We frequently get questions asking how our pricing model works, especially as compared to other vendors in the ETRM/CTRM industry. In answering the question "What will I save?", we first need to understand the pricing model for legacy (or on-premise) software.
Typically, with on-premise (or even single-tenant cloud) software like an ETRM, pricing has three components:
- Perpetual License Fee
- Annual Maintenance
- Services (i.e., installation)
For a mid-size ETRM/CTRM customer, let's say the license fee is $1m on a 4-year contract. This is the most negotiable part of the contract because 1) it's not where the real money is paid and 2) the underlying variable cost (what it costs to send you the software) is essentially $0.
The annual maintenance fee, however, is where the margin gets real. Annual maintenance is often 20% of the standard pre-negotiation license fee. So, $200k/year in this example. This is less negotiable because this money pays for the development team. We've also heard of this as "the money that pays for new features and bug fixes," which makes our sales team go crazy.
Services – now here's where the major cost lies. On a greenfield ETRM/CTRM implementation, services can start at several hundred thousand dollars. However, implementations typically go into the millions, or even tens of millions (not because they're budgeted that way, but because they quietly end up ballooning in scope and time). The cost is unbounded – and from what we've seen, services are typically 75% of the total cost to the customer of an ETRM/CTRM installation. (CTRMCenter has an article on this, here). This is the case for numerous good and bad reasons. But, from our perspective, the most important reason is that because of a time-and-expense billing schedule, vendors are not incentivized to keep billing for services low.
Molecule is different. We have a fixed-fee price for all packages, and don’t charge hidden implementation and maintenance fees. For more lengthy implementations and complex trading portfolios, we’ll let you know if there are any additional implementation costs at the beginning of your onboarding.
We have a minor fee schedule for a handful of things like new users, custom reports, and re-configuration of the application – but most of our customers never pay any hidden additional fees.
Package prices are calculated, on purpose, to be roughly equivalent to the 4-year amortized license fee + maintenance fees of another ETRM/CTRM. This takes into account that license fees are often heavily discounted for smaller customers – but the point is, we're not aiming for the lowest license fees in the industry.
We pride ourselves on being upfront and transparent with our customers. You won’t have to worry about being blind-sided by outrageous implementation fees and timelines. We include implementation costs in our Fund package. We will calculate implementation costs by the complexity of your trade portfolio if you choose our Core or Enterprise package.
We want to give you the best implementation experience - we do so by:
- Assigning an expert project manager on Day 1
- Avoiding implementation-related travel, if possible
- Figuring out what "success" means for you, and keeping laser-focused on that goal
- Building tooling for our Customer Success (support & implementation) team, so they can get their job done faster
This is how we create the most value. Our customers don't benefit from paying tons of money for implementation, and neither does our enterprise value.
If you’re ready to save money with a modern, scalable ETRM/CTRM like Molecule, check out our packages and contact our sales team for a demo today!
Updated January 24th, 2023