Nu Skin’s 2021 Income Disclosure Statement review demonstrates how Nu Skin, like all multi-level marketing companies or network marketing companies, only benefits those in the top tiers. The majority of people make virtually no money, and likely lose money trying to grow a business.
As a reminder, I have an MBA, I am a Certified Public Accountant (CPA), and have almost 15 years working in finance and accounting. These are my opinions based on researched facts and my understanding of those facts. However, this is not legal, financial, or tax advice. If you need legal, financial, or tax advice, you should reach out to a professional for a 1:1 chat! All opinions are my own.
To skip right to the PDF of the Income Disclosure – Click Here.
What is Nu Skin?
Nu Skin is a publically traded personal care and supplement company. Nu Skin operates as a multi-level marketing (MLM) or network marketing company. According to their 2021 Annual Statement, they had $2.7 Billion in revenue.
This is a large company that sells in many different countries across the world.
Nu Skin’s 2021 Income Disclosure Takeaways
I’m starting with the takeaways up front. If you want to skip to the full PDF of the Income Disclosure – click here. Here are some key statistics from Nu Skin’s 2021 Income Disclosure Statement:
- Nu Skin’s Compensation plan is long, detailed, and complicated
- Almost 80% of all Nu Skin Partners didn’t make any sales commissions in 2021
- Based on their income disclosure statement, the average affiliate earned less than $2,500 per year
- This is a public company, with Shareholders – this business model is chosen to make the Shareholders the most money – not the sales representatives
- The company makes over $2.7 Billion, coupled with the average affiliate earning $2,500 per year was most shocking to me
Nu Skin Compensation Plan
Before fully understanding Nu Skin’s income disclosure statement we have to take a look at their compensation plan. The compensation plan (or Sales Performance Plan) is complicated. It’s over 30 pages and has conditions on how you qualify and then maintain, hold or lose brand representative status based on your sales each month. Just like any multi-level marketing or network marketing company, there are many tiers:
Brand Partners (lowest tiers):
- Brand Representative
- Brand Partner (Gold Partner)
- Senior Brand Partner (Lapis Partner)
- Executive Brand Partner (Ruby Partner)
Brand Directors (highest tiers) start once you hit 4 generations (levels) on your team:
- Brand Director (Emerald Director)
- Senior Brand Director (Diamond Director)
- Executive Brand Director (Blue Diamond Director)
- Presidential Director (Team Elite)
An affiliate is a tier-below Brand Representative. To qualify as a Brand Partner you have to complete 12 Building Blocks (4 need to be sharing blocks) during the six-month qualification period. The Building Blocks are how Nu Skin tracks Sales Volume. A sharing block involves only sales volume from customers, it does not include your personal sales. This means, to be a qualified brand representative, you must be actively selling their products to customers.
Nu Skin 2021 Income Disclosure Statement & Key Statistics
The Nu Skin 2021 Income Disclosure Statement – which they call the Brand Affiliate Sales Compensation Summary – reveals no surprises. It is also confusing to read, which is no surprise to me. They seem to interchange Brand Affiliates and Brand Representatives in the Income Disclosure Statement. The full PDF is below. The majority of the Brand Affiliates and Brand Representatives make very little in monthly revenue, while only the top tiers make a living wage. Let’s talk about some Key Statistics:
- The averages sales compensation paid to Active Brand Affiliates was $207 a month, about $2,500 a year
- The top four tiers on the income disclosure (Blue Diamond Director, Diamond Director, Emerald Director, and Ruby Partner) are the only tiers that made enough revenue that it may be worth the effort.
- However, they represent less than 1% of Active Brand Affiliates each month
- There is a huge jump in monthly revenue in the top two tiers from Diamond Director ($9,670) to Blue Diamond Director ($39,066)
- The top tier from the compensation plan Presidential Director isn’t even included in the income disclosure statement
- On average, only 21.84% of Active Brand Affiliates earn a sales compensation payment
Why You Should be Skeptical of Network Marketing/MLMs
Network marketing also known as multi-level marketing (MLM) is something you should have a healthy skepticism of (and in my opinion avoid). Let’s talk about some of those things:
The majority of people who get involved with MLMs lose money.
This has been proven time and time again by reviewing income disclosure statements and this study that was published by the FTC.
This study is a little dated, however, I have reviewed many Income Disclosure Statements and find that the results are still valid. See all the Income Disclosure Statements I’ve reviewed here.
Focus on recruiting those already struggling financially.
Oftentimes, when people are recruiting others on social media, it starts with a relatable story about how that mother was struggling to help support herself or her children. Therefore recruiting someone who is unlikely to have money to spare for a “business opportunity” and will likely lose money.
Uplines Make Money Off Downlines Losses
The way multi-level marketing and network marketing businesses are structured is that those in the upline make money off the sales of those in the downline. Oftentimes, MLMs require a certain amount of personal volume (PV) to stay active in the company. This results in consultants spending money to buy products to remain active. This results in them losing more money while their uplines earn commissions off those “sales”
Lack of Transparency In Where Sales Come From
Currently, MLMs are not required to produce any reporting that identifies how much of their sales come from customers or from those involved with the “business”. This makes it very difficult to establish where the line falls between MLMs and Pyramid Schemes
The FTC warns that MLMs and Pyramid Schemes can look very similar.
The FTC has an entire article (click here to read) on its website that has a lot of great resources, including questions to ask someone who is looking to recruit you.
Many network marketers will argue their MLM isn’t a pyramid scheme because pyramid schemes are illegal. However, illegal things happen every day until people are caught. I would not give this any merit.
Final Thoughts on Nu Skin’s 2021 Income Disclosure
It is true that some people who go into network marketing can be very successful. However, by reviewing Nu Skin’s 2021 Income Disclosure Statement and many others, it is clear this percentage is very small. Those that are making money are earning commissions off those in their downline spending money trying to make a business work. This seems very unethical to me, and it is not a business model I would not want to be involved.
Nu Skin had over $2.7 Billion in sales, yet the average salesperson working for them was paid less than $2500 per year.