For traders mostly placing MIS intraday orders in small quantity, the brokerage becomes a big hurdle to scalp profitably. Combined with the STT / taxes and auto-square off charges etc, zerodha only remains viable for traders dealing in larger quantities.
If zerodha reduces brokerage , then influx of smaller traders will improve. Volumes will improve also.
Now, the question arises how does zerodha cover the operational costs then ? There can be several alternate sources of revenue :
advertisements ( by voluntary opt-in in exchange for reduced brokerage)
user participation in surveys / users consenting to donation of their user data
monthly subscription plans for brokerage at reduced rates
paid add ons / tools / books / education resources
an alternate Lite version of zerodha for basic users having reduced functionality , limited customer support and slower servers.
pooled trading. A system where different traders who want to take the same trade can combine their order of small quantities into a single large order ( just like car pool service ).
(This would be advantageous only if it reduces overhead costs for zerodha, because i don’t know how much an order “costs” for zerodha , i.e. the expenses involved in processing it)
coordinating with exchange for selectively reducing brokerage for small cap stocks , to enhance liquidity and improve market efficiency.
User trust and privacy come first. We’d never monetize them.
This can nudge people towards overtrading, more order placements isn’t always good for the customer. Also, this doesn’t sustain long term either.
Our approach has been to make educational resources openly available, rather than using them for monetization or data capture.
Platform performance, reliability, and robustness aren’t features we’d differentiate across user segments. Everyone should have the same experience.
Lite version is something we can explore. However, not sure on pricing bit.
Regulations don’t permit this. It isn’t practical from an execution standpoint either.
It doesn’t add meaningful value. A stock should be chosen for its merits, not because it’s cheaper to trade.
thank you for the elaborate reply. I’ll write some counter-points, not to argue but just to debate.
Some users don’t mind ads, rather they enjoy them. And some brokers have 2 sub products , a full service brokerage app , and a discount brokerage , parent company being the same. Eg IIFL & 5 paisa . Yes it breaks the experience but user has a choice.
User is voluntarily donating their data, not forcefully. And some users have free time and like to help by participating in surveys to support the cause and for earning freebies.
the current structure of fixed brokerage per order nudges users towards taking larger quantities / lots in a single order, which isn’t always good for customer either. Maybe traders who make larger orders should pay more brokerage.
Some people don’t value education unless they pay for it. Content creators put more effort if sufficiently incentivized.
Equality is a very ethical idea but not so practical to devote same manpower of customer support executives to an influential user of net worth 100 crores vs an insignificant user of 10 lakhs net worth only. And also a user who does more frequent F&o trades and generates more revenue for zerodha should be prioritized from a business standpoint.
My intention is not to seek support but contribute ideas from which value can be derived to support the zerodha mission. I apologize if i wasted time of customer support. These discussions are pleasantly intellectually stimulating for me.
I think it would make sense to have fixed monthly plans for automated trading systems, for optimal usage we need to break orders into multiple small trades and can’t afford to pay 20 INR for each of them.
Thanks for taking the time to share your thoughts. We appreciate discussions like these
Some users may not mind ads, but that’s not the business we want to build. Keeping the platform free from ads ensures there are no conflicting incentives.
Even if users are willing to share their data, we prefer to collect only what is required to provide our services. We don’t want our business model to depend on user data, whether it’s shared voluntarily or otherwise.
We’ve deliberately kept brokerage simple and transparent. We don’t charge differently based on order size, trading volume, or customer profile. A flat pricing model is easier to understand and treats everyone equally.
We believe financial education should be freely available. Education has always been a way to help more people participate in the markets, not a revenue stream for us.
From a business perspective, this approach seems reasonable. However, we’ve always believed that every customer deserves the same pricing and the same level of fairness, regardless of whether they have a ₹10,000 portfolio or a ₹10 crore portfolio.
Many of these ideas can certainly increase revenue, but we’ve consciously chosen not to optimize for every revenue opportunity. Simplicity, transparency, privacy, and fairness have guided our decisions from day one, and we believe they’ve served both us and our customers well.
A subscription model comes with its own trade-offs. For example, if it costs around ₹2,500 per month, many traders may feel compelled to place more trades just to recover the subscription fee. We don’t want customers to feel pressured to trade simply because they’ve already paid for a plan.
Now, customers pay only when they actually trade. This also makes them more conscious of the trades they take, encouraging them to focus on quality over quantity rather than trading just to make a subscription feel worthwhile.
I meant a subscription could be optional here. A trader can choose to not opt for it, and go ahead with existing 20 inr per order.
All traders are different, and can’t be put in the same bucket, as even you have pointed out.
For algo traders like me, paying 20 inr > 250 trades in a day, amounts to > 5k per day, and isn’t sustainable in the long run, even a 10k brokerage per month would be better
