Tech startup: I really do make mobile phones!

Chapter 13 Terminal Pricing 499
The first major cost is the "self-developed" cutting-edge gaseous lithium battery, and the second cost, needless to say, is the screen.

The screen has been changed from a resistive screen to a capacitive screen, and it also supports single-point touch. The only downside is that the cost has increased by almost 50%.

However, using a capacitive screen does save the need for a resistive stylus.

Even if this configuration isn't as good as the Apple 4, Chen Mo can still say that it's far ahead of all feature phones in North China.

The third cost is the cost of creating a "high-end" image for the Orange 1 phone.

Whether it's adding a high-wear-rate piano lacquer finish to the engineering plastic body or using a costly, high-quality independent packaging box, Chen Mo's goal is to create the brand image of the Orange 1 as the first "smartphone" in China.

Humans are visual creatures, and our first impression of a mobile phone often comes from its appearance and packaging.

The Orange 1 features a piano lacquer finish on its engineering plastic body, giving it a premium feel. Holding it in your hand is like holding a delicate work of art, making it instantly recognizable as a different phone from ordinary ones.

Aesthetics are the essence of a product.

Individual premium packaging boxes must be meticulous in terms of design, materials, and surface texture.

The moment the outer box is opened, there should be a strong sense of ceremony.

Chen Mo hopes that users will experience the thrill of opening a blind box and discovering a hidden model when they first see the Orange 1 phone.

The "prestige" of this phone is not some unimportant fancy feature.

From the individual premium packaging box to the moment you see the phone, the process should be progressive, presenting the "technological feel" of the Orange 1st generation to the user in a more intuitive way.

Although Orange Technology's "self-developed" cutting-edge technology, gaseous lithium batteries do indeed have a high level of technological content.

But ordinary users aren't going to take apart your phone to experience the technological sophistication of your lithium battery firsthand!

The "technological feel" of a good technology product should be something that users can intuitively feel from its appearance, so the Orange 1 phone naturally needs to do a good job on its appearance.

Humans are honest visual creatures; only when faced with a beautiful woman will you want to understand her inner world.

Only when faced with a phone that looks high-tech will you have the patience to learn about the cutting-edge technology it uses.

The gaseous lithium battery used in the Orange 1st generation is a true cutting-edge technology, unlike those knock-off phones from North China that simply come in a basic cardboard box costing only 1 yuan and are simply sealed.

Chen Mo wanted to make their products clearly different from theirs, starting with the outer packaging.

现在的改进的橙子1代的总成本：178元的物料+17.8元的组装成本（一般是物料成本的10%）+华北强档口分销体系渠道成本30元=225.8元。

As for why we didn't use e-commerce platforms like Taobao or Jingdong, back in 2010, people weren't as accepting of online shopping as they are now, when they pick up packages every few days.

Most people still don't quite trust mobile phones, which are "high-priced" electronic products, and prefer to go to physical stores for convenient exchanges and repairs.

Although the online channel cost only accounts for 1-5%, about 20 yuan, the sales of Chen Mo's Taobao store are truly impressive.

If you borrow someone else's mature online store channels, the cost is no different from that of Huabeiqiang, and the return cycle is even slower after going through two rounds of manual labor.

If Chen Mo needs to quickly recoup funds for his first batch of 1000 Orange 1st generation mobile phones, going directly through the well-established distribution system in North China is the best option at present.

After the Orange 1 phone was drastically modified from a feature phone to a smartphone, the total cost soared to 225.8 yuan. Taking into account additional costs such as rent, utilities, labor, taxes, and subsequent operating costs for Orange Technology, the final price of the Orange 1 phone was:

499 yuan!!!
Currently, leading companies in North China generally adopt a "cost x 3" pricing strategy to determine the ratio of cost to terminal price.

Don't call Chen Mo a villain; he was actually showing mercy.

Now, those competitors in North China who make knock-off feature phones that can access the internet, log in to QQ, and play games are out of the question.

假设他们的生产成本在225.8元，那出厂价就是316.1元（+40%）。    档口代理商拿货383.7元（+21.4%），各地零售终端给用户的售价高达500-550元（+29%~36%），向上取50、100的整数。

Chen Mo's pricing strategy of lowering the price of the terminal by 99 is quite unusual.

Of course, this approach was not his original idea; he simply followed the practices of most manufacturers in later generations.

Under the strong distribution system in North China, with a terminal price of 499, if the first batch of 1000 Orange 1 phones are sold out smoothly, Chen Mo's profit will be 9.6 yuan.

Chen Mo spent three months working at Orange Technology, a small workshop, and only earned 9.6 yuan, which was even less than what he could earn working at a chrysanthemum factory!

However, startups that can make money right from the start are extremely rare.

Most people are already grateful if they don't lose money and can get their companies running smoothly.

Profits are too low; it's not as profitable as the real estate industry's game of borrowing new money to repay old debts, a kind of musical chairs financial game. This is why many people are unwilling to engage in real business.

If you can't even get off to a good start in the early game, how can you expect to have a great late game?

499! !! !!

With this price, and the hype of being the first smartphone released in China amidst the smartphone wave brought by Apple, Chen Mo refused to believe that it wouldn't sell 1000 units.

Moreover, this is the Orange 1st generation smartphone with its own core cutting-edge technology, and it sells for a price similar to that of a feature phone today.

In the current domestic market, it can be said to be very cost-effective.

Of course, if Chen Mo's e-commerce channel operations mature in the future and he doesn't rely on Huabei Qiang's mature distribution system, the cost can be further reduced to 13%~15%, which can save a lot of intermediate channel fees and reduce the terminal price.

Chen Mo refused to believe that, with Orange Phone holding the line, these strong competitors in North China could still sell electronic waste for three times the price as easily as they did in the feature phone era.

This isn't Chen Mo generalizing; users also have the right to enjoy the technological experience of recycling electronic products at low prices.

You're selling electronic waste to users who are paying the price of a brand-name computer—isn't that just deliberately trying to disgust them?
Chen Mo felt he could step forward and take action. He used to say that if he couldn't change his peers, he could change the industry, but that was really weak.

Now I'm going to teach my peers a lesson and crush those who exploit users with electronic waste.

Let our competitors in North China see what it truly means to make products with heart. We've taken this to a whole new level and swept away all the chaos in the industry.

Let Orange 1 Mobile teach you a lesson on how to let users buy truly good mobile phones at reasonable prices.

Of course, Chen Mo kept a low profile before giving the lesson, since the Orange 1 phone still relies on the strong distribution channels in North China for sales!

Currently, Chen Mo only has one shop on Taobao: a small store selling secondhand electronic products used by a beautiful woman.

The monthly sales volume of this small shop is usually only enough for him to earn some pocket money. To use it to sell the first batch of 1000 Orange 1 mobile phones is completely like a small horse pulling a large cart, and he is powerless to do so.

Given the current traffic and brand awareness of this small store, it is nothing short of wishful thinking to launch the Orange 1 phone on a large scale in a short period of time and make a profit.

To establish Orange Technology's brand, it needs to rely on a mature and robust distribution network in North China.

Don't underestimate these offline channels. The later generations of Red Factory and Blue Factory relied on their offline channels all over the country, and even without focusing on cost-effectiveness, they still lived very well.

As Chen Mo rattled off the new features of the Orange 1 phone, a brand-new blueprint for smartphones seemed to slowly unfold before Zhao Tiezhu's eyes.

With only some key components changed, a prototype of a smartphone, completely different from the previous Orange 1 phone and full of imagination, was born in this somewhat chaotic little workshop.

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(End of this chapter)