Considering the recurring costs of a home business is crucial when it comes to choosing the one that’s right for you. Because this is where several decisions are made by you… and by the FTC.
Ok, this is where the meat & potatoes are when it comes to home businesses. Because this is usually where you begin to figure out how people are getting paid.
When there’s a high buy-in, that’s usually the source from which others get paid. Think Ponzi-scheme, although it doesn’t have to be a Ponzi-scheme. Trading cripto-currency is an example here. You pay more up front, but it’s for an investment in another form of currency, which is supposed to pay you back in the long run. It may or may not include a recurring investment or monthly fees (much like a bank charges you a monthly maintenance fee).
Even without a high buy-in, any monthly “fees” should be fully investigated:
- Are you paying monthly for a website? Investigate how much a basic commerce or blog site costs, including the domain & hosting. Again, is your cost reasonable for this service?
- Why would a company need to charge you a monthly fee to market their website? They should be recovering any and all costs of their website from the sale of goods or services.
- What are you getting in exchange for these fees?
- How much volume (sale of products and/or services) do you need to maintain to off-set this cost every month? (A statistic of which you need to be aware is that, in most home businesses that involve sales of any sort, the average sale per sales rep is only 2 – forever – before the rep quits.)
Auto-ships is where you really have to do some evaluation. If you’re expected to keep making regular purchases, consider:
- Is it reasonable that I should make these regular purchases?
- Would I WANT to make these regular (repeat) purchases?
- Is the price of these repeat purchases reasonable (for the goods or services I’m receiving)? Compare the cost AND value of the goods & services to the cost of the same from any other reasonable source. Are you getting reasonable value for the cost?
- How easy is it to cancel the auto-ship?
- Do I trust this person or this company with my credit card info, which they’ll use for these repeat purchases?
Only you can answer those questions for yourself.
Remember, the FTC wants to make sure that a company isn’t just making money from, nor paying it’s representatives from, enrollment fees. They consider that a Ponzi scam. The company and its reps must be paid by the sale of products and/or services, even if they’re digital (online). So, remember: profits from the sale of products and/or services is the only legitimate means to be paid, according to the FTC.