What Is The Difference Between a Pyramid Scheme & Network Marketing?

Marketing is an essential tool for business. Whether you are just starting your business or if you have been in one for some time now, you should know that marketing and advertising are two powerful weapons that must be considered at any stage. Many times people get confused with the concept of a pyramid scheme and network marketing. The purpose of this article will be to demonstrate that they are two completely different things.

Network marketing, as the name suggests, allows you to network, build a team and find new ways of growing a legal business whereas a pyramid scheme only focuses on generating income through unsustainable and often illegal procedures.

The foundation of a pyramid scheme is to recruit people rather that selling goods or services. Network marketing, on the other hand, is purely business oriented opportunity where your main source of money is to sell products. You will also recruit people but not in a fraudulent way. Some examples of companies that work with network marketing are: Avon, Herbalife and Mary Kay cosmetics.

The Basic Differences Between Pyramid Scheme and Network Marketing


A pyramid scheme requires you to pay a fee to join and then try to recruit other members to pay the same price. The profit comes from hiring people, which is called your “Downline”, rather than selling a product or a service. Once you recruit some, you will encourage them to bring more people into the business (commonly family or friends). A pyramid scheme is an illegal way of doing network marketing that will only give your returns if you can recruit people and get them pay an initial price to join.

Network marketing, on the other hand, is a good way to join a business group of individuals that will work together to build a profitable and prosperous business. A network marketing business may or may not require a joining fee, and it will help you in selling your product or service through like-minded individuals.

If you are about to get into a network marketing business, please make sure beforehand the following:

    • Read what is the Business about
    • Is there any product behind the business or are they just trying to get you in the business for a Fee?

Selecting between the two, you have to know how they work in order to make an informed decision. Pyramid marketing will not get you the kind of profit that is promised nor do any business opportunities whereas, network marketing will enable you to reach out to a broad client base through your networking group which will eventually lead to more sales and help the business grow. You should always speak with other members and businessmen to get a better idea before joining a pyramid scheme or a network marketing group.