Network Marketing vs the Linear Income Trap

residual vs linear income illustrationIf you’re considering a network marketing opportunity, I’m sure you’ve heard about the difference between “linear income” and “residual income”. This is the difference between the type of  income you make from a job, and income you receive from a network marketing or MLM business.

Let’s look at the difference, and what it means to you.

Linear income is what you earn at a traditional job. You only get paid when you are actively working. Regardless of whether you’re paid hourly, on commission, or on salary, your income is based on the time and effort that you and you alone put in.

One of the bad things about linear income is that you don’t have many options. If you decide to work fewer hours, for whatever reason, your income will immediately drop. In the case of a salaried position, you may not even have an option to work fewer hours. This seriously limits flexibility for parents who wish to spend more time with their kids.

In recent years, the trend in America has been for companies to cut positions and assign increased responsibilities to fewer workers. How many people do you know that do the same job, by themselves, that two or more people did just a few years ago?

While there is nothing wrong with working hard, and cutting costs to remain competitive, the fact is that employees in many companies now face much longer hours and greater responsibility. Along with this comes increased stress and unhappiness.

How do most people live their life? They go to work day after day, hoping to make it to retirement age so they can get out. Do you know what is really sad? By the time many people reach retirement age, they still find themselves limited in what they are able to do. Many dream of retirement so they can travel, or just sit back and enjoy life.

Unfortunately, far too many retire and then have to re-enter the work force on a part time basis just to make ends meet. They most likely will always have to keep a job just to pay all their bills and live comfortably. It just shouldn’t be this way.

A lot of people think that there are only two ways to make a “real” living – working a traditional job, or owning a storefront business (such as a franchise). Believing they have no real choice, they slip into a deep rut. They get up, go to work, come home, then go to bed. The next day, it starts all over and repeats until they reach the weekend. They get two whole days to enjoy themselves, then it starts all over again….get up, go to work, come home, go to bed. This goes on month after month, forever.

Now, here is the contrast between linear income and residual income.

Let’s say I write an e-book called “How to Start Your Own Profitable Online Business”. I package it up ready for sale and download.

Scenario #1 – I have been hired to write the e-book. The buyer pays me $1000 when I complete the project. That is linear income. I make $1000 one time for my work in writing the e-book, then move on to a different job or project.

Scenario #2 – I write the e-book and put up a web page to promote it. I advertise the e-book and even recruit some affiliates to help me sell it. Every time someone buys a copy of my e-book I make a profit. Once I have written the e-book and set it up for sale, it makes money for me while I move on to other things. This is residual income.

See the difference?

Linear income equals one project, task, or block of time for your efforts in exchange for a fixed amount of money. You never get paid again for that project, task, or block of your time.

Residual income equals one project, one task, or a particular block of your time that pays you back many times, not just once.

Perhaps it’s time for a change? A network marketing or MLM business can redefine your future. This business can bring you more freedom and flexibility than you’ve ever known.

If this sounds interesting, are you willing to focus and work hard for 3-5 years establishing your own home business and building a full time income? Consider it seriously – it’s a decision that can change your life.

Did you get some value from this post? If you did, I would really appreciate you sharing it with others! And, your comments are welcome below!

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Eldon Beard, Home Business Success Coach

If you have a home business and are happy, that's good. If you are looking for the right opportunity, the right mentor, and something you can build online, I would enjoy the opportunity to share what I'm doing. Click here and let’s explore the possibilities.

About Eldon Beard

Making money with a home business should be fun! I help others create a profitable global business from anywhere using an Internet connection and a phone. Send me a message and let's talk! Connect with me on Google+.


  1. Really enjoyed your article Eldon. I’ve long been a fan of residual income, but you’ve helped me to take a hard look at the ROI some other activities as well. Thanks!

  2. Hey Eldon,

    Great break down on both types of income.

    However, I want to point out that you must NEVER RULE OUT linear income for the simple fact that people can earn enough income doing that while building a network marketing income.

    Normally, a network marketing income is relatively low for a great deal of networkers for a very long time. However, where things start to change is, when the marketer starts to express their own talents and experiences (while still working for themselves) on sites like Odsk and Elance.

    Now, home based business professionals can earn all the income they want linear style by providing their own talents while still operating and building a network marketing business and or residual income.

    Also, there are many different ways to generate residual income outside of network marketing. In fact, some affiliate programs offer this as their payout structure.

    Some some food for thought, but never the less… perfect breakdown of both types of incomes!


  3. Hello Dereck,

    I appreciate your thoughts. I wasn’t really trying to dismiss linear type income at all. My point is that many people get stuck in a rut, thinking that is the only way they can ever earn a living. 🙂

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