Hard Dollars

Hard dollars are cash fees or payments made by an investor or customer to a brokerage firm in return for their services. Hard dollar payments are usually set amounts that are known before a customer begins dealing with a broker.

Hard dollar payments include set transaction charges, monthly account maintenance charges, as well as paying for research provided by the brokerage firm. 

If an investor places a market order and pays the brokerage a $40 fee for that transaction, that is a hard dollar payment. However, if the brokerage then charges some spread to his client, that extra cost, which is borne buy the investors is known as soft dollars. 

For example, if a client buys 100 Apple shares for $150 per share and the brokerage firm charges $20 for every transaction and $0.10 commission per share then the client pays $20 in hard dollar fees and $10 in soft dollar fees (100 x $0.10). In essence the investor is paying a larger spread. 

In other words, hard dollars differ from soft dollar payments because soft dollar payments are paid within the commission revenue from making trades or deducted from the value of any other transactions. Another way to look at it is that hard dollar payments are physical 'actual' payments in cash, whereas soft dollars are add-ons and are never transferred from client to broker.