Xiaomi had really brought a revolution in Smartphone Industry with superb features at very less prices. The Same Mobile Phone will Cost almost double the amount with the same specifications in other brands.Many people might be wondering how Xiaomi will make profits when they are selling smartphones at such very low prices.
Let’s see how Xiaomi will make profits:
First and Foremost Thing is Xiaomi won’t spend that much on advertising. While It’s competitors are spending crores of money, Xiaomi almost spends nothing on advertising. It’s customer base is purely built in Word of Mouth. As Xiaomi Smartphones has excellent features, its existing customers will spread the word to their friends and family and there is no need for Xiaomi to spend on Advertising.
Xiaomi Smartphones wont be available in Offline stores and is only available on Online websites like Amazon. This will decrease the cost to a greater extent where Xiaomi has to spend very less as the Smartphones will be stored in Godowns. If the Smartphones are available in Offline stores, the stores have to compensate the Maintainance costs too. So, this In turn will increase the price of smartphones. As Xiaomi is available only Online, the price will be less.
Although the price is less, Xiaomi will keep a minimum margin and sell the mobiles. As the mobiles are sold in very huge numbers, the making cost will obviously less and the profits will increase due to the sheer magnitude of sales.
There are many other factors too but these factors are very critical for fetching profits to Xiaomi Company although they are selling mobiles at low cost.
