Glossary
Breakage
Breakage is the portion of a compensation plan's total payout budget that goes unpaid in a given period, usually because no qualified distributor exists at a given position, rank, or matrix slot to receive it. Companies commonly redirect breakage into a bonus pool shared among distributors who did qualify at the top ranks.
Also called: unallocated commission, unpaid volume
Why it matters
Breakage is a normal, expected part of how compensation plans are funded, and it is one reason a plan's stated maximum payout percentage is rarely paid out in full. It also means reaching a qualifying rank can be worth more than the base commission structure alone suggests, since breakage pools add extra income for qualified distributors.
Example
A company sets aside 2 percent of company wide sales for a leadership pool, and in a period where fewer distributors than usual qualify for that pool, the unclaimed share is breakage that is either carried forward or kept by the company under its plan rules.