For most trading companies, an ETRM costs about $100k-200k/year, plus taxes and implementation fees. The smallest, simplest, exchange-only shops can get away with simpler software (around $60k/year) – while the largest companies, with enterprise support, physical logistics, and heavy workflow needs may pay $500k/year or more. Contract terms are generally 1-5 years.
These prices are what we've gathered across the industry – meaning, they include what we charge and what we've heard about our competitors.
What levers change the price?
Usually, the factors that drive the pricing quote are:
- Complexity of the portfolio (i.e., exchange-only vs bilateral, commodities)
- Number of users
- Needs for physical logistics features
- Expectations around support
The biggest item that changes the cost of the solution – and which can ultimately triple in cost during the life of an ETRM/CTRM system – is implementation.
Implementing ETRMs is a difficult, consultative task that often involves building some customizations. Vendors will typically quote the lowest number that seems likely, but include a provision that indicates the actual spend will be based on "time and expenses", or T&E.
What costs aren't accounted for?
Typically, the price of an ETRM system includes the software itself and a low estimate of the implementation cost. It does not include:
- Market data (ICE, CME, Nodal Exchange, Platts, Argus, OPIS, LMPs)
- A market data loading/aggregation solution (i.e., a way to get the market data into the ETRM system)
- A business intelligence solution (i.e., custom reporting)
Is Molecule any different?
On pricing, we are in line with standard industry pricing. Where we are different:
- Our contracts are generally 1-2 years, and can bill monthly.
- We include implementation costs in our fixed-price quote – not an estimate and no T&E for the scope we agree on; we wear the implementation risk.
- We include some market data in our quote (where the vendor allows us to), such as the LMPs and block pricing we provide for North American ISOs. We also have our own tools that load the data automatically.
- We include an embedded business intelligence solution, so we can provide custom reports as part of our subscription.