Online Opportunity

After my review of Bigorilla web hosting, I started thinking about how their commission structure was designed to make the founders money, not the affiliates.

So it makes sense to create your own web hosting MLM, so that you are the founder. And here’s how.

First step is to secure the web hosting for a large number of affiliates. Go to Hostland.com and click on the “Reseller Hosting” link. You can get 5,000 websites for $50 a month. If you want to be generous and offer MySQL databases to your affiliates, that’s an extra $50 a month. We’ll assume we’re going all out and paying $100 per month.

We’ll take one of those 5,000 sites and setup our main MLM page. We’ll also install some scripts that we can offer to our affilites, such as URL rotators, autoresponders, etc. We can get those scripts for free, and modify them as needed (throughout this, I’m assuming you have a partner proficient in PHP coding).

So we have our product we’re going to charge $19.95 a month for. Before we can actually sign up affiliates, we need some software for keeping track of the downlines. We can get this for free, or pay for a more professional version. We’ll splurge and pay $69 a month for MLM Software Pro, and our partner will integrate it with Hostland’s billing software.

Our total cost per month is $169, plus our time.

Let’s assume we have a commission structure like Bigorilla. 15 levels deep, making $1 on your first level, $0.75 on your second, and so on. The first people we recruit pay $19.95 a month, but we get all of that. If we use a 2x force matrix, we’d have two people on the first level, for $39.90. If we can fill out the second level, that’s 4 more people at $18.95 (we give $1 to their sponsors). Our grand total is now $115.70. We need just 3 more people at the third level to break even.

Even when we get down 15 levels, we’re still making $10 per person. By the time we get to 5,000 members, we’re making more than $50,000 a month, and can easily afford to invest in a dedicated server or two to raise the quality of our web hosting. Granted, I doubt we’d get to 5,000 members, but anything past 9 is pure profit.

I’m not entirely serious about this, but looking at the numbers from the founder’s point of view helps to illustrate why the best MLM programs give generous commissions to their members. There’s simply a lot of money to be made by running an MLM opportunity, and it doesn’t make sense to not give your members as much of it as possible. Skimp on them and they’ll leave, and you’ll watch your nice large matrix evaporate from the bottom up.

Bigorilla provides web hosting and Internet marketing tools (URL rotators, shortened URL service, capture pages and autoresponders). Priced at $19.95 a month, they’re not out of line with what other services charge for the same mix of tools.

Bigorilla is also an MLM opportunity, and that’s what I’ll review here.

They use a 2×15 forced matrix (each person has 2 people on their first level, you get paid commissions down to 15 levels). As a forced matrix, you will get people placed under you from the efforts of the people above you. This is attractive to many people who aren’t good at recruiting, and in Big Gorilla you don’t need to have enrolled anyone to earn commissions.

While a 2×15 matrix looks good in the earnings chart (over $30,000 a month), the difficulty of filling it completely cannot be overstated. That’s over 20,000 people on the 15th level who are not earning a commission right away. The two components needed to keep people involved in an MLM program when they aren’t earning commissions are:

1. The prospect of breaking even with relatively few referrals
2. Providing a service they’re willing to pay for anyway

From a marketing perspective, there are a lot of things Bigorilla is doing well. They offer a 21 day free trial to get you into the system. What they don’t emphasize is that as a 21 day free trial member, you cannot earn commissions on people under you. Anytime someone signs up after you they send you an email telling you that they signed up, and reminding you that you need to upgrade to lock in your position in the matrix.

This is an effective way of building tension, and they’ve combined that with a trial upgrade offer of 25 cents a day for some relatively short period of time (5 or 7 days, I think). Since you can lock in your position for only 25 cents a day, you lose little by upgrading and seeing if you get more people under you before you have to start paying the $19.95 a month.

Given a 15 level deep commission structure, there simply isn’t that much commission to go around at each level. You get $1 for people on your first level, then $0.75 for your second level, and dropping down to $0.25 on level 9. In a nice twist, they start to go back up at that point, getting back up to $1 at the bottom level. By my calculations, they’ve only used about half of a member’s monthly fees in commissions, leaving $10 for Big Gorilla.

While a 15 level deep commission structure sounds like good earning potential, more important for the success of an MLM company is how quickly a single person can break even on their membership fee. The best programs let you break even after 2 or 3 referrals. In Big Gorilla, you have to have about 70 people under you to break even.

Bigorilla does let you earn commissions without having enrolled anyone personally. What they don’t mention until you’re a member is that the commission levels I described above are only for people who do have at least one personal referral. With no personal referrals, you get a flat 10 cents per person on any level. At that rate you need about 200 people under you to break even.

Bigorilla’s marketing is terrific, and the use of emails about people signing up for you combined with the 25 cents a day lock in rate is very effective. But unless you need the Internet marketing tools they provide, and are willing to pay full price for them without any expectation of breaking even on MLM referrals, I’d give Bigorilla a pass.

Note that if you do sign up for Bigorilla, and later want to cancel, you must go to PayPal in order to cancel your monthly payment subscription. Bigorilla will not refund any monies paid to them by your failure to cancel your subscription at PayPal.