ETRM software enables the automation of front-to-back office energy trading and risk management processes to streamline workflows and proactively monitor risk throughout the trade lifecycles.
Some of these essential ETRM software features include:
- Deal Capture
- Automated position, P&L, and risk reporting
- Risk metrics + valuations
- Value at Risk (VaR)
- FCM Reconciliation
- Custom reporting
Given the scope of everything an ETRM can do, paired with the complexity of implementation and maintenance, they can be a significant investment. So, naturally, the next question that someone considering an ETRM purchase would ask is, "How much does an ETRM cost?"
Here is the most straightforward answer: An ETRM costs about $150k-250k/year for most trading companies, plus taxes and implementation fees.
The smallest, exchange-only shops can get away with simpler software (around $100k+/year) - but may run into deficiencies as they grow and need a more scalable solution.
With enterprise support, physical logistics, and heavy workflow needs, the largest companies may pay $500k/year or more.
As far as the length of the contract, contract terms are generally 1-5 years. We've gathered this information from across the industry – meaning they consider what we charge and what we've heard about our competitors' costs.
What Levers Change the Price of ETRM Software?
Usually, the factors that drive the pricing quote are:
- The 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 can ultimately triple in price during the life of an ETRM/CTRM system – is implementation
Implementing ETRMs is a difficult, consultative task that often involves building some customizations. Because of their complexity, lengthy and costly implementations are notorious in the ETRM industry. More than likely, you or someone on your team has experienced a nightmare implementation, which means your team may be hesitant to purchase a new ETRM.
This lack of transparency with pricing occurs when vendors will quote the lowest number that seems likely but includes a provision that indicates the actual spend will be based on "time and expenses" or T&E. Sometimes the costs associated with T&E can balloon into the millions, and cause implementation timelines to seem never-ending.
What ETRM Software 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 several hidden fees:
- Market data (i.e., 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's ETRM Software Any Different?
We are in line with standard industry pricing. However, we offer a fixed-price quote – not an estimate and no T&E for our agreed scope. Because we account for every cost in our fixed-fee quote, Molecule may look pricier than other ETRMs on the market.
However, we bid on a fixed-fee basis because Molecule is a SaaS ETRM. That means we don't need to build our application from the ground up for every new customer. Instead, we offer packages and add-ons — since we are multi-tenant, our fundamental infrastructure is already up and running before you've even signed your contract.
In turn, we can be transparent about our prices and implementation timelines. Once you become a Molecule customer, we determine an implementation project plan that includes the following:
- Configuring our app and integrations to your needs
- Loading your trades
- Validating your data
- Helping to build your reports
You'll also avoid hidden costs with Molecule's embedded business intelligence solution for custom reports. We also have built-in integrations for FCMs, all the major exchanges, and market data if the vendor permits. Moreover, we include LMPs and block pricing for North American ISOs. We even have built-in tools that automatically load data.
Molecule also differs from other ETRMs on the market because our contracts are generally 1-2 years. If you renew your contract with us, it's a much more seamless process with your data already in our system.