OnePlus doesn’t make a penny profit when you buy its new smartphone
We all knew the OnePlus One was going to be cheap — for a flagship phone, at least. But I don’t think any of us anticipated it would start at as little as $299 off-contract when competing devices — such as the Galaxy S5 and the HTC One M8 — cost around $600. So, how has OnePlus made its debut smartphone such a bargain?
It hasn’t skimped on build quality or specifications, that’s for sure. What it has done is pass up the opportunity to make any kind of profit. The Chinese startup won’t make a penny when you buy its first device because they’re all sold at cost.
That means that the price you pay for the One is exactly the same price OnePlus paid for its components and assembly.
“We are selling the phone at cost,” OnePlus CEO Peter Lau confirmed to TechRadar. “We are able to do that by redistributing our costs to better benefit the user.”
OnePlus keeps its costs down by having a small marketing budget and selling all of its devices directly through its own website, rather than through third-party retail channels. The company relies on community interaction and its own online marketing efforts to raise awareness for its product.
It’s still unclear how OnePlus can be sustainable without making a profit on its devices, though. It doesn’t sell any software or services like Google, or put sponsored content on its devices like Amazon. We probably shouldn’t expect the company’s next phone to be so cheap, however.
It’s thought OnePlus has decided to swallow its costs and give up its profit on this particular device to make a name for itself. It needs to raise brand awareness and give users a compelling reason to buy its device so that it can compete with the likes of Samsung and HTC for smartphone market share — and a great way to do that from day one is to sell its debut product crazy-cheap.
But in order to keep its business going long-term, OnePlus will have to make a profit on something at some point.