insult. Like b!tch, bimbo, harpy, the c-word etc. it equates “bad stuff” with “female” and that has been going on far too long. It’s a kind of behavior that’s not limited to women and real-life women named Karen hate it. We can get creative with our insults without having to resort to gendered terms (or other traits that are built in – age, race, sexual orientation, nationality, etc.)
Yes, I do object to using male parts as insults as well.
Yes, I do make some sort of comment in every online forum I frequent, as well as in real life.
I can’t disagree with you. We all know the stereotype of a K**en, but I didn’t equate it to those other nastier words. Still, I’ll own it and accept your points.
How should we refer to this type of person? Not sarcasm.
I 100% agree about the people actually named Karen, and I should’ve considered it. It makes me think of all the poor Richard’s out there nicknamed Dick. I wonder how that got started?
I appreciate valid corrections and input. To the nice people named Karen, I apologize. I will be more mindful going forward.
Meh, I don’t have a problem with people using the name Karen as an insult. I’m sure it’s annoying to people named Karen. But there are words that are going to be used as insults. That’s just how it is. I don’t care if an insulting word is related to a gender or not, personally. So yeah, I’ll probably keep saying “that was a dick move!!!” to both men and women. Sorry. 🙂
I have a friend names Dick. He doesn’t mind if I use the phrase “he’s such a dick” in front of him. Context is everything.
My 95-year-old Uncle Richard has gone by Dick since circa 1930 (way before the term became derogatory, I’d think) and I have never been able to call him that, even though the rest of the family including his wife of over 70 years exclusively call him Dick. But for me it’s always uncle Richard.
I have a friend named Karen and she has embraced the slang usage of it, threatening to “go all Karen on their asses” but I should add that she has a sharp, cutting sense of humor so it’s just fun for her. She even joked about getting the “let me talk to your manager” haircut. But I totally understand why most others named Karen would be offended.
Richard-> Rich ->Richie-> Rick -> Ricky -> Dick -> Dicky -> Dickon.
All Mediaeval and later nicknames for Richard. Richard III was known to his intimates as Dickon.
In Cockney rhyming slang Richard or sometimes George III is a term used in lieu ( or loo) for turd or poop. Calling some-one a Richard/ George is the equivalent of saying that they are a POS.
In my late teens I had a boss named Dick, but I just could not call him that. I still feel awkward about it. So silly. Like Nay said, “Context is everything.”
That’s great about your friend. And, OMG the haircut option. The “Karen” Wikipedia page even mentions it. I also looked for replacement terms, but I could not find a word that seemed to work. Still waiting for suggestions.
For fun: Who here knows the Madea Goes to Jail parking lot scene? That’s all I could think about yesterday after this conversation. I pulled up a clip, and the woman is wearing a pink outfit! Madea is a trip.
::shrug:: I find it’s more fun to launch into the scatalogical and creatively obscene and leave gender out of it. (I’d throw in a gratuitous insult here, but I don’t want to get banned :P)
French Quebec swearing. https://www.youtube.com/watch?v=KUGW0jszPzo
Back to Econ 101. There is a very delicate balance between supply and demand that a manufacturer must decipher to maximize profit. If you supply too little, you risk missing out on volume revenue. If you supply too much, margins trend towards negative. Hitting that sweet spot takes experienced, professional marketing.
The retail side of Mary Kay is significantly over-supplied, which pushes margins toward negative (which means average retail prices trend down toward wholesale or lower). Mary Kay Corporate does not consider retail demand. Instead, they look at consultant demand. Their entire pricing/compensation model is built around orders placed by consultants, not retail sales.
So Mary Kay must drum up demand to compensate for the gross over-supply they are trying to achieve. Since retail demand is simply not there, they need to create demand within the distribution network itself. That’s where the elusive “opportunity” comes in. Without it, there is simply no way you’ll convince so many people to order way more product than they can ever use or sell.
Some folks call MLM a “closed system” for good reason. If you research the source of the cash flow in any MLM, you will quickly find very little comes from the “outside”. MLMs like Mary Kary are deliberately designed to work this way. Retail purchases are simply not part of the MKC business plan. Consultant orders are everything.
Imagine hauling one of your friends into a retail store — say, Home Depot — and coercing them into paying double price for something so you can benefit…
“Hey, buy this hammer for $40?”
“I don’t really need a hammer, but…forty bucks? That seems like a lot for that hammer.”
“Yeah, but if you buy it for $40, I’ll get a $10 coupon from the store manager. Don’t you want to do that for me? I thought you were my friend.”
(Looking at phone) “The Home Depot site shows $19.95 for this hammer. How come the price tag is covered up on this thing?”
“Don’t peel that off! If I tell you it’s worth $40, then you should trust me. Are you my friend, or not?”
This is what this Mary Kay Director is proposing to the would-be recruit. Just replace “Home Depot site” with “EBay” as the source of the market value, and it’s the same proposal: “Get your friends to overpay for stuff they don’t need, and I’ll toss you a pittance.”
MLMs everywhere make the same pitch: start out selling to your friends and family. True friends don’t take advantage of one another like that; family members shouldn’t either.
Reminds me a bit of a former IBC featured either here or on the PT boards…she was trying to sell her leftover inventory online and she said that she is “willing” to sell the lot for a specific price, having chosen that price based on what she still owes on her credit card that she used to buy it to begin with. Not priced based on what someone would be willing to pay, not based on prices offered for the same products on EBay or whatever, but instead based on what she needs to get for it. And that demonstrates how very little she understands about sales in general. I don’t recall the specifics, but she had the lot priced over $1000. Oh, and was unwilling to break it up. Take all her expired, unsaleable product and take it for the amount of money she needs for it.
I love that an old man in his 80’s or 90’s is on PT
See Shark Tank Lyoness…https://www.bing.com/videos/search?q=shark+tank+lyoness&&view=detail&mid=2EC82FD7EA6DACBF1A232EC82FD7EA6DACBF1A23&&FORM=VRDGAR&ru=%2Fvideos%2Fsearch%3Fq%3Dshark%2Btank%2Blyoness%26FORM%3DHDRSC3
Better link..https://www.youtube.com/watch?v=7ZH_HaqZ-8s&t=51s
Well, that was both hilarious and pathetic. Consider these two snippets:
Question: “How do you get a return on your investment?”
Answer: “By signing up 4 under you!”
(Practically in the next breath): “It’s not a pyramid scheme!”
Oh, yes it most certainly IS a pyramid scheme.
If anyone has time to waste reading lame arguments from TrUe BeLiEvErS, check out the comments section here:
https://behindmlm.com/companies/lyoness-us-review-cashback-and-investment-returns/
It’s a review of Lyoness from back in 2012, and site-owner “Oz” came to the same conclusion the Sharks did, based solely on the business model: pyramid/Ponzi scheme.
“ If anyone has time to waste reading lame arguments from TrUe BeLiEvErS”
Ooh ME! I have lots of time for that! I’ve bookmarked the link and look forward reading it with my bunny slippers on, under a blankie, with true crime shows on in the background.
While that might sound like /s, it’s not…lol, this is how I spend much of my free time! Thanks for the link and I’m looking forward to it NayMKWay!
According to MLMhuns I’m supposed to scroll my social media while in the bathroom, I just don’t spend that amount of time in there. Except when I had gastro when I wasn’t in the mood to browse on my phone.
True friends and family should also not buy any pity purchases which only further delude the newbie consultant and extend the pain and financial losses. Love them but be firm that you will not contribute to a mlm and set boundaries.
The best thing my sister in law did for her friends was to keep them from me after my husband died. I lack a certain degree of tact. She’s happy to buy a small item from them with a grimace but she knows I don’t have the patience to not beat around the bush and play nice.
That’s definitely something I’ve learned, being in actual retail business ownership now. 50% is pathetic. Shark Tank would laugh in Mary Kay’s face.
If you include unsold consultant inventory across the board (which has a negative margin), you will find the true average retail margin for MLMs like Mary Kay is always negative.
50% is just a “what if” number they throw around. If you order $1000 (wholesale) inventory and sell 50% of it at 50% margin, your average margin remains zero. Most consultants dont sell even 50% of what they order, and the average margin for what they DO sell is nowhere near 50%.
The consultant supply so greatly exceeds retail demand that it can never be a profitable retail business.
I came across a MK sales director advertising bridal makeup. She charges $200 for the bride. She has a fee schedule for others in the bridal party, including children. Travel fees may apply.
I wonder if she makes more money selling her services than selling the products.