Many of you may be aware of the unique selling proposition that Zecco is making.

Free stock trades!

Now, I don’t blame the founders. They came up with a great marketing tool and promoted the heck out of it. After all, Zecco is trying to grow and maintain its customer base. I’ve long argued that the cost of trading will come down to near zero because the marginal cost of another trade is near zero (there are some SEC fees, etc…). Wherever you see an industry with a marginal cost of zero, you know prices will keep decreasing. Of course, Zecco monetizes its active users through option trading and margin balances. It will continue to offer ancillary monetizable services, while it advertises the free areas.

For an in-depth view of the Zecco experience, you can check out My Money Blog’s experience with the Zecco site.

While some people love the experience and want to save a few dollars, the overall impact of switching your account to the site really needs to be analyzed. There’s a few reasons for that:

1. Most people are not active traders, so they don’t really care whether the commission is $10.95 or free.

2. Interest rates on credit and debit balances may not be as competitive as what you get with the larger discount players.

3. There are other things that go into choosing a brokerage like trading ease of use, research, advice, etc…

In other words, there’s no guarantee that you’re going to like the “Zecco” experience any more than you would some other discount firm. In fact, based on some of the feedback, it looks like the customer service leaves something to be desired (sort of like the vonage customer service - they’re open 24 hours a day/7days a week to open an account, it’s M - F to close one!). So while it made a big marketing splash, you should really consider whether it makes sense for you to switch.

Utility shouldn’t be and is not guided by price alone, other factors do come into play. For some people at least