Zerodha has established a strong business model that allows them to earn income and retain profitability. They accomplish this by catering to the demands of serious traders, charging for access to their platform and tools, and introducing maintenance fees for inactive members. Zerodha’s strategy of targeting a certain consumer base and instituting service fees has been beneficial in generating income. In addition, their policy of collecting maintenance fees allows them to weed out less active or less valuable customers, allowing them to concentrate on meeting the requirements of their more engaged and potentially more lucrative customer base. Zerodha’s market success has been largely down to its concentration on a certain consumer group and the introduction of various fees.
Zerodha disclosed its financial figures for the financial year 2022, and it is now a massive profit machine.
Some numbers :
Revenue: Rs 4,964 Cr
Profit: Rs 2,094 Cr
Spend: Rs 2,164 Cr
They spent Rs 0 on marketing
Zerodha has 6.2M active users compared to Upstox’s 5M users.
Here are the main reasons Zerodha is making a lot of money:
Account opening fees
They can charge Rs200 for each new Demat account.
Serious traders and investors are willing to pay a small fee to use their platform.
Also, it makes it seem like a high-end platform.
Even though Upstox is free to sign up for and sometimes gives out credits that can make the first 10 trades free
Maintenance charges
Zerodha has an annual maintenance fee of Rs 300. Yes! Zerodha’s subscription business is doing well.
This is how Zerodha makes money from people who aren’t actively trading.
Upstox/Groww, on the other hand, doesn’t cost anything to keep up.
A user who is not committed to investing or who invests insufficiently would likely switch to the competitors.
In this manner, Zerodha generates revenue and causes its competitors to incur losses by attracting low-value users.
Marketing strategies
Affiliate: You may have seen YouTubers advertising Zerodha as the premier trading platform.
Zerodha rewards Rs 2 per trade for life made by a referee. Consequently, lifetime revenue for affiliates. Unacceptable!
Education: Zerodha spends a significant amount of money on educating its users through Varsity, which improves their trade volume.
Zerodha has found a great way to make money! Focusing on high-volume traders, charging fees for account maintenance and opening, and coming up with smart marketing plans have all paid off.
Zerodha knows a lot about its target market and always looks for ways to improve its customers’ experiences.
