Those Years When I Was Forced to Top the Forbes List

Chapter 311 Hardcore Prices Under Deep Planning
Let's discuss this?

Let's discuss this?

"Wow!"

These words were like a pebble thrown into a boiling oil pan, instantly igniting a wave of emotions that had been suppressed throughout the room.

Is this even negotiable?
The audience erupted in chaos, with many people standing up.

No longer were there reserved applause or focused silence, but rather a chaotic, enthusiastic, and participatory wave of sound.

The tech enthusiasts practically shouted it out:

"It can't be any more expensive! We've already told you the cost!"

"Four thousand! Four thousand five hundred is the absolute maximum!"

A young man wearing thick glasses stood up excitedly, waving a small notebook filled with his guesses: "Impossible! The chip and screen cost over two thousand! Including other components, R&D, assembly, and distribution, the cost is four thousand! Let's sell it for five thousand!"

The university students in the back rows were also caught up in this fervor, buzzing with discussion:

"This phone is so awesome, I'd pay eight thousand yuan for it! I'm going to get it from my dad no matter what! Just tell me how long it will take to sell!"

"Don't shout nonsense! It's not that expensive! It's made in China!"

"What do you know? They use all top-of-the-line foreign components! They're expensive! Just based on the functions they demonstrated, I think it's worth at least six thousand yuan!"

The university professor who had previously championed the N73 had now completely switched sides, his eyes gleaming with excitement: "I think it's worth six thousand! Worth more than my Nokia! The system and screen alone are worth the price!"

Hearing the voices around her, Xiaotong, a college student, felt her resolve waver, her heart leaping into her throat.

"Could it be a low price? Low price, low price, two thousand eight... three thousand... three thousand five, can it be sold for three thousand five?" she muttered to herself. Since she didn't understand the cost of mobile phones, she could only keep raising her psychological threshold based on the analysis of the surroundings. Her eyes were fixed on Chen Xuebing on the stage, both expectant and afraid.

The Spreadtrum employees were mostly college students, and their emotions were suddenly ignited by the heated atmosphere, with shouts that shook the heavens.

"Mr. Chen! Set a fair price! Let everyone be able to use it!"

"Just add a little to the cost price! We'll buy it!"

This is their boss, and also their major client!

They knew that if Kirin phones sold well, their baseband chips would have a future.

Flashbulbs went off like crazy, capturing this rare moment in business history—the climax of a launch event where consumers and other participants "participated in pricing."

Chen Xuebing stood in the center of the stage, a signature confident smile on his lips, patiently listening to the surging public opinion. He did not stop it; on the contrary, he enjoyed the collective celebration and value discussion sparked by his product.

Moreover, this was indeed something he had been hesitating about.

Pricing is not just about money; it also triggers many subsequent effects.

Lu Weibing constantly sought ways to make money and also mentioned the employees' ideas to him many times.

Singularity Technology offers relatively high salaries, and many employees are planning for long-term career development. They want to see the company make money so they can live well, build their own skyscrapers and buy luxury homes. They don't want to continue receiving subsidies from Long March Capital. Only when the company makes money can they feel at ease and believe that this is a long-term plan. This also reduces anxiety when investing heavily in research and development.

If it were him, he wouldn't want to entrust the rest of his life to a company that's losing money.

This relates to the employee's passion.

Passion! It's very important!

So we still have to earn money.

However, he is not a management expert, and when considering this issue, he constantly puts himself in different roles.

He thought of Xiaomi.

An efficient supply chain, lean manufacturing, and striving for zero inventory.

Since the pre-sale era has not yet arrived and the market cannot be fully predicted, at least two sets should be ordered from the same supplier. This can reduce the initial order quantity from the supplier and make it more efficient to place additional orders on short notice.

However, his bill of materials requirements are high and difficult to find. He even has to deliberately avoid Apple's supply chain to prevent production capacity conflicts. This is the fundamental reason why he inquires about Apple orders everywhere.

The remaining companies were unwilling to lower prices, and in their desperation, they had to make many compromises.

You want to negotiate a lower price, but the seller won't agree. You still need the item. What should you do?
Looking for apples.

Many suppliers come from Japan, South Korea, and Taiwan. These people dare to rip him off without restraint, but they would never dare to rip off Apple, the American "father" that sells $20 billion worth of electronic products every year.

His collaboration with Apple is not just about preventing Apple from seizing his supply capacity and holding him back; it's about going a step further and adding a cheap and complete supply chain.

Apple's supply costs are extremely low, its gross profit margin is extremely high, and its material overlap rate is also extremely high. With Apple's supply chain support, it can also pressure its original suppliers to lower prices.

But both Apple and he are in a rush, and their R&D progress is almost identical. Apple's original sales date was also the same as his, in June next year. So, the supplier's production capacity certainly cannot be allocated to him too much. Even if they cooperate, they will not achieve the desired effect.

Therefore, he deliberately waited until close to the press conference before revealing his internet thinking to Apple.

An extremist like Jobs, with numerous past accolades, would never allow himself to be defeated by others on an ideological level.

Therefore, he will definitely agree to the condition that Singularity relinquish some of its honors in exchange for cooperation on the supply chain.

Apple will definitely rush to redesign the product, delaying the release and sales.

Apple's requirements were much more detailed than his; just the App Store and 3G negotiations alone would have kept Jobs busy for at least six months, or even more.

The press conference will be postponed until at least June or July next year.

During the past six months, everyone's peak production periods have likely overlapped, giving him a chance to weather the storm with his suppliers.

If his supply price were to match Apple's, he could cut costs by at least 25%.

That's how ruthless they are.

If Marvell hadn't made so much money off the chips, this thing wouldn't have been able to change its design midway through, and they could have gone even further.

Next, there's another question.

Sales.

Increased sales can significantly reduce costs and losses, which in turn allows for greater control over suppliers.

So, if Lei Jun were to sell this phone, what would he do?
value.

First and foremost, consumers need to feel that it's a great deal.

First, you need to explain the difficulties you're facing and keep putting the consumer's needs first, so that the consumer feels embarrassed to haggle any further.

Then cut it again, breaking through the psychological threshold.

Actually, once the first problem is solved, the second problem becomes much easier to handle.

After about a minute, when the fervor of the audience had subsided slightly, Chen Xuebing returned to his senses and raised his hand.

This gesture seemed to possess a magical power, instantly drawing everyone's attention. The noisy atmosphere was silenced, leaving only rapid breathing and expectant heartbeats.

"Let's not guess the cost, let's be open and honest," Chen Xuebing's clear voice rang out.

The curtain behind him suddenly lit up, no longer displaying complex technical parameters or system architecture diagrams, but a string of extremely simple yet incredibly weighty numbers, one by one:

③

②

⑥

⑤

! !
Two exclamation marks fell heavily with the sound effects, followed by a label: BOM (Bill of Materials) cost.

"3265 yuan, that's the cost of our parts."

Chen Xuebing gave everyone a moment to react, then waved his hand, and the scene changed again, showing a photo composed of hundreds of contracts and invoices. The headers and company names of each photo were blurred out, but the prices were clearly displayed.

"This is a VAT invoice provided by our supplier. We each bought one according to the agreed purchase contract price and assembled it into this picture."

"In addition, there are R&D, mold making, production, distribution channels, marketing, and tax costs. We also have to support the business. Even small factories without brand recognition need to achieve an average gross profit margin of 10%-12%."

"Based on this standard, we should price it at 6000 yuan. If we don't count the investment in the mobile phone system, we can probably break even if we sell 100 million units."

"So I said, let's go with the market pricing model, let's make money according to the standards of small factories, and set it at 5999."

As soon as he finished speaking, the numbers on the screen behind him jumped wildly from 3265, like a slot machine.

⑤⑨⑨⑨!

This sparked widespread lamentation.

The university professor and several students guessed the price correctly, but they pounded their fists on the armrests of the seats.

"It really does cost six thousand!"

Although they guessed correctly, there was no surprise, which was disappointing.

College student Xiaotong's fingernails dug deeply into her palm.

She knew she couldn't afford it.

No matter how much the price drops, she still can't afford it.

Some people, however, remained glued to their screens.

"Don't panic, don't panic. They've built up this much with such a long wind-up, it can't be like this! It'll definitely be able to get a little lower!"

The number 5999 accurately predicted the psychological expectations of those in the know regarding costs and selling prices, but smart people also guessed that the price would be lowered.

There should still be a few hundred dollars of space left.

But the more knowledgeable you are, the more you realize how thin the profit margin is.

Even just a small cut would be better!

"However," Chen Xuebing on the stage frowned and shook his head, "then we thought about it, where was our original intention?"

"It's about technological equality, it's about making people who like our products place orders without hesitation."

An unexpected yet logical reversal.

The phrase "technology equality" has won over many people, making them fans of the Singularity brand.

Some of the more emotional people even had tears in their eyes.

Domestic operating system, great!
Technological equality is great!

Wang Jianguo, an elderly reporter in the corner, couldn't help but take two steps forward and loudly proclaim to the audience, "This phone is from one of our own domestic manufacturers, and people can still haggle over the price! Six thousand? If it were one of those foreign brands, wouldn't it sell for over ten thousand? Maybe they wouldn't even sell it to us! Some scalpers are going abroad and buying them like crazy! Then they bring them back and resell them to people who can afford the price!"

These words immediately resonated with some people.

"That's true! Think about when MP3 players first came out, how much did foreigners sell them to us for? Back then, the cost was only a few dozen yuan, just some kind of mixed signal conversion technology! They made ten times that profit! Even now, you see that person sitting in front of us? An iPod still sells for over a thousand yuan! The expensive models sell for three thousand! And a bunch of people are scrambling to buy them. Their technology is so much more advanced than the iPod's, isn't it? If there hadn't been a major technological breakthrough, would America be sitting on our moon here?"

"Hey, if you put it that way, I'm impressed! I'd buy it for six thousand too!"

"Yes! I'm going to buy one and start a disassembly thread on our civil engineering forum! Everyone, please help me bump this thread!"

"Hey, don't rush!" Many people who were already planning to buy panicked. "They've said that, the price will definitely drop!"

"It can be reduced! It definitely can be reduced!"

At this moment, Chen Xuebing on the stage also said the same thing.

"We immediately studied the solutions for each step! We discovered that if we managed things meticulously, reduced waiting time and waste, and didn't advertise on TV, we could save 300 yuan!" "In addition, we tried signing performance-based contracts with our distributors!"

"If sales are high and bring more customers to the mall, we'll lower our sales commission!"

"besides!"

The sound grew louder and louder.

"We don't pay the chip manufacturers for the solutions they design; we buy out the designs outright!"

"As long as sales exceed one million, we can break even! If sales exceed two million, we can subsidize consumers by another 150 yuan!"

"Then I think we should set a sales target of two million! Let's use the money to subsidize it first!"

After finishing his sentence, Chen Xuebing paused, looking somewhat uncertain as he asked the audience:
Do you think we can sell 200 million phones?

"Wow!"

The audience erupted in uproar again.

With such a price reduction of 300 and 150, and several items at once, how much money can be saved!
"It's available for sale!!"

"I'll buy it right now!!"

The cheers from the audience came in waves, and even the Spreadtrum employees were caught up in the excitement.

"it is good!"

Chen Xuebing shouted, and the "⑤" on the curtain shattered instantly.

④⑨⑨⑨!

The audience was stunned.

I guessed it would drop, but I didn't expect it to drop by a thousand!
This is cutting-edge technology! Not some roadside stall!

"Whoosh!"

A wave of applause immediately erupted.

Praises erupted from the audience, but Chen Xuebing raised his hand again.

"4999, this is the price we set two months ago!"

"But I still think it's too expensive!"

Their eyes were already brimming with surprise.

Are you coming again?
This time, Chen Xuebing calmed down, put one hand in his pocket, paced back and forth on the stage, and when he spoke again, he seemed a little anxious.

"We want to make high-end products, not luxury goods."

"Hardware is expensive, software is expensive, distribution channels are expensive, but we are the only ones who want to make it cheaper, even cheaper."

"What should I do?"

"If we want to make good products, we have to use the most expensive hardware and find the most talented software engineers, no matter how rare they are. After thinking it over, we decided to try to find a solution in terms of distribution channels."

Everyone fell silent.

Some people started discussing how the electronics mall downstairs from his house reportedly charges an entrance fee of 25%.

Some people whispered that Huang Guangyu of Gome became the richest man because all the home appliance manufacturers in the country were working for him.

"We cannot lose our sales channels," Chen Xuebing said in a deep voice. "Negotiations with distributors are quite difficult. Manufacturers are like this; they are upstream in the production chain and downstream in the sales chain. Some people have even told me that there are industry rules in sales, and no one can easily give in."

Everyone sighed deeply.

Yeah, it's fucking dark.

But without sales channels, where will they buy them?

"But today, everyone believes we can sell for 200 million."

Chen Xuebing raised his head again, his eyes filled with a powerful gaze: "I've decided to challenge them! To open up a new channel!"

"The future of the internet is in our hands, so why can't we trust it?"

"I've invested in JD.com!"

"They invested in Alibaba's Alipay!"

"Actually, there's a story behind my investment in Alipay. Two years ago, I said a sentence to Jack Ma of Alibaba, which consisted of six words."

Chen Xuebing raised one hand, making a six, and then said in a strong and clear voice:

"If you dare to pay, I dare to compensate!"

"Those six words stirred up a storm in online payments two years ago, and they also represent my expectations for online sales!"

"Wow!" The audience exclaimed in surprise.

Chen Xuebing didn't give everyone time to discuss further and said directly, "So we've decided! To do an online sales event!"

"We've launched an official website! And we're selling our first million units!"

"The first sales period is set for six months from now, around May Day next year. We can save everyone 400 yuan by selling online!"

The numbers on the big screen shattered into a sky full of stars in an instant!

"We've also set up a pre-sale channel! Anyone who places an order through our official website within two months and pays a deposit of 1,000 yuan will receive an additional 200 yuan discount!"

The screen slowly revealed: QD.com → ④③⑨⑨!
The moment this number appeared, there was an eerie 0.5 seconds of absolute silence in the venue.

Then, a wave of wild cheers erupted!

"Long live President Chen!"

Surprisingly, it was the Spreadtrum employees' contingent that started shouting first.

They are also college students. To be precise, most of them were recruited from major universities in Shanghai and were senior students of the three hundred Shanghai college students in the middle.

They also have the desire to buy, and this price is equivalent to most of their monthly salary.

Their bosses and partner companies created products that captivated these young people. Their company was also involved in chip manufacturing, and they even had the company present at the product launch.

Fortunately, they can still afford it.

This feeling made these students, who had just entered the workforce, feel as if they had joined a new, smaller society, and they were filled with a sense of belonging.

Although the seats were arranged in squares, they were connected in a fan shape. The audience in the middle heard the discussions of the Spreadtrum employees on both sides and curiously inquired about Spreadtrum, Singularity, and the General Manager Chen on the stage.

"The boss of Spreadtrum and Singularity is Mr. Chen! Mr. Chen is also a well-known investor!"

"Hey juniors, I'm also from Tongji University! Apply to Spreadtrum's campus recruitment after graduation! Starting salary for 985 graduates is 4500 RMB! 5500 RMB for master's students! 7000 RMB for computer science master's students!"

Envy surged instantly. Many proud college students realized that many of the thousands of people wearing red work uniforms on both sides were their predecessors, and that these people were high achievers who had entered the final destination of happiness in school!
Xiaotong, whose hope had been rekindled, clenched her fists tightly.

She wants to apply to this company next year too!
The other audience members, fifty forum users chatting excitedly, one hundred electronics market vendors pondering their own thoughts, some writing and drawing in their notebooks, and even members of the open-source software alliance discussing among themselves.

Jobs frequently asked his translator for advice.

The two sides had already reconciled their accounts and knew each other's supply chains inside and out.

At 4399 RMB, it's 400 RMB more expensive than Apple's pre-order price of $499, and it uses the same level of hardware. Even if you include the gyroscope that Kirin phones have, it's only just on par with Apple.

Why does Chen Xuebing's rhetoric excite the audience so much?
Do we always have to quote a high price first and then try to lower it?

Is this what Chinese-style sales are like?
But will American users buy into this approach?
He wasn't sure, but he really wanted to learn.

If Chen Xuebing knew his doubts, he might have told him: Your situation in the United States is too advantageous. Apple's ubiquitous supply chain and direct sales network make it impossible for people to empathize.

"Ahem!" Chen Xuebing knew the atmosphere in the second half of the event would be difficult to control, but today's speech was to be broadcast to internet users nationwide and might even be shown on television, so he grabbed the portable microphone and raised his voice:

"This discount of 200 yuan is only available to customers who pre-order through the official website. We are offering this discount in order to secure the first batch of orders in advance, which will facilitate production management and subsequent negotiations with suppliers. Therefore, customers who place orders later will not be able to receive this discount. We hope everyone can understand."

“We focus on research and development and production, and do not manage sales. So after the pre-orders are closed, our online sales will be completely handed over to JD.com, and the delivery will also be handled by JD.com. Although they also have some management costs, they are lower than those of offline stores.”

As soon as he finished speaking, a second website address and its corresponding price appeared on the screen: JD.com → ④⑤⑨⑨!
Everyone nodded.

The price dropped by 1000 yuan, saving me another 400 yuan! That's quite an achievement!
These were all painstakingly extracted, bit by bit!
Compared to the cost of 3265, they only spend around a thousand yuan! How much do they have to cover production, R&D, and sales?

“However, I’ve done the math, and we can still make a profit,” Chen Xuebing suddenly said, making a change of topic.

Everyone was shocked.

Good grief! Another "however"!
Are you really not planning on staying together?!
“I think that since the sales volume is set at two million, the supplier’s price will definitely be lower, and we might be able to offer some discounts.”

At this moment, Jobs, who was in the audience, heard the translator, chuckled and shook his head, somewhat speechless.

That Chen is such a liar!
The BOM cost of an iPhone is only $255, which is about 2000 yuan at the current exchange rate of 7.83!
It will definitely drop further next year.

They've already secured their supply chain support, yet they're still playing the victim.

But after so many years of being dumped at high prices by foreign brands, how could audiences possibly think this price is expensive?
After hearing Chen Xuebing's frank and open explanation of the costs, I felt it was even more worthwhile!

4599, 4399, are they going to lower the price again?
"Mr. Chen, we can't lower the price any further!" a Spreadtrum employee shouted, standing up.

"Yes! We're still waiting for you to develop the system!" came a response from the audience.

Chen Xuebing laughed.

"For a high-end phone to achieve sales of two million units, you need to have some guts."

"As long as everyone supports us, we can still make a profit!"

"So, this time, we're forfeiting all existing profits!"

"Lower the price all the way down!"

Bang!
The numbers on the screen shattered again!

QD.com → ③⑨⑨⑨!
JD.com → ④①⑨⑨!
The entire venue seemed to have been put on pause.

Immediately afterwards, the audience erupted like firecrackers.

"Brilliant!"

Cheers, shouts, and leaflets being tossed into the air.

Applause surged toward the stage from all directions, and for the first time, loud whistles were heard in the venue.

Seeing the spectacular reaction from the audience, Chen Xuebing loosened his tie and breathed a sigh of relief.

The previous hour was not wasted.

The price of 3999, breaking the 4 mark, is his explanation for today's press conference.

The price of 4199 or 4000 yuan marks a milestone for Singularity in reaching the high-end price segment.

How much do you earn?
I made a small snowball.

Sales volume drives the supply chain, the supply chain drives profits, and profits drive scale.

The snowball has already been started; now we'll see how big it gets!
(End of this chapter)