Why zerodha have such low brokerage compare to others how they earn?

Zerodha is a leading discount broker in India.

As per your doubt. How discount brokers offer services with such low brokerage ? right?

Because Full time brokers for example Sharekhan, ICICI Direct, HDFC Sec etc. These full time brokers have good number of offices very nearby to our home. Suppose Sharekhan have more than 10 offices in Hyderabad and Full time brokers will have special market analysis team who gives investment ideas to their customers. Because of These many offices their staff is more and for analysis team they spend more money. They have own trading platforms which may give more stability. Due to all these they have higher brokerage.

On other hand Discount brokers have generally only one office through out the country. E.g Zerodha have their office in Bangalore. They will not have any analysis teams that’s why don’t offer any investment ideas. They depends on third party trading platforms which decreases their expenses ( But recently Zerodha came with their own Trading Platform ) Because of these lower costs they can give services with lower brokerage.

Generally who want to be investors better to have account with Full time brokers. For Traders better to have account with Discount brokers.

Recommends There is lot of discount brokers with even low brokerage better to have an account with have experience attest 3 years in the field and have good support team.

Hope Your doubt clarified.

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Like I have always said, the question is not why we charge so less, it should be why others charge so much more in an online environment like this.

In an online world, the cost of executing a trade for a brokerage doesn’t go up with the size of the trade. So if you buy 1 share or 100 shares, the broker is putting the same effort. Hence when we started, we said, if the effort is the same, why charge differently let us charge Rs 20 irrespective of the size of the trade.

The issue though is, because we charged so less compared to others, suddenly doubts arise. Does Zerodha provide sub standard product? Is there a risk? Hidden charges? and more.

I guess over the last 5 years we have put all those doubts to rest, continuously offering something new. With our new trading platforms Pi and Kite, reporting tools Q and Quant, and all the other things that we run (http://zerodha.com/technology), I guess we should be counted amongst the top brokerages in terms of technology as well.

Here is the interesting thing, we have done all of this without taking any debt on books and ensuring that the business is profitable. We are probably the only brokerage in the country with zero Debt, not even a singe Bank Guarantee as well.

Phew, that was quite a sales pitch… :slight_smile:

4 Likes

@Nithin, love da… love the way u guys operate, would love to see you among the top cream companies in India, in a few years time. All the best.

Hi Nitin
Can I know why You hide my answer ?
You can comment on that If you have any issue with that. I think it is not fair. By hiding my answer I am getting an opinion that you created this platform not for public, But for your advertising.

Hey Vamsi, we typically never talk about Zerodha here. It must have been some moderator on this forum who might have tried to close this question (we typically close all questions asked about Zerodha). Anyways, I guess you should be seeing it now.