Its very simple. AMTD will not be able to charge below their current price of $8.xx.
They are running a tight ship now just to break even, make a little profit.
Anyone knows that you have to charge a fair price to make money, any company that continues to cut prices to survive will eventually not make it.
This is a basic rule of markeing and pricing. Every business school teaches it, companies usually raise prices in order to pay for better service, good employees, innovation, and to provide a good product.
Cutting the product / service price almost always means that death is soon to come. Raising the price ususally means that the company will survive.
Heck $9.00 a trade is cheap and if you have a problem with that then you must not have much cash to trade with and trade somewhere else. I would not mind paying more for better service, quality, etc. That;'s why people want and have nice cars, homes, drink coffee at starbucks etc. WE Want To Pay For A Good Procut. The lowest cost provider we do not want. Do you work for the goverment? They always go after the lowest provider. See what they end up with!
Just my thoughts. Raise prices to $14.95! Then profits will dramatically increase, (margins) and most will stay and the one who leave AMTD to go to a less expensive OLB will be made up with the increase trade margin. That is what AMTD and others will do once the competition goes away.
Yeah, the paper confirm fees, also account inactivity fees, and increase in: bank wire fees, transfer fees, reorg fees, etc., etc....
...not usually fees that would apply to most customers. If you aren't ever charged those fees, you would never notice that they went up (unless you are anal and check them periodically like I do...heh heh heh).
You make some good points. However your viewpoint while not nessessarily wrong, is diametrically opposed to what the common thought process is of the former Datek subscribers.
Daytek became what it was, a Online service that was bigger than Ameritrade, because of the very philosophy of charging traders cheap trading prices AND giving fast order processing. Go back on this message board and see for yourself, Ameritrade has had problems doing either.
As I see it, Ameritrade now has a big problem...keep as many of the former Datek members as possible before they jump ship! They need to give them something or this merger will blow up in their face's.
The numbers say that they can now do something about cheaper trading prices. How low?
I think a BASE fee of $4.99 is possible, but even if it were $5.99 or $6.99, the point is......they need to more than just a little bit better than other online trading services, they have to go farther than that to hold what they got and to be better able to attract more in the future.
However, eventually I believe that the OLB will have to raise prices, or get many more clients who trade. Otherwise, companies like AMTD who do not diversify into other service offerings will never make big, or will be acquired by another company that has other services, such as a bank, etc. which is not bad. Be good at one thing, be the biggest, be the best, and you will have some value that someone will want.
However, Etade decided to diversify and can keep trading prices where they are, grow their client base, offer other services. A good model to have.
Not to say that AMTD is a bad one as I said before - focused on one thing etc. One strategy will probably be for AMTD is that they will provide different levels of service and support for those who pay more to trade (and maybe will raise the price to match Etrades) and will kepp prices lower <$9.xx for those who are more experience trades, or who do not want to pay for the extra service. Then eventually AMTD can determine what their clients are will to pay for etc.
Just my thoughts. AMTD is a good company with a good product service.