Binary plan

A binary plan is an organizational structure used in multi-level marketing (MLM) organizations. In this structure, new members are introduced into a Binary Tree where each “node” or new member of the organization has a left and right sub-tree. Considered one of the simplest of the popular marketing compensation plans, binary plans began to be introduced by MLM companies in the late 1980s and became one of the four most commonly used organizational structures by the early 2000s.

In each sub-tree of a binary plan, there is an outside leg, also known as a power leg, and an inside leg, known as a profit leg. When new distributors are recruited, they are always placed underneath their recruiter, typically in the next available node in the power leg, even if the recruiter does not have any leaf nodes left. This contrasts with the profit leg which is typically filled with members who have been directly sponsored or enrolled by their immediate ancestor.

Another element of a binary plan is that it makes each member only responsible for recruiting and sponsoring two other people to join the plan, which can potentially lead to a rapid expansion of the plan in a short amount of time, with a potentially unlimited number of members. However, if a recruiter successfully recruits more than two people, the new addition will be added to next available node in the power leg. This allows for the profits from gaining a new member to be shared between all ancestors in the power leg, regardless of who recruited them, which is a process known as spillover. This helps foster a team-like dynamic within the binary plan as it encourages collaboration between different members as they all mutually benefit from adding new members.

Due to the nature of a binary tree being a recursive data structure, a binary plan allows for multiple business centers for the MLM to be created, which cannot be done in the other three commonly used network marketing compensation plans, which allows for a more international group of people to potentially become members of the plan.

Every binary plan has two distinct sub-trees - a left sub-tree and a right sub-tree. Whichever of these sub-trees makes the least amount of money is called the “pay leg” due to a concept known as balanced volume which is typically used in MLM Binary Compensation Plans. This is due to the fact that the members of both sub-trees will be paid a percentage of the pay leg’s growth regardless of how much growth that person is responsible for or which tree that person is actually in. This leaves the difference between the more profitable and the “pay leg” of the binary plan to be left over and not be paid out, in a process known as flushing. Due to this, recruiters tend to decide to introduce new distributors into their “pay legs” to try to minimize the difference between the more profitable and the “pay leg”. This process is called "balancing the legs" and is difficult to do as one persons power leg will benefit from spillover from child members while their profit leg will not. This makes it very important to try to maximize the profit from the profit leg, which is done solely by the individual. To fix this, some companies put regulations to try to weaken "power legs" such as requiring distributors to place one member into both of their legs before being eligible to receive commission.

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