Inc. Breakage is defined as the commissions left unpaid each month compared to the theoretical maximum of the plan. Upon further study, however, a plan which uses breakage wisely will reward the producers much more generously than one without Breakage.
Breakage can be a strong competitive advantage if it is used correctly and for the right reasons.
Objectives for breakage in a plan Every piece of a good compensation plan has a specific purpose or desired result. Reward specific behaviors which are most desired by the company such as recruiting, retailing, building managers and leaders, and retention. Reward those who exceed minimum levels of performance more than those who don't. Avoid rewarding distributors who fail to perform consistently. The benefits of properly using breakage Breakage is applied by imposing reasonable rules to qualify for commissions.