Free lotteries - are they worth it?

Over the last year a slew of free lottery sites have cropped up.  We've been trying them for almost a year, so now's a good time to analyse the results.

The business model is fairly simple.  Your entry to the lottery is based on some personal datum, like post code, date of birth or phone number.  Entry is free and there’s a draw every day, all you have to do is go on to their site and check the results every day.

There is advertising on the site and that pays for the prizes.

The big question is:  Are they worth doing?

The £70 or winnings sat in our bank account suggests yes.  A more thorough look at effort and reward says maybe not.

On the surface, it looks like a no-brainer.  It only takes a couple of minutes and you could win a nice lump of cash, in some cases hundreds of pounds.

But those couples of minutes add up.  We’ve been using six of these sites for eleven months.  That’s 330 days at 6 minutes (allowing for 1 minute per site) a day, times 2 people.  3,960 minutes or around 66 hours.  So the £70 we’ve won over all came at a rate of £1.06/hour.

This is a slightly unfair statistic, as all of our £70 has come from one site, so discounting the others, that one has a pay rate of £6.36/hour.  Almost minimum wage.  Add in the excitement of winning and that’s probably worth the effort.  Or it was, before they reduced the pay rate by 60%

Luckyphone

This is the one we’ve had the money from.  The main reason that this site pays out is that there’s a slight difference in format.  Where the others are all-or-nothing jackpot only, Luckyphone allows you to build up smaller prizes and cash out at £10.

I’ve loved this format from the start and it’s always been the one free lottery I would have recommended to people.

Your entry is based on the last nine digits of your phone number and you can have multiple entries if you have more than one phone number.  The main daily draw picks one person who receives £20 (originally £10), then you can have smaller prizes for matching 6, 7, 8 or 9 of their numbers.

It was nice.  A couple of times a week you’d log in and see you’ve won 25p or 50p.  It’s small amounts, but a little bit of free money is a great way to start the day.

Up to 4 May 2016, we were averaging 25.8p per day between us.  It was never going to make us rich, but it was a nice little bonus.  A little bit of excitement every day and competition to see who could get to £10 first.

On 5 May 2016, the format changed.  Jackpots were doubled, a new “mega draw” was introduced with a one in a billion chance of winning £1,000 and the small prize structure was changed.

The rewards for matching 7, 8 or 9 numbers was reduced, matching 6 now gets nothing but new prizes for matching 0, 1 or 2 were introduced.  Maybe that will balance out, maybe not.

Since that change, our average is 9.8p per day. 61.8% lower than previous.

We’re only a month into the new regime, but so far it’s pretty damning.  If it continues like this, it’ll be bye-bye luckyphone.

It’ll be a shame because it’s been a great site.  Excellent service and very prompt payment but if the bottom line doesn’t add up it has to go.

The others

Well, we’ve had nothing from the others.  They are all jackpot-or-nothing, so maybe that’s just the odds slowing things down.

That being said, with over 10 hours sunk into each site so far, even winning the bigger jackpots will struggle to bring up a decent average.

Maybe it’s just luck though, maybe the experience of two people over eleven months is too small a sample to really tell, so I’m going to ask you to help improve my stats.

Please comment with your own figures and I’ll edit this post with overall predicted earnings on each site.  I’ll need the following info:

·         Name of site
·         Number of days you’ve been using it
·         Total amount won

My conclusion so far is that it’s just a long-shot gamble like any other lottery, but at least you don’t have to pay for this one.  If you enjoy the anticipation then go for it, it doesn’t cost anything after all.  If you’ve got a more mercenary approach like me, maybe don’t bother.

If you do want to give them a go, here are some links:

Luckyphone

Selfie lottery

Free postcode lottery

Ashleigh money saver

DoB lotto

Free birthdate lottery

Number plate lotto

Edit: On 14 June 2016, Luckyphone changed the reward structure again, once more reducing the value of various wins.  In the 39 days since, we have averaged 1.74p per day between us.  The total reward has been reduced by 97% over the two changes.

It's going to take each of us about 3 years at this rate to build up £10 with withdraw.

Thanks for he good times Luckyphone, but I'll be leaving now.

Neobux experiment: part 8 - Another day another dollar (almost)

Status: Profitable

Deposited: $10

Current Balance: $25.77

Profit/Loss: $15.77 profit

Assets: 156 referrals, Golden membership

Turnover/day: $0.954

Profit/day (worst/mid/best): -$0.02/$0.04/$0.25

Income/day: $0

Since the last update, I've managed to grow my account by another 23 referrals.

I haven't been finding much time to do the extra stuff to boost my funds, so I've just been ticking along with the minimum number of personal clicks and seeing what my referrals do.

Over all, they're paying for themselves nicely and allowing me a little bit of growth. If I'd been doing mini jobs or clicking more and hitting my ad prizes, I'd be growing a lot faster, but for now I'm happy that they're self sustaining and I'm getting a little trickle of profit.

It's been really noticeable how fast the money is flowing in now. The few cents a day I was getting six months ago was barely registering, but now I'm getting about a dollar a day coming in, I can really see it mounting up.

It's a long-term project, but I'm definitely getting there.

If you can't beat 'em...

In my quest to make a little extra money, I read a lot of blogs, forums (fora?), articles and adverts.  I tend to read through it all because who knows, maybe there’s some little grain of truth in there and I’ll actually be able to make some money.

There are some phrases however, that really set the alarm bells ringing.  (Actually, Admiral Ackbar pops into my head shouting “IT’S A TRAP”, but essentially the same thing.)

If I see someone shouting that something is “FREE”, in capital letters, over and over again, I start to wonder how much it’s going to cost me.  When something is described as a “secret”, I have to wonder why you’re offering to share it with strangers on the internet.

Well, if you can’t beat ‘em, join ‘em.

Here are some of the fantastic secret business opportunities that will allow you to make £££s from home in just a few minutes a day with no experience for FREE* with no selling** involved.  Places are limited, so sign up immediately.  No time to think or Google anything, just rush straight in.

*Except for the fees

*You won’t have to sell anything, buy you may need to convince people to buy stuff.

Amazing opportunity 1: Money for Old Rope

I bought this piece of old rope last week for £20.  I’m now offering to sell it to you for £100.  That’s a 400% profit in just ONE WEEK!

All you need to do is wait a week, then find someone to buy it from you for £500 and you’ll have made 400% profit in ONE WEEK too.  It’s really that simple.

Then, if you’re smart, you’ll come back to me and buy another 5 pieces of old rope and repeat the process, for a total profit of £2,400 in just TWO WEEKS.

Supply is limited, so hurry!

Amazing opportunity 2: Self-assembly air guitars

This is your opportunity to get in on the ground floor of my fantastic new business enterprise.  Work from home as much or as little as you like and earn £££s in your spare time.

Have you ever noticed how cool people look when they’re playing the air guitar?  Would you like to be cool?  Well now you can, with your very own air guitar!

For just £50 I’ll send you a flat packed, self-assembly air guitar kit.  Once assembled, you can sell it on for £100 with no upline commission to pay!

Alternatively, you can keep it for yourself and use it as the basis for your own fantastic business.

So how does it work?  Well, once your friends see how cool you look, they’ll want to be cool too and you can help with that.  As a licenced air guitar distributor, you can supply them with all the air guitars they’ll need and you’ll receive a 10% commission on every sale!

It gets better.  If you recruit your friends as distributors, you can also receive a bonus 10% of everything they earn, including bonuses from people they recruited and so on ad nauseum.

Don’t have any friends?  Don’t worry, you soon will now that you’re a cool air guitarist!

You get to be cool and make money.  What have you got to lose?

**As a bonus for the first 20 applicants, you’ll receive free instructions on how to play the dirty trombone!**

Amazing opportunity 3:  Become a minister of the Church of the Almighty Dollar

Many people already worship the Almighty Dollar, but none of it is organised and worse yet, nobody is cashing in on all that worship, which is clearly an affront the the Almighty Dollar itself!

There is so much in the world that is sinful and much of that stuff is fun, which is why so many people sin.  Fortunately, the Dollar is very forgiving - for a price.

Did you give in to the temptation of chocolate? That’s a sin.

The good news is that the Dollar will forgive you for the low, low price of just £2 (paid to a licensed minister).

Now this pay-as-you-go redemption could prove expensive, but fear not!  The Dollar is not only compassionate, but also efficient.  For the bargain price for just £9.99 a month, you will be pre-forgiven for all of your chocolate-based sinning.  Then you can enjoy chocolate guilt-free every day of the week!

Chocolate is just one example.  So many sins are forgiveable for the right price.

As a special introductory offer, I'm looking to ordain 20 new ministers.

After you receive your training, you’ll be able to sell forgiveness too!

Book your initial training now for just £199 and we’ll throw in certification on any two sins of your choice for FREE (usual price £49.99 per sin)!

The world is so full of sin, your earnings are limitless!

So, there are the three greatest deals you’ll ever see.  Who’s in?

Neobux Experiment: Part 7 - Turnover, profit and income

Status: Profitable

Deposited: $10

Current Balance: $52.99

Profit/Loss: $42.99 profit

Assets: 123 referrals, Golden membership

Since I upgraded to golden membership I’ve had a couple of good weeks on the minijobs.  This has given me enough cash to rent 50 more referrals, putting me into what should be the profitable phase.

So now it’s time to take a look at whether it is actually profitable.  I'm going to look at the first five full days after I got my last bundle of new referrals (so I’m comparing like with like) and see how the numbers stack up.  

I’ll be looking at three key performance indicators: Turnover, profit and income.  These will form part of the heading in future posts.

I’m only looking at the money generated by my rented referrals, so I can see whether this aspect is profitable.  (It’s fairly obvious that personal clicks and mini jobs are 100% profit)

Turnover

Turnover is simply how much money is coming in each day.  I get one cent per click, so this is fairly easy to calculate.

Total income over 5 days: $4.09

Average daily income: $0.818

So my balance is growing by a little over 80 cents a day, which is nice.  This doesn’t mean I have 80 cents a day in my pocket though, some needs to be held back to cover costs.

Profit

Profit is the key point of doing all this.  It’s a measure of how much better off I am each day and is calculated as turnover minus costs.

Costs are variable and based on assumptions about the price of extending my referrals and the cost of membership.  I’m going to look at three scenarios: Best case, worst case and a middle path.

The worst case is that I pay full price for my golden membership ($90) and never extend on a promotion, so I pay the full $1.12 for 240 days.

In this scenario my daily cost is $90/365 + $1.12*no of refs/240 = 82.1 c/day

In the worst case scenario, I’m losing a quarter of a cent a day, so I still need a few more refs to spread the cost of that golden membership.

The best case is that I get free golden membership (from adprize or points) and extend all my referrals on promotion days at $1.09 for 240 days.

In this scenario my daily cost is $0/365 + $1.09*no of refs/240 = 55.9 c/day

This means my profit is 26 cents a day.

The middle path assumes I get my golden membership on a promotion for $75 and extend some referrals on promotion days, so I average $1.11 for a 240 day extension.

In this scenario my daily cost is $75/365 + $1.11*no of refs/240 = 77.4 c/day

This gives me a little over 4 cents a day profit.

Realistically, I’m probably going to hit somewhere between the middle path and best-case.  I’ll always take as much advantage of promotions as I can and I ought occasionally to get a free gold membership.

So there it is, actual profit being made.  Not just theory any more, more coming in than going out.

Income

The final stage is income.  How much of this money is finding its way into my hands?

None.

Right now, I’m reinvesting all my profit, so that the profit can grow.  I have no intention of taking income for quite some time.  In principle, I won’t take anything until I’m renting as many new referrals as often as I’m allowed, then I’ll take whatever remains as income.  In practice, I might lose my bottle and take a few quid here and there before that point.  Only time will tell.

In summary:

Turnover/day: $0.818

Profit/day (worst/mid/best): -$0.003/$0.04/$0.26

Income/day: $0

Tesco Orchard

I have been a member of the Tesco Orchard Panel for quite a while now, and had some really great things to try free of charge including cheese (Rob’s favourite) and flowers (probably not Rob’s favourite)  The latest campaign they have been running is Fresh Flowers.

Rob doesn’t buy me flowers on a regular basis.  He says it is because he likes to surprise me, and if he gets me them all the time they won’t mean anything.  To a certain point I agree, but I do love having fresh flowers around the house.  Unfortunately my favourite flowers are lilies and Rob has severe hayfever which means I can’t have them in the house.

I was brought up around supermarkets.  My parents met as Management trainees at a chain of well- known supermarkets, and when we were little we went to work with my Dad on a regular basis.  Rob still maintains that my use of the phrase “out of code”* is abnormal!  This means that I have an eye for a bargain and we do try to pop into stores at the time products are reduced.  Tesco often have reduced flowers, sometimes down to as little as 50p per bunch which is an amazing bargain.

Tesco has always been one of our favourite stores for flowers.  They are normally quite well stocked, regardless of the size of the store, and it is quite rare that we go there and find that there is nothing we like.  However, for us, it has been the longevity of the flowers that has really attracted us to them.    Even the reduced options I have mentioned above tend to last at least 2 weeks, sometimes longer. 

I was sent a voucher to purchase a full cost bunch of flowers, plus some money off ones which I haven’t yet used.  The £5.00 voucher I spent on a bunch of beautiful lilies for my Mum when we went round there for my birthday celebrations.  We were both pretty impressed with the size of the bunch for the £5.00 that it cost us- we got about 6 large stems, none of which were out.  My only minor criticism, which makes no difference to me, is that none of the bunches had any stems in bloom.  Personally I like this as it means they last longer, but it does mean they look a bit bland so if you are getting them as a gift it might not necessarily work.

Directly after giving them to my Mum I went away for about 2 ½ weeks, providing her with strict instructions to monitor the life span, size of the flowers, and quality of the bloom.  Silence for the whole duration of my trip.  When I returned I anxiously contacted her, thinking she had forgotten and I was going to be left without a picture.  To my surprise I got a response (on the 14^th) saying that they had all bloomed beautifully, the scent was very fresh, fragrant and long-lasting, and that they were only just getting to the point where they needed to be thrown away.  I was shocked.  

As you can see from the picture the colours, size of the heads, and the amount of flowers, is superb, especially for the princely sum of £5.00. 

Mum is now a convert, like us, to Tesco flowers.  It is rare that I will recommend Tesco over my beloved Waitrose but in this case Tesco is a clear winner.  They have got it all; great range, low cost, long lasting, and beautiful to boot.  Thanks Tesco Orchard for giving me the opportunity to try out these flowers free of charge.  Now I just need Rob to use those discount vouchers I still have remaining and purchase some for me.


*Rob's note: Normal people say that food is "out of date".  "Out of code" is jargon that I've only ever heard used by Emma's family.

The Money Shed - the place to go for online earning

I've been dabbling in online earning for about a year now.  A couple of months ago, I discovered a site called The Money Shed.  I signed up and have certainly been glad that I did.

TMS is essentially a forum where people go to discuss online earnings and ways to save money.  They have very active threads on every subject in the sector: Surveys, mystery shopping, PTC, matched betting, blogging, MLMs (the good ones) and so much more.

So far, so Moneysavingexpert.

What sets TMS aside in my opinion, is the community they've built up.  From the enthusiastic amateurs like me to the seasoned pros like Katykicker, who make a full time living from this kind of thing.  Everybody is friendly, welcoming and helpful.

If you're new to online earning and want to know what opportunities are out there, TMS has all the information you need.  If you're already at it and want some help, someone will always steer you in the right direction.  If there's a mistake to be made, someone on the forum has probably already made it and will try to help you avoid it.  The people on TMS keep finding better ways to do things and are happy to share.  If you want to maximise your profit, you need to read these forums.

It's not all just one big love-in though.  Fun and friendly though it is, this is still a serious business and there's potentially a lot of money involved.  This leads to one of my favourite aspects of the TMS community: Conmen and shysters get very short shrift.

New ideas are very much welcomed.  We all appreciate a new income stream here and there, but be prepared to be questioned and to justify yourself.  The people to whom you're trying to sell your new idea are no fools.  They will want to know exactly what's involved and what it will cost and will want to to show proof of your earnings.  If it looks good, someone will try it and report back.  If not...

They all know that get-rich-quick schemes rarely pan out.  If you come on the forum with some variation on the old "Fantastic opportunity to earn £££'s from home.  I'm on track to make £100k a year working only 10 minutes a day and you can too!!!1!", with no further details, you can expect to be greeted with a certain degree of scepticism and suspicion.  Maybe I'll buy into your fantastic new scheme with some of the money that Nigerian Prince has promised to send me...

You will be grilled on your new idea, but in a friendly way.  We have to bear in mind that not everybody who comes along with a dodgy-looking scheme is deliberately trying to con us.  Many of them are victims who have been convinced by some snake oil salesman and are just repeating the same sales pitch.  They need to be helped to see it for what it is before they get in too deep.  The people at TMS will ask the questions that help to expose that.  If you can't answer the questions, then maybe it's not as good an opportunity as you thought.

Between the hints, tips and guides on every aspect of online earning and the solid defence line against the Lyle Lanleys of this world, a TMS account is probably the single most valuable resource you can have in this field.

Big thanks to Jon and the rest of the team for making TMS such a good place to be.  Keep up the good work.

Neobux Experiment: Part 6 - Golden Membership

Status: Profitable
Deposited: $10
Current Balance: $20.65
Profit/Loss: $10.65 profit
Assets: 73 referrals, Golden membership

On 24 March this year, Neobux celebrated its eighth birthday with a promotional discount.  This meant that golden membership cost $75 instead of $90.  Thanks to a good run of mini jobs through March, I had that much in my account, so I took the plunge.

What did $75 buy me?

Golden membership comes with a range of benefits and new features, but I couldn't find a full list of them anywhere before buying.  Now that I've had a chance to look around, here's my summary.

Increased income

The most noticeable benefit is the jump in income.  This comes from three sources:

1. Referral income doubles.  Referral clicks are now worth one cent each, rather than half a cent before.  My 53 referrals were making me about 20-25 cents a day, which immediately become 40-50 cents.  It's really noticeable the way the balance increases now.
2. Personal clicks are worth something now.  As a standard member, you're guaranteed four gold-coloured fixed ads a day, worth 0.1 cents each.  There's usually about 20 other ads available, so your personal clicks get you about 2.5 cents a day (plus the points and adprizes, which are much more useful).  As a gold member, the fixed ads are worth a whole cent each, and you get nine of them a day.  Add in the others and you're looking at around 11 cents a day from personal clicks.
3. Mini job bonuses double.  Standard members get a 15c bonus for every dollar earned, Golden gets 30c.  March was a good month, where I did $60 worth of mini jobs, receiving $9 of bonus, that would have been $18 if I were golden at the time.

So without the mini job income, I'm around 30c a day up, just on the 53 referrals I already had.  That's around $110 a year.  Even at full price, that upgrade is paying for itself.

Add in the mini job bonuses for an extra $110 (assuming I can keep up the March pace, which I probably can't) and we're up to $220 a year extra, a profit of $130 on full price membership or $145 on the promotional price.

So yes, it's worth it.

My referrals are not yet self-sustaining and will require subsidy from personal clicks and mini jobs until I have 115 of them (see previous post), but I'm making good progress towards that number.

Renting referrals

You can now have up to 2,000 referrals (or 2,099 if you're careful how you do it), up from 300 at standard level.

You should now receive better quality referrals, due to a stricter distribution filter.

As a standard member, you were guaranteed only to get referrals who have clicked at least 11 ads in the last 5 days (average 2.2).  Golden members only get people who have clicked 14 in the last 6 days (average 2.33).  So the people you get should be marginally more active.

You can still rent more referrals seven days after the last set, but you are restricted to two one-hour slots, which you chose yourself.  I chose noon and 11pm as the most convenient times for me, but then the clocks changed and now I'm on 1pm and midnight.

Enhanced statistics

A few new graphs appear with the upgrade.

On the statistics page, transfers to rental balance and golden pack balance are added to the group that contains the recycle and extension values.

A new graph showing the number of referrals due for extension over the next 270 days is very useful in helping you to spread out the costs.

On the rented referral page, a new icon has been added to each line which shows the click rate over the last ten days for that referral.  Possibly of use when making recycling decisions, but this would take a lot of effort if you have a large number of referrals.

The summary page now has a smaller version of the direct and rented referral clicks graphs from the statistics page.

Progress and future plans

Since upgrading, I have acquired a further 20 referrals.  At the time that I upgraded, I had enough cash to get another 10 and extend them for 240 days while there was still a discount on ($1.09 each, rather than $1,12).  I got the other 10 a week later and am holding back enough cash to extend them when they come due.

I've added a page to my Neobux spreadsheet to track costs and tell me how much I can spend on new rentals.  It shows for every day over the next year the projected extension and upgrade costs, assumed daily income (based on a conservative 0.6 average) and then calculates the projected balance at the end of each day.  The sheet then tells me how many I can afford to rent based on my current balance, without running out of money when costs come up over the next year.

Currently it's telling me I can get up to another 15 this Friday, so I'll probably end up getting another 10.

My plan it to keep expanding until I'm renting as many as I can as often as I can, then I'll start withdrawing whatever's left.  Might take a while, but I definitely think it's possible.

Join the fun: https://www.neobux.com/?r=rrobson

Why I don't like MLM schemes

I'm not a fan for a number of reasons, most of which boil down to either the product or the business model.

Now, don’t get me wrong, direct marketing can be a valid model with great benefit to all those involved.  In the past, companies such as Tupperware and Ann Summers, who produce useful and good quality products, have found the “party” model to be a valuable route to market.  Things that people want to see, touch, ask questions about before they buy.  You don’t hear much about Tupperware parties these days, as there are other and presumably better routes to market for them, which is kind of a shame.  I'm not knocking these companies or their products; these are the good guys.

A similar model has also proved very successful in the illegal drugs trade.  It’s what made Pablo Escabar so rich, so famous and eventually so dead.

Before I go into the details, it’s important to make the distinction between pyramid schemes, ponzi schemes and multi-level marketing (MLM).  The first two are scams and are illegal, the third is neither.

Pyramid, Ponzi or MLM?

A pyramid scheme is where I offer to sell you the secret of making money for £100.  The secret is to sell other people the secret to making money for £100, half of which you pass on to me.  You make 10 sales, you’re £400 up, plus you get a slice of any sales they make.  Nice and simple.  The people at the top make a lot of money (this fact is used as a marketing tool), but eventually you run out of mugs to recruit and the last people in lose their “investment”.

In a Ponzi scheme, you don’t know you’re part of a scam.  I take your £100 and tell you I’m going to invest it and make fabulous returns.  I don’t invest it, I stash it away somewhere or blow it all on drugs and hookers and fast cars.  A month later I send you an email saying that my brilliant investment skills have grown your money to £200.  Do you want to take it out, or do you want me to double it again?  Greed usually wins and I breathe a sigh of relief.  A few people ask for their money and so long as I’ve fleeced a few new punters this month, I give it to them, they’re happy and they tell their friends.  Good advertising.  Eventually, too many people will be asking for too much money and it all collapses, so I go and hide on the tropical island I bought with my ill-gotten gains.

An MLM is a genuine business.  There is a real, physical product to sell to real customers, with a commission paid on sales.  You also have the added advantage of being able to recruit other people to sell the products and get commission on their sales too.  And on the sales of the people they recruit, and so on down the line.  Everyone’s happy, all above board, great opportunity, what’s not to like?

As I said earlier, the product and the business model

The product

There are many different products sold by MLM schemes.  Most seem to be in the health and beauty category, so I’ll stick with them.

The first question that springs to mind is if these are good quality health or beauty products, why can’t I get them in Boots, or Holland & Barrett, or Tesco?  Surely the company would make more money selling through major high street chains?

Sometimes, the answer is that I can.  An identical product is available from a reputable high street store, usually at a much lower price, so why wouldn't I buy it there?

Often, you can’t.  Why not?  Because it’s “exclusive”?  They prefer this method?  Maybe it’s because the health claims made by these products are rarely if ever backed up by any kind of medical or scientific evidence; the quality might be poor, the price unrealistic.  Maybe it’s because reputable high street stores want to stay reputable and they think this product won’t support that aim.

Of course the people trying to sell you this stuff don’t have the necessary scientific background to answer technical questions themselves, but surely the companies could provide some FAQ website to point to answers, if they exist.

This becomes more of a problem when they’re trying to sell to scientifically-minded people like me, because I tend to ask awkward questions.  I was almost tempted to try a toothpaste sold by one of these companies once, on the promise that it “doesn’t contain any chemicals”.  Ignoring the obvious point that water is a chemical, I assumed it meant artificial chemicals.  “Oh, so they don’t add sodium laurel sulphate?  Fantastic, I’ll be able to drink orange juice after brushing my teeth!”  I was genuinely excited.  Looked at the tube: Contains SLS.  Damn.

If you get involved with an MLM scheme, you have these hurdles to overcome.  You have to rely on selling to people who will just believe what they're told, not ask questions and not check the internet.

Alternatively, you can guilt friends and family into buying some “to support your new business”, which brings me on to the main issue:

The business model

The first issue is the hard sell.  

Every time you do anything near a MLM agent, you hear “ooh, I’ve got a product that does that better”.  No, you don’t.

Then there’s the social media spam.  It starts with a flurry of posts about how excited they are to be setting up their new business, then you start getting added to groups, invited to events, tagged in photos…  Then it’s the sappy posts about how wonderful the product/company is, how it’s changed their life and they've met the bestest friends ever by doing it and you’re all mad if you don’t get involved RIGHT NOW!

*sigh*

Then you run into a mutual friend down the pub.  “Have you seen X lately?  She still flogging that detox crap?”  “Yeah saw her the other day, still at it”  “I had to delete her off Facebook in the end, those posts were driving me nuts.”

Or maybe before you go out “Should I invite Y?”  “Don’t bother, he’ll just spend all night trying to sell us snake oil again.”

If you join one of these schemes and follow their instructions you will lose friends.

The second issue is the structure.  My concern here is that the people involved in MLM schemes tend to spend a lot more time selling the business than selling the product.  It’s all about recruiting more workers rather than building a customer base.  They’re careful to retain some aspect of selling, because if that part falls to nothing, then it becomes a pyramid scheme, which it isn’t.  Definitely not.  Not even remotely.

One way the keep the sales alive is by selling to themselves.  “Turn your home into a Product X household” they’re told.  It shows customers how much you support the product and gives you a way in to talking about it whenever anyone visits.  So you replace all your cleaning products with Product X brand equivalent.  You get your staff discount, but the people up the chain still get their commission slice.  This starts to look more like a sign-up fee than actual sales, but who am I to judge?

Then there are the parties.  Tried and tested by reputable companies for decades.  Get a few of your friends round your house, give them a cup of tea and some cake and show them the goods.  Then ten minutes in, I’ll just pop in this half-hour DVD about how good the business is and how much money you could make if you join me…  You spend ten minutes selling the product, followed by two hours selling the business.  You end up with three new sales reps on your team, but don’t make any actual sales.  But I did try to sell, so it’s still not a pyramid.

It’s got a square base, four triangular walls rising to a point and there may be a Pharaoh buried inside, but you won’t catch me calling it a pyramid.  Not until there’s been a decent test case through the courts.

The next objection is the structure when you’re in. If the Facebook posts are to be believed, everyone is all loved up with their sponsor, parental towards their minions and idolising the higher echelons, who can do no wrong.  It’s like a Family, with a capital F, and I find it a little creepy.  They have conferences and rallies and everyone aspires to ascend the the next level, then the next, then the next until one day the Thetans come to take you back to their home planet.  For some of these schemes that I've read about (but by no means all), there’s a strong whiff of a cult.

(For legal reasons, I’d like to point out that I'm not saying Scientology is a cult.  Unless you’re reading this in France, then it definitely is.)

All this talk of cults and pyramids has the Indiana Jones theme stuck in my head now.

In short, I won’t be joining your MLM scheme, I don’t want to be in your Facebook group or to see the countless posts about it and if you follow my suggestion about what you can do with the products you’re trying to sell me, you’ll wish you were working for Ann Summers.  At least some of their stuff is designed for that purpose.

Neobux Experiment: Part 5

Status: Profitable
Deposited: $10
Current Balance: $49.014
Profit/Loss: $39.014 profit
Assets: 53 referrals, extended 240 days

It's been a while since my last post, mostly because I've been busy with other things, but also because there were no major changes to report.

Now I've got to the point where I can report that the experiment is a success.  You can actually make money out of Neobux.

Before I discuss the profitability, I'll address my concerns from part 4.

Average click rate

I was worried that my average was suspiciously high.  This has now settled down to something like the figures other people are reporting, 0.68 clicks per day average.  It seems that new people are enthusiastic but tend to tail off after a couple of weeks.  I'm seeing that with my automatic recycling, when the new minion comes in, they average 2 or 3 clicks a day for the first couple of weeks and then settle down the same as everyone else.

Adprize

The wins are rolling in now, I've had 2 x 25¢, 19 x 10 points and 1 x 100 points.  The average is still only 60% of what I'm expecting based on other people's experience, but that could be the low sample size.

Break Even Point (BEP) - the magic number of Neobux

Now to discuss the profit side.  When you read through the forums, everyone is obsessed with BEP.

Your BEP tells you what you need the average click rate of your minions to be in order to make a profit.  If they click higher than BEP, you win, if they click lower, you lose.  There's nothing you can do about the click rate; your minions are anonymous, so there's no carrots or sticks available to increase productivity.  This means that your fate lies entirely in manipulating your BEP.

There are three factors that effect BEP: Number of minions, level of membership and extension choices.

As a standard level member, extending for the maximum 240 days and not taking advantage of any promotional discounts, your BEP is 0.93, regardless of number of minions.  The actual cost per day is 0.0047¢, slightly less than the income you get for one click.

If you chose to extend for the minimum time possible, 15 days, your BEP shoots up to 1.33.

Taking advantage of the occasional 2% promotional discount can bring BEP as low as 0.91.

You will have noticed that all of these figures are above the average click rate of 0.68.  At standard level, you will always make a loss on your rented referrals.  The more you have, the more you lose.  My 53 minions currently lose me around 6¢ per day.  However this is made up by my own clicks and some mini-jobs, leaving a net profit.

When you upgrade to golden membership, your income per click doubles, which reduces the BEP, but you also have the $90 cost of the upgrade to divide between your minions, which pushes it back up again.  If you're lucky enough to win a free upgrade your BEP instantly drops to 0.47 and you're in profit immediately.

As a golden member, the more minions you have, the thinner the $90 gets spread and the lower your BEP.

This leads to two important tipping points.

The first is where I am now.  Somewhere between 53 and 54 minions is the point where buying golden membership makes absolutely no difference.  The extra income per click is precisely equal to the cost of the upgrade.  Any fewer than 53 and upgrading increases your BEP (and your losses), any more and the BEP starts to fall.  That's why I've chosen this point to stop renting for a while and save for an upgrade.

Once I have my golden membership, I need to keep plugging away at the mini jobs in order to rent more minions to break through the second tipping point.  At 115 minions, my BEP will hit 0.68, equal to the average click rate.  Any more I pick up after that push me into profit.  At that point, my rented referral income will be turning a profit on its own, with no need for subsidy from my clicks or mini jobs, after that it's all good news.

If I manage to take advantage of promotions, 2% more off of extensions and $10 off the price of golden membership, That tipping point comes down to 95 minions.

It's in reach and I'll get there soon, then I can really start building my account.

Want to join me on this journey?

I'd say give it a go.  The zero investment route is entirely feasibly, if you have the patience.  Work up your funds from personal clicks and mini jobs and you can buy straight in.

If you don't have the patience, it'll cost you $241.80 to get straight to the profit point, or $202.55 with the right timing.

Sign up here: NEOBUX