Binary Compensation Plan
An MLM pay structure in which each distributor has exactly two 'legs' in their downline, with earnings calculated on the weaker leg's volume, creating structural incentives to recruit rather than sell.
Also known as: binary MLM plan, two-leg pay plan, MLM binary structure
Last reviewed: 10 June 2026
A binary plan in multi-level marketing limits each distributor to two sponsored frontline positions — a left leg and a right leg. Volume accumulates in each leg as recruits join and make purchases. Commissions are typically paid as a percentage of the weaker leg's volume, which structurally pressures participants to balance their two legs by constantly recruiting.
Because the plan pays on recruitment-driven purchase volume rather than genuine retail sales, binary plans are frequently cited by regulators as indicative of a recruitment-focused business model. When most income derives from new recruit sign-up purchases rather than end-consumer sales, the plan functions as a pyramid scheme regardless of product labelling.
Binary plans also include a 'flush' mechanism: volume from the stronger leg that exceeds the weaker leg is discarded rather than rolled over, ensuring most participants lose accumulated volume and must continue recruiting to maintain any earnings.