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Case
6 (Affiliate)
Lee is an Affiliate. She refers customers to Merchants and receive 10% of
commissions from each completed sale. This business requires a lot of activity.
Lee knows that she generates not only sales but also builds (for
free) the customer's
network for the Merchants. She is not satisfied with this fact, because she is
rewarded only for the first activity.
During a party of her friends, she discusses this problem
with Rod, who is a trader. Rod makes money by means of arbitrage opportunities
on financial markets. He advises Lee to use this idea (arbitrage) in her
business.
Lee spends about month to think on this.( See AP_MLM
arbitrage). She decides to follow the Rod's advice and to increase her
income by means of using the arbitrage.
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Date
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Event
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Lee’s actions
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2/2/00
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AP Settings
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Set
up AP settings: 5-levels, type=%, period=1month
on
the first level-4%
on
the second level-3%
on
the other levels-1%.
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2/7/00
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Announcement of AP
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Lee announces her AP.
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February
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First 10 affiliates
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Lee registers the first 10 affiliates with
ID=1...10 and Reference ID=0.
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March
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The second level affiliates
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Lee
registers 10 new affiliates with ID=11-20 and Reference ID=1, 10 new
affiliates with ID=21-30 and Reference ID=2, 10 new affiliates with
ID=31-40 and Reference ID=3, ..... and10 new affiliates with ID=91-100
and Reference ID=10. Total 100 affiliates |
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April
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The third level affiliates, first sales and
payments
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Lee
registers about 1,000 new affiliates (each old affiliate referred about 10
new affiliates).
Each of
old affiliates generates about $40 sales, so Lee has income from the
merchants:
$40-from
the first level affiliates(10% from 10*$40),
$400-from
the second level affiliates.
Lee
pays $296 to the affiliates.
As
result Lee has profit of $144.
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May
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The forth level affiliates, new sales and payments
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Lee
registers about 10,000 new affiliates (each affiliate on the third
level referred about 10 new affiliates).
Each of
old affiliates generates about $40 sales, so Lee has income from the
merchants:
$40-from
the first level affiliates(10% from 10*$20),
$400-from
the second level affiliates,
$4,000-from
the third level affiliates.
Lee
pays $3,496 to the affiliates.
As
result Lee has profit of $944.
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June
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The fifth level affiliates, new sales and payments
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Lee
registers new affiliates on the fifth level.
Each of
old affiliates generates about $40 sales, so Lee has income from the
merchants:
$40-from
the first level affiliates,
$400-from
the second level affiliates,
$4,000-from
the third level affiliates,
$40,000-from
the forth level affiliates.
Lee
pays $39,496 to the affiliates.
As
result Lee has profit of $4,944.
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July+
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Sales and payments.
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In July
the market of affiliates is saturated, so there is no grows of the
affiliate's net. Average sales per affiliate is about $40, so Lee's
monthly income stabilize on the value of about $4,944.
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