How does BUX make money? The revenue model behind BUX
Free investing sounds great, but is it really? In this article, we explore what the revenue model behind BUX Zero is, so you can make an informed decision.
Do you want to try BUX Zero for yourself? Open an account with BUX & receive a free stock worth up to €200:
What does BUX offer for free?
- With a Zero order, you invest in stocks for free
- You receive a free share upon registration
- Opening an account is completely free
How does BUX make money?
I understand that users can become somewhat sceptical of the word free. Especially with companies like Facebook and Google, we are used to the fact that if something is free, we ourselves are often the product. Fortunately, this is not the case with BUX: your personal data is protected and cannot be sold.
Transaction fees on orders
At BUX Zero, you can only trade for free with a zero order. With a zero order, all share orders are executed at once for all clients, which allows BUX to save a lot of costs. However, you have little control over the way your trade is executed.
If you still want to execute a normal market order or limit order, then you will have to deal with a fixed price of €1 per transaction. When you invest with an amount of €100, this comes down to 1%, which is quite steep. When you invest with larger amounts, the transaction fees can be quite low. Because many trades are made with the BUX application, the company can earn a lot of money with this.
Transaction costs on US stocks
BUX also earns good money with investments in American stocks. When you buy American shares, your euros must first be converted into dollars. For this, you pay 0.25% of the order amount at BUX. This is probably the most important motivation behind the earnings model of BUX Zero.
How can BUX be so cheap?
Fortunately, BUX Zero is completely transparent about these costs within the application. Compared to other brokers, BUX Zero is still the cheapest option when you choose for the €1 orders.
According to BUX, they can offer their services so cheaply because the technology is getting more affordable. They also do not own fancy offices and only 100 people work for the company. When operating costs are low, BUX does not have to pass on high costs to its customers.