Is Scentsy a pyramid scheme? According to the research in this article, it isn’t. However, some of its characteristics resemble those of pyramid schemes.
Would you want to work for a company that offers terrible compensation and prioritizes recruitment? Well, that’s what you can expect once you sign up to become a Scentsy Consultant.
Scentsy has built a reputation for offering “natural” products with pleasant scents. However, their fragrances’ delightful aromas can’t mask the foul odor their business model reeks of.
In this guide, I will talk about Scentsy’s recruitment practices and earning methods. I will also explore how much you can earn as a Scentsy consultant.
This guide will also include a handy summary of the pros and cons of working for Scentsy. My goal is to get you well-informed about the company so that you can make an informed decision about starting with them.
We worked with a former Scentsy Consultant to produce this article.
My Personal Experience
My experience with Scentsy started in late 2019. I had heard the company’s name before this. However, I never really looked into their products.
That all changed when an acquaintance named Sarah invited me to her home for a “girls night in.” I met Sarah through a mutual friend a few months earlier. We hit it off after discovering we shared a passion for gardening.
I was excited to see her again, so I promptly arrived at her house with a bottle of my favorite white wine and a box of cupcakes the following weekend. I entered the residence and was led to the living room, where I met six other girls.
The group consisted of a mix of Sarah’s close friends and acquaintances. We sat down and began getting to know each other over drinks and hors d’oeuvre.
At some point in the night, a person turned to Sarah and complimented her on how nice her living room smelled. She giggled in response and said it was a special citrusy wax melt she had gotten for her wax warmer.
Sarah then walked over to the far end of the room and brought a Scentsy wax warmer back to the table we were sitting at. Everyone looked at the warmer in amazement and took turns smelling the partially melted wax in its top tray.
Someone eventually asked Sarah where she got the wax warmer from. She stood up and said she bought a wholesale quantity from the company directly. She also said she had more warmers and wax melts if any of us were interested in purchasing them too.
Sarah spent the next two hours showing off how the warmer worked and demonstrated different wax scents. The demonstration was a success because four girls ended up buying warmers and wax.
At the end of the night, I asked Sarah if she sold Scentsy products frequently. She then explained she was a Scentsy consultant and that I could also start my own business selling their products.
She promptly listed many benefits of joining. This included being able to make income using a flexible business model, selling natural products, and getting to be your boss.
This offer sounded exciting because I had just finished college and was looking for a way to make some extra cash while job hunting. Sarah then led me through the sign-up process and helped me order my first set of products.
I spent 20 hours a week promoting Scentsy products for the next four months. I promptly quit once I found a job. So why did I leave Scentsy?
Well, the truth is that I wasn’t earning much from sales. The company’s business model incentivizes recruitment, but I wasn’t very good at bringing in new members.
I was also getting tired of hosting “Scentsy parties” to promote their products. I spent a lot of money hosting these events but made little profit once I actually crunched the numbers.
My time with Scentsy was disappointing, to say the least. I viewed Sarah’s success and thought I could replicate it. However, I simply wasn’t cut out for the company’s business model.
For this reason, I want to inform people who are planning to join Scentsy. The company might sound like a great income idea at first. But actually working as a Scentsy consultant is a lot harder than you think.
You definitely won’t make much money. In fact, you’ll spend most of your time organizing promotional events, which might not pay off.
In this guide, I will deconstruct the multi-level marketing company’s business model and how much you can potentially earn as a Scentsy consultant. I’ve written about my experience to ensure you don’t make the same mistake I did.
What is Scentsy
Scentsy is a direct selling company founded in 2004. The company is similar to other MLM companies such as Monat and Young Living because it targets young people with interest in “natural” or “naturally-based” products.
Scentsy’s signature product is an electric wax warmer that works with the brand’s scented waxes. They also offer diffusers, air fresheners, personal care products, and cleaning products.
The MLM company has amassed a whopping 250,000 consultants. They currently operate in 11 eleven countries. Scentsy reported $1 billion in revenue in 2021.
Scentsy was founded by Kara Egan and her sister-in-law, Colette Gunnell, in Salt Lake City, Utah, in July 2003. Egan came up with the initial idea for a wax warmer business before asking Gunnell to come on board.
The pair began the company by selling their wax warmer and waxes out of a basement and found success relatively quickly. A struggling entrepreneur named Orville Thompson eventually found their business and bought them out.
Orville and his wife Heidi then relocated the business to Idaho and adapted it with a direct selling model. The change was a massive success, and the company amassed thousands of consultants within a few years.
Scentsy eventually expanded its product range beyond just wax warmers and waxes. Today they sell laundry supplies, cleaning products, air fresheners, and other accessories.
The company has over 250,000 consultants worldwide. Scentsy reported $1 billion in revenue in 2021, making them one of the biggest wax warmer brands in the United States.
You can learn more about Scentsy’s origins in the following Youtube video:
CEO and Staff
Orville and Heidi Thompson both serve as Scentsy’s co-CEOs. They assumed these positions in 2004 when they acquired Scentsy from Kara Egan and Colette Gunnell.
The pair are responsible for adapting Scentsy to its current direct-selling model. They have also helped the company expand to eleven countries.
Scentsy has approximately 1,000 employees at its corporate offices around the globe. The MLM company has over 250,000 consultants worldwide. Most of whom are young people interested in making money through the company’s business model.
Is Scentsy a Pyramid Scheme?
So is Scentsy a pyramid scheme?
Let’s view the Securities and Exchange Commission’s definition of a pyramid scheme to get a deeper look.
The SEC states that a pyramid scheme is “an investment fraud in which new participants’ fees are typically used to pay money to existing participants for recruiting new members.”
They go on to say that pyramid schemes generally display each of the following traits:
- No genuine products or services are sold;
- Members are promised high returns in a short period of time
- Members are told the business model allows them to make easy money or passive income
- There is no demonstrable revenue generated from retail sales
- Members must make a purchase to sign-up
- The business has a complex commission structure
- The business model places a high emphasis on recruiting
Why Isn’t Scentsy a Pyramid Scheme?
Scentsy can’t be counted as a pyramid scheme for the following reasons:
#1. Scentsy Sells Genuine Products
Scentsy was founded with the idea of selling wax warmers and wax. The company’s products are sold in a dozen countries. I have personally sold Scentsy wax warmers, wax, and air fresheners. Therefore, I can confirm their products are genuine.
#2. Scentsy Doesn’t Promise Members High Returns in a Short Period of Time
Scentsy’s recruitment page states you can “Make some extra dough.” However, this wording is too vague to imply “high returns”.
#3. Scentsy’s Business Model Doesn’t State Members Can Make Easy Money or Passive Income
Scentsy entices consultants with the promise of being able to work whenever you want. This flexibility isn’t linked to any claims about “easy money” or “passive income.”
#4. Scentsy Has Generated Revenue from Retail Sales.
Scentsy hasn’t shown that they generate revenue from retail sales. However, it isn’t likely that they’re earning exclusively through sign-up fees.
For example, let’s say half of Scentsy’s 250,000 members signed up in 2021. If each of these 125,000 recruits paid the $100 sign-up fee, the company would earn $12.5 million.
This $12.5 million figure is far smaller than the $1 billion revenue figure the company posted for 2021. Therefore, we can confirm the company is pulling in revenue from sales.
Why Do People Think Scentsy is a Pyramid Scheme?
Some people believe Scentsy is a pyramid scheme for the following reasons:
Scentsy Asks You to Make a Purchase to Sign-Up
Scentsy asks you to pay a $100 sign-up fee. Once you complete this payment, you can start purchasing products at a 20% to 25% discounted rate.
This MLM company’s business model relies on you purchasing products at this discounted price and then selling them at the regular retail price. So you essentially need to spend money to make money with Scentsy.
Scentsy Has a Complex Commission Structure
Scentsy’s commission structure isn’t easy to understand. This is a common trait among MLM companies because they wish to obscure how much you can earn.
Scentsy Places a High Emphasis on Recruitment
Scentsy doesn’t offer bonuses for recruiting new members. However, you can indirectly get bonuses from growing your team and hitting high sales volumes.
This means you will need to recruit members if you wish to earn anything resembling a livable wage.
How Much Money Can You Earn from Scentsy?
So how much money can you make as a Scentsy consultant? The company’s 2021 Income Disclosure Statement offers a bit of insight into this.
As you can see, Scentsy has divided its earnings statement into two groups. Consultants in Group 1 earned an average of $2,925 in 2021. Consultants in Group 2 earned an average of $300 in 2021.
If we combine the total earnings for both groups and divide it by the total number of consultants, we get an average of $1,040.
This implies that new consultants are likely earning less than $1,040 per year. That’s around $87 per month! This amount is barely enough to cover your phone bill.
Assuming you’re one of the high-earning consultants from Group 1, your annual earnings are still only $2,925 per year. That’s $240 per month.
Based on this information, you definitely shouldn’t be relying on Scentsy as your primary income source. In fact, these earnings are also on the low side if you consider it a part-time side-hustle.
How to Earn Income Through Scentsy?
Scentsy lets you make money in two ways. These are:
- Earnings from selling products directly to customers
Method #1. Earnings from Selling Products Directly to Customers.
The first way to make money is to sell products directly to customers. As a Scentsy consultant, you can purchase products with a 20% to 25% discount, depending on your rank. You can then sell these at their regular retail price for a 20% to 25% profit.
The company encourages you to host “Scentsy Parties” where you show off products to your friends. This is the primary strategy for making direct sales.
Method #2. Bonuses
As a Scentsy consultant, you will likely make most of your money by recruiting people. As mentioned earlier, Scentsy doesn’t give you direct bonuses for finding new members.
Instead, the MLM indirectly rewards you for hitting certain group sales and team sales targets.
Once you reach a high enough rank, you will also start commissions from the sales the people you recruited make. Over time, you can build a large team and earn a chain of commissions from the people your team members go on to recruit.
You can learn more about Scentsy’s compensation schemes in this Youtube video:
3 Key Advantages of Becoming a Scentsy Member.
Pro #1. Selling Any Scentsy Products You Wish
Scentsy allows you to pick and choose which products you want to sell. This gives you the freedom to select between wax warmers, waxes, personal care products, cleaning products, air fresheners, or a combination.
This could be advantageous if you’re skilled at selling a certain type of product. Alternatively, it could be useful if you’re an influencer with a particular niche. For example, beauty and skincare influencers might be interested in selling Scentsy body cream and sugar scrub.
Pro #2. Promoting Safe Products
Scentsy’s signature wax warmers offer a safe alternative to candles. These products offer the light, warmth, and scented waxes that candles provide, but without the dangers the flame poses.
Flameless candles don’t rely on combustion, so they won’t release any carcinogenic particles into the air. So you might enjoy selling Scentsy’s wax warmers if you’re passionate about selling flameless candle alternatives.
Pro #3. Learning About Sales
Scentsy offers many training resources to help you get better at making sales. However, I found that I learned more from the consultant who recruited me.
Sarah was skilled at making sales, and I learned a lot by asking her for tips. However, I can’t guarantee that your chosen consultant will be as knowledgeable as she was.
3 Key Disadvantages of Becoming a Scentsy Member.
Con #1. Miniscule Earnings
Most people quit Scentsy due to the terrible earning experience. As we saw earlier, the average consultant makes only $1,040 per year. New consultants will likely make a lot less than this amount.
For this reason, you should avoid Scentsy if you want to make serious money.
Con #2. No Compensation for Your Expenses
Scentsy encourages you to make sales by hosting “Scentsy Parties”. However, they don’t offer to recuperate your expenses for these events. You will need to pay for snacks and drinks, so it’s not uncommon to pay upwards of $100 for each event.
Note: with COVID and the rise of digital events, the cost may be lower. But, the engagement becomes way harder.
There’s also no guarantee you will make any sales during these parties, so you could end up making a loss.
For this reason, many consultants aim to find recruits and build a team as quickly as possible. With this approach, you can rely on your team to make sales and do the heavy lifting.
Con #3. Minimum Sales Requirement
If you thought Scentsy’s business model allowed you to kick and relax, think again. The company requires you to make $200 in sales within your first month. If you fail to do this, they will delete your account. You will then need to start over by paying the $100 sign-up fee again.
This minimum sales requirement might not seem high. However, it could be troublesome if you believe Scentsy offers a flexible business model.
Making $50 in sales per week doesn’t sound extreme. However, you should remember that this requirement is active in your first month. This is the period where you won’t have any experience with sales.
I barely managed to reach the $200 sales target within four weeks. However, I knew other consultants who couldn’t reach the target. They ended up buying Scentsy products to ensure they reached the required amount and avoided getting their accounts canceled.
Major Scentsy Controversy.
Scentsy might not be considered a pyramid scheme. However, the MLM company has faced and filed multiple lawsuits over the past two decades. The good news is that these lawsuits aren’t directly related to its business model.
Some notable Scentsy lawsuits include:
Website Accessibility Lawsuit
In July 2019, a person named Leshawn Dawson filed a complaint with the New York Federal court against Scentsy. They alleged the company’s website wasn’t accessible according to Web Content Accessibility Guidelines.
They pointed out that the MLM company had omitted key website elements that would have made it more accessible for visually impaired users. Such users typically rely on screen readers to understand the visual elements of a webpage.
Information on this case is sparse. However, it is believed the lawsuit was dismissed in November 2019.
Trade Secrets Lawsuit
In January 2009, Scentsy filed a lawsuit against a machinery manufacturer called Performance Manufacturing Inc or PMI. They alleged the company had shared the wax warmer producer’s trade secrets with competitors.
Scentsy had initially hired PMI to produce machines for manufacturing its wax warmers. They disclosed sensitive information about their product manufacturing process to help PMI come up with a suitable design.
Scentsy later noticed a company called Rimports selling products similar to their own under the brand name “ScentSationals”. Upon investigation, they learned Rimport had ordered machinery from PMI.
The court eventually ruled in Scentsy’s favor. Rimports were asked to pay a fine and were prohibited from selling products based on Scentsy’s designs.
Wax Repackaging Lawsuit
In April 2010, Scentsy filed a lawsuit against a former consultant for repackaging their wax and selling it to other Scentsy consultants.
The company alleged Mary Kay deDisse had been melting down the company’s wax before repackaging it into smaller quantity containers. She allegedly also added a Scentsy trademark to the containers before selling them to other consultants for promotional use.
The court ruled in Scentsy’s favor, and deDisse was prohibited from selling her packaged wax to Scentsy consultants.
The above information should demonstrate that working for Scentsy isn’t all it’s cracked up to be. In fact, it’s not really a stretch to say that income idea might be more like an income trap if you are not careful.
I spent tens of hours organizing Scentsy Parties each week, only to come away with little to no sales. The revenue I made from sales also greatly diminished thanks to my expenses.
I thought my experience with the company was anomalous, given how well Sarah was doing. However, after a bit of research, I’ve learned how little Scentsy consultants actually make.
If the average Scentsy consultant makes only $1,040 per year, it’s safe to say you won’t be doing much better than a sweatshop worker. Taking a minimum wage job flipping burgers would be better than working for Scentsy if you’re desperate for cash.
Who Would Scentsy Be a Good Fit For?
So who would Scentsy be a good fit for? I’m hesitant to say it would be a good fit for anyone. However, I think specific types of people might fare better than I did.
This includes people who are great at making friends. If you excel in this area, you will have an endless supply of people to invite to your Scentsy parties.
You will also fare well under Scentsy’s business model if you’re talented at recruiting new members. However, this is a sales skill that few people possess.
So there you have it: Scentsy deconstructed. Give this income idea a shot if you’d like to try your hand at working under one of the least profitable MLM business models out there. I hope this deep dive offered some useful insight into Scentsy and what to expect when you join them.
Frequently Asked Questions
Does Scentsy Give Bonuses for Recruitment?
Scentsy doesn’t directly pay bonuses for recruiting new members. However, you can receive bonuses for achieving a minimum group sales volume. This sales volume gets easier to accomplish if you have a large team.
Can You Lose Money as a Scentsy Consultant?
You can lose money as a Scentsy consultant if you fail to sell the products you purchased at a discounted rate.
Does Scentsy pay well?
You can earn a commission cut of 20% to 25% from selling Scentsy products. However, the average Scentsy consultant earns only around $1,040 per year.
- Scentsy Products: Scentsy
- Scentsy Members Numbers: Why Scentsy?
- Scentsy Revenue: Scentsy Hits $1 Billion in Revenue
- Scentsy Founding: Kara Egan – Scentsy Top Earner Interview
- Scentsy Employees: Scentsy Forbes Profile
- Scentsy Earnings: Income Disclosure Statement
- Scentsy Earnings Methods: Scentsy Compensation Plan
- Website Accessibility Lawsuit: DAWSON v. SCENTSY, INC.
- Trade Secrets Lawsuit: SCENTSY, INC vs. PERFORMANCE MANUFACTURING INC., et al
- Wax Repackaging Lawsuit: Scentsy, Inc. v. Mary Kay Dedisse