FAQ 2013 Pricing and Compensation Plan Enhancements

Which markets will be affected by these changes? These changes will affect all of USANA’s global markets.

When will these changes begin to take place? These changes will be announced on Thursday, August 15 at USANA’s 2013 International Convention, and will go into effect the next day—Friday, August 16, 2013.

1. Preferred Pricing

1.1 What is the Preferred Price?

The Preferred Price is the everyday price offered to Associates and Preferred Customers. This price is for all orders, including online orders and orders placed through a USANA office. All Associates/Preferred Customers will receive this price.

1.2 Do I have to be on Auto Order to get the Preferred Price?

No. Although Preferred Prices are similar to the old Auto Order prices, if you are an Associate/Distributor or Preferred Customer, you will receive the Preferred Price even without having an Auto Order established. If you do choose to purchase your products through Auto Order, you will save an additional 10% off the Preferred Price.

1.3 How do I take advantage of the 10% Auto Order savings?

The Auto Order savings will be applied to all applicable products that are placed in an Auto Order ahead of time and allowed to process automatically as part of a weekend-processed Auto Order.

1.4 Do I still get the 10% Auto Order savings if I choose to pick up my weekend-processed order at Will-Call, instead of having it shipped to my home?

Yes.

1.5 How much should I charge my customers for USANA products?

Although we don’t list a specific retail price to charge your customers, we suggest you add 10% to the Preferred Price (to calculate, multiply the Preferred Price by 1.1). For example, if the Preferred Price of a product is $30, we recommend you sell it for $33. If you received 10% Auto Order savings for this product, your cost would have been $27, giving you a retail profit of $6.

1.6 How does Auto Order work?

The 10% Auto Order savings only apply to weekend-processed/computer-processed orders from your 001 Business Center placed as Personal Sales Volume (PSV). This means that to get the Auto Order savings, your orders must be set up in advance so they can process automatically. To do this, we encourage you to set your Auto Order at least one week before it is scheduled to process.

1.7 How can I place the Sales Volume Points generated by my Auto Order to my second or third Business Centers?

Volume Points for Auto Orders only go to your Business Center 001 as Personal Sales Volume. They help you qualify for commissions, but do not add to the Group Sales Volume on the left or right side of your Business Center.

1.8 What if I call and have Customer Service add products to my existing Auto Order? You will still receive the 10% Auto Order savings as long as you call far enough in advance to allow your updated order to process automatically. Auto Order changes must be completed prior to midnight MST/MDT the Friday before the Auto Order is scheduled to process.

1.9 How long does it take for an Auto Order to process automatically?

It depends on when you set your Auto Order to process. If you are setting up a new Auto Order, it will not be able to process automatically during the current commission period. If you make changes to an existing Auto Order, the changes must be completed prior to midnight MST/MDT the Friday before the Auto Order is scheduled to process.

1.10 Will these price changes affect shipping rates?

No.

1.11 What if I already have a reoccurring Auto Order that processes automatically—do I have to do anything to receive the additional 10% Auto Order savings?

No. You will automatically begin to receive the savings on qualified product.

1.12 What products qualify for the 10% Auto Order savings?

Only products that have a Sales Volume Point value greater than zero will receive the Auto Order savings. Products that do not generate SVP (sales tools, logo merchandise, etc.) and enrollment packs will not receive the Auto Order savings.  All other permanent packs will receive the AO Savings. 

1.13 Do enrollment packs or discounted packs qualify for the 10% Auto Order savings?

Enrollment Packs – no as they already receive a built-in discount, but all other permanent packs  do qualify for the AO Savings.

1.14 Will Preferred Customers receive the 10% Auto Order savings?

Yes. The same rules for Auto Order savings apply to Preferred Customer orders as they do to Associate orders.

1.15 Is there a minimum order value (e.g. 100 Sales Volume Points) before I can receive the 10% Auto Order savings?

No. You will receive 10% off weekend-processed orders of any value, as long as they contain qualified products.

1.16 Do I get the 10% Auto Order savings on additional orders I place during the week if I pay using the same payment method?

No. You would receive the Preferred Price, but without the 10% Auto Order savings. The Auto Order savings only apply to the orders you place that are fulfilled automatically during USANA’s weekend batch processing.

1.17 Do the 10% Auto Order savings lead to a 10% reduction in the volume points of the order?

No, the volume points of the order remain unchanged.

1.18 Will I receive 10% off my Auto Order shipping fees?

No. The Auto Order savings only apply to products that have a Sales Volume Point value greater than zero. Business tools, logo merchandise, renewal fees, and shipping fees will not receive Auto Order savings.

1.19 Why don’t I see the 10% Auto Order savings on the Mother’s Day Gift Pack I purchased?

The Auto Order savings may not apply to certain promotional packs because promotional packs cannot be placed on auto order due to the short duration of the promotion.

1.20 I have set up a recurring Auto Order. Will I automatically get the 10% Auto Order savings every four weeks?

Yes, as long as you allow that Auto Order to process automatically.

1.21 Why don’t I see the Auto Order Price on the USANA Price List?

We no longer list Auto Order prices separately on our Price Lists. Instead, a single Preferred Price is listed, and the 10% savings will be applied to total product order amounts placed ahead of time for automatic processing by USANA. This simplification makes our pricing structure easier to understand.

1.22 Doesn’t this mean I now have to pay more for products I purchase during the week?

On the contrary—the new Preferred Price is the old Auto Order price for most products. This means that during the week you can purchase at the same price as before, but the Auto Orders you place ahead of time for weekend processing now come with an additional 10% savings.

2. Simplification of Compensation Plan Language

2.1      What are the new terms USANA will be using in our compensation plan, marketing materials, and communications?

           2.2      Why are we changing these terms?

USANA is hoping to reduce network-marketing jargon that can be difficult for new Associates to understand, and that are problematic for existing Associates to explain to their potential team members.

           2.3      How were these new terms chosen?

USANA’s marketing and network development teams worked with our Independent Distributor Councils to find terms that are more common in everyday business or just easier to understand.

3. Reward on Initial Order

3.1 What is an Initial Order Reward?

When you enroll as a new Associate or Preferred Customer, you will earn a 10% reward on all products in your initial order that have a Sales Volume Point value greater than zero excluding enrollment packs. 

3.2 What price will I pay for my initial order? Can I get the 10% Auto Order savings on my initial order?

As a new Associate or Preferred Customer, you will pay the Preferred Price for products in your initial order. If the initial order is an Auto Order, that order will generate an Initial Order Reward, but it will not receive the 10% Auto Order savings the first time that order processes automatically.

3.3 Who is eligible to receive the Initial Order Reward?

This reward is only available to new Associates or Preferred Customers who enroll on or after August 15, 2013, place an initial order, and then set up an Automatically Processed Order (Auto Order).

3.4 When will I receive the Initial Order Reward?

The reward will be split into two equal installments—paid in each of your first two weekend-processed Auto Orders, provided these two Auto Orders process automatically. To receive the reward, your first Auto Order must automatically process within the first four Fridays of placing your initial order, and your second Auto Order must automatically process within the first eight Fridays of placing your initial order. Start counting from the Friday of the week your initial volume-generating order was placed.

Example: Your initial order is $600, and you receive a 10% reward (which equals $60). Half of this amount ($30) will be applied to your first Auto Order, processed within the first four Fridays of your initial order, and the next $30 will be applied to your second Auto Order, processed within the first eight Fridays of your initial order. 

3.5 Does my initial order need to be above a certain value (e.g., 200 Sales Volume Points) to qualify for the Initial Order Reward?

No. The reward applies to initial orders with an SVP value greater than zero.

3.6 What products qualify for the reward?

Any products placed in your initial order that have an SVP value greater than zero qualify for this reward. Products that do not generate SVP (such as sales tools, logo gear, etc.) do not qualify for this reward. Note: Enrollment packs do NOT qualify for this reward.

3.7 Why didn’t I receive a 10% reward on the full value of my initial order?

Your initial order may include the Business Development System (BDS), business tools, and/or logo merchandise that do not generate Sales Volume Points. The reward does not apply to these items. You will not receive a reward for the price of the shipping fee, either.

Your initial order may include special enrollment packs. The reward does not apply to these products, even if they generate Sales Volume Points.  The reward does apply to other Packs.

3.8 What if I only purchase a Starter Kit at the time of enrollment, and then place my first product order the next day? Will I still receive an Initial Order Reward on my product order?

Yes. The reward will be generated by your first order in which you purchase product that has an SVP value greater than zero. If you place that first order as an Auto Order, it will be treated as an initial order and you will earn the reward, but you will not receive the 10% Auto Order savings the first time your order processes.  

3.9 If I place a second order the day I enroll, but after my initial order has processed, will my second order also receive a reward?

No. Only the initial order that generates volume will receive a reward.

3.10 Do I have to set up my Auto Order at the same time as I place my initial order to get the reward?

Not necessarily. You may set up your Auto Order later, but to receive the reward your first Auto Order must automatically process within the first four Fridays of placing your initial order, and your second Auto Order must automatically process within the first eight Fridays of placing your initial order.

3.11 What if I postpone/miss one or both of my first two Auto Orders?

You may end up losing one or both installments of your Initial Order Reward if your actions result in the next two Auto Order(s) processing and shipping more than four Fridays (first Auto Order) and eight Fridays (second Auto Order) after your initial order.

3.12 What if I make changes to my first two Auto Orders?

This is okay, as long as your first two Auto Orders are allowed to process automatically within the Initial Order Reward timeframe.

3.13 What if I return products from my initial order? Or from one of my Auto Orders?

You will be required to pay back any discounts or rewards you have received through an adjustment to the refund amount or through reverse commission.

3.14 My reward exceeds the cost of my Auto Order. Will USANA pay me the difference?

No. In such cases, the cost of your Auto Order would be $0. You will not receive the difference between the price of your reward and the cost of your Auto Order. Neither will the difference be applied to any future Auto Orders.

3.15 If I place my initial order through the True Health Assessment, or through a USANA Customer Service department, will I still get the Initial Order reward?

Yes.

3.16 Do new Preferred Customers qualify to receive this reward?

Yes. Preferred Customers may also receive this reward based on products placed in their initial order that have an SVP value greater than zero.

3.17 If my first two Auto Orders have an Initial Order Reward applied, will those orders also receive the 10% Auto Order savings?

Yes. The reward from your initial order will be paid during your first two Automatically Processed Orders (Auto Orders), for which you will also receive 10% Auto Order savings.

Example: Suppose you placed an initial order with $600 worth of qualifying (SVP-generating) product. Afterward, you added one HealthPak to an Auto Order. This is what your first few receipts would look like:

Initial Order = $600

• Initial Order Reward: $60 (10% of initial order)

1^st Auto Order = $114 (cost of HealthPak in United States)

• 10% Auto Order savings ($11.40)
• 5% Initial Order Reward ($30)
• Total cost: $72.60

2^nd Auto Order = $114

• 10% Auto Order savings ($11.40)
• 5% Initial Order Reward ($30)
• Total cost: $72.60

Ongoing Auto Orders (for the same HealthPak) = $114

• 10% Auto Order savings ($11.40)
• Total cost: $102.60

4. Simplified Rank Advancement

4.1 How do I advance in rank under the new rules?

Rank advancement has just become easier to achieve and easier to understand. You simply generate the required weekly Commission Volume Points (CVP) to attain a higher rank.

Note: “CVP” in this case refers to base commission volume, and does not include Leadership Bonus, Elite Bonus, Lifetime Matching Bonus, etc. It does, however, include Auto Order Maxed Business Center Commissions (see “Auto Order Maxed Business Center Commissions” section below).

4.2 Do Commission Volume Points include Matching Bonus?

Commission Volume Points (CVP) are from your base weekly commission only, and do not include Matching Bonus, Leadership Bonus, Elite Bonus or any other contest earning. However, base CVP does include Auto Order Maxed Business Center Commissions (see “Auto Order Maxed Business Center Commissions” section below).

4.3 How do I advance to the rank of Gold Director or above?

You will need to generate enough points from your entire business to reach a CVP minimum (dependent on each rank) each week for four consecutive weeks.

4.4 Can the 800 CVP to become a Bronze Director come from different Business Centers?

Yes. You may generate 600 CVP from your first Business Center (001), and 200 CVP from your second Business Center (002) to advance to the rank of Bronze Director. This is why it is now easier to rank advance!

4.5 Can I become a Ruby Director without maximizing a Business Center?

Now you can! The example below illustrates one such possibility:

• Week 1: You earn 800 CVP from BC1, 800 CVP from BC2, and 400 CVP from BC3
• Week 2: You earn 800 CVP from BC1, 600 CVP from BC2, and 600 CVP from BC3
• Week 3: You earn 800 CVP from BC1, 800 CVP from BC2, and 400 CVP from BC3
• Week 4: You earn 600 CVP from BC1, 600 CVP from BC2, 400 CVP from BC3, and 400 CVP from BC4

4.6 If I earn 2,300 CVP during Week 1 of my Ruby Run, can I use the extra 300 CVP against any shortfall in Week 2?

No. You need to generate at least 2,000 CVP in each of the four weeks of your Ruby Run.

4.7 How will this new rule affect my current rank?

Your current rank will not be changed because of the new rule, although you are now likely to find it easier to advance to your next rank.

4.8 I would have advanced to Diamond Director last August had the new rules been in place then. Will USANA offer any additional commission or recognition for those who would have advanced earlier had these changes been available?

No. We will not backpay any rank advancements, commission checks, bonuses, etc.

4.9 Will this new rule affect how I earn Leadership Bonus?

No. The rules for earning Leadership Bonus remains unchanged.

4.10 I was in the third week of my “Ruby Run” when the rules for rank advancement changed. Will I be required to max out two Business Centers in the fourth week, or generate 2,000 CVP?

You can do either and still be recognized as a new Ruby Director.

4.11 Will this new rule for rank advancement change how I earn an Additional Business Center?

No. While you may now become a Silver Director without maximizing a Business Center, you will still have to maximize a Business Center in order to earn an Additional Business Center.

4.12 Will my accumulated CVP include bonuses received by team members in my downline?

No. Your accumulated CVP is only based on the Group Sales Volume generated in your Business Centers—this does not include bonuses or other incentives received by team members.

4.13 Will this new rule change how I qualify for the USANA Gold Retreat?

Possibly. We will be changing Gold Retreats to Executive Gold Retreats, where you will need to qualify as an Executive Gold Director during any quarter to qualify to attend the retreat. (See Section 6 regarding Executive Recognition Titles.)

4.14 Will this new rule change how I qualify for promotions like Success on the High Seas or The Cruise of The Stars by advancing to the rank of Director?

No. The “Fast Track” rules remain unchanged.

5. Base Commission Changes

5.1 How are commissions going to be calculated?

We will pay 20% in commissions based on where the right and left side of a Business Center match. Or, in other words, commission payout can be calculated by multiplying the Group Sales Volume (GSV) on a Business Center’s small side by 20%.

• Example:

700 GSV Left Side                800 GSV Right Side

You will be paid 20% of your small side.

700 * 20% (.2) = 140 Commission Volume Points

5.2 Will there still be volume carryover or rollover?

Yes. Any extra volume will roll over into the next commission period. (Note: There is a rollover maximum of 5,000 GSV per side)

• Example:

700 GSV Left Side                800 GSV Right Side

700 * 20% (.2) = 140 Commission Volume Points

Carryover = 100 GSV on the Right Side, 0 GSV on the Left Side

5.3 What happened to USANA’s Weekly Commission Payout Schedule?

In simplifying USANA’s compensation plan, we have re-worded the weekly base commission as equal to 20% of the Group Sales Volume on the small side (formerly “weak leg”) of your Business Center. In addition, we have eliminated volume tiers and will pay commissions for Group Sales Volume between 125 GSV and 5,000 GSV on the small side of a Business Center. For these reasons, we have discontinued using the Weekly Commission Payout Schedule.

5.4 What is the benefit of this new way of defining our Weekly Base Commissions?

You can get paid sooner! In the past, you had to meet the next tier on the Weekly Commission Payout Schedule to get your check. Now you get paid for all the Group Sales Volume on your small side (minimum 125 GSV).

Example 1:

                                                 OLD:  You do not earn any commission until your
                                                 Right Side generates 500 GSV

                                       NEW:  You earn 20% x 400 = 80 CVP

Example 2:

                                       OLD:   According to the Commission Payout Schedule, 

                                       1,000 Left, 1,000 Right earns you 200 CVP.

                                       NEW:  You earn 20% x 1,950 = 390 CVP

5.5 Is there a minimum GSV I need to reach to receive a commission check?

Yes. To receive a commission check, a Business Center must generate a minimum of 125 GSV.

5.6 I generated 80 GSV on the small side of my Business Center last week. Why didn’t I get paid?

To avoid the transaction cost of paying out small amounts of money, we will only pay a commission if it is at least 25 CVP. This means your 80 GSV will be rolled over until it accumulates to a minimum of 125 CVP.

6. Auto Order Maxed Business Center Commissions

6.1 What is an Auto Order Maxed Business Center?

Unlike a maxed Business Center, which generates a minimum of 5,000 Group Sales Volume (GSV) on both its left and right sides at the end of a commission week, an Auto Order Maxed Business Center does so at the start of the commission week, immediately after the Automatically Processed Orders are processed.

This means the Business Center maxed with only volume generated from automatically processed orders, without counting any new GSV that is added during the commission week.

6.2 What benefit do I get for building an Auto Order Maxed Business Center?

You earn 1,250 CVP for each Auto Order Maxed Business Center Commission, instead of 1,000 CVP for a regular maxed Business Center. Having a stable maxed Business Center earns you 25% more!

6.3 Will I only earn this extra CVP for my first Business Center (001)?

No. Any number of Business Centers can achieve Auto Order Maxed status, and they will earn you 1,250 CVP each.

6.4 Can an Auto Maxed Business Center have GSV not generated by an Auto Order?

Of course! Additional GSV can always be generated during the week, over and above the 5,000 auto-generated GSV. But the extra 250 CVP can only be earned when you max a Business Center with volume points from Auto Orders.

6.5 I thought my first Business Center achieved an Auto Order Maxed status. Why did I not earn 1,250 CVP for it?

Some of the Auto Orders in your team may have been subsequently cancelled. This can happen if some credit card charges or electronic fund transfers have been declined, which brings your auto-generated volume below the 5,000-point threshold. 

6.6 In the situation above, will I still earn 1,250 CVP if those affected by the financial-transaction failure eventually process their Auto Orders during the week?

Yes.

6.7 Does the extra 250 CVP count toward rank advancements, growth contests, Elite Bonus, and Million Dollar Club qualification?

Yes.

6.8 Is the extra commission subject to arbitrage?

No.

7. Executive Recognition Titles

7.1 How do I receive an “Executive” title?

Executive status is applied when you earn at a specific rank for an entire 13-week calendar quarter. For example, if you are a “solid” Ruby Director and continue to generate base commissions at that level, then you would be able to qualify as an Executive Ruby Director by meeting the commission requirements.

7.2 Can I meet the qualification requirements during any 13-week period?

No. Executive qualifications are based on 13-week calendar quarters (January–March, April–June, July–September, October–December) and not a rolling calendar. Note: The number of weeks in a calendar quarter may vary slightly.

7.3 Which ranks qualify for Executive status?

For now, Executive status will be applied to the ranks of Gold Director and above.

7.4 Is “Executive” a lifetime status?

No. You must re-qualify for Executive status each quarter. 

7.5 To become an Executive Gold Director, do I have to generate 1,000 CVP each week?

No. You must generate a total of 13,000 CVP by the end of the 13 weeks, although you can generate that volume at any time during the qualification period.       

7.6 What if I’m an Executive Gold Director, and then I rank advance to Ruby Director. Will I lose my Executive benefits?

No. During the rest of the calendar quarter in which you rank advance to Ruby, and the following quarter, you will be recognized as a new Ruby Director and still receive Executive Ruby Director benefits. If you continue to produce at that level (generating 26,000 CVP in the quarter after advancement) you will become an Executive Ruby Director and maintain benefits continuously until you fall below for any quarter and need to re-qualify.

7.7 If I’m a Gold Director, can I become an Executive Ruby Director without advancing to the rank of Ruby Director first?

No. Although it would technically be possible within a 13-week period to generate 26,000 total CVP without meeting the requirements to advance to the rank of Ruby Director (generate 2,000 CVP for four consecutive weeks), you will not obtain an Executive rank title without first advancing to that rank.