Xiaomi rose rapidly to become the world's largest startup in 2014 by selling its smartphones with thin margins, cutting costs by using online retail channels and doing minimal marketing.
It's hard to know exactly what reasonable means Xiaomi is referring to, but here are some though.
Business model only allows for 1-2% profit margins on smartphones.
Xiaomi, the Chinese smartphone manufacturer, just pledged that if they make profits beyond a certain point, they will give a part of it back to the users. In fact, they've set the limit at 5 percent of the net profit margin on hardware after adjusting for tax.
"If the margin crosses 5%, then we will find a way to return the excess above 5% to our users", Jun added.
Let's talk about profit That said, making profits in the smartphone market is easier said than done.
Xiaomi's strategy has never chased net profits when it comes to selling its hardware.
"From the beginning, we embarked on a relentless pursuit of innovation, quality, design, user experience and efficiency advances, to provide the best technology products and services at accessible prices".
A brand like Apple can afford to claim 87% profits, while controlling 18% of the market share. Nonetheless, this venture by Xiaomi converges with its core focus on providing high-end specs at a budget price. Much has been said over the years of the bang-for-buck of its $150 Redmi range, while countless comparisons of its higher-end Mi phones - which typically sell for $150-$300 - and flagship products from Apple and Samsung have graced the internet. As per reports by Counterpoint Research, Xiaomi overtook Samsung as the leading smartphone brand in India last quarter and during Q1 2018, Xiaomi has continued to increase its lead while Samsung has fallen behind.