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How much does an ETRM cost in 2021?

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.

Cost Savings

The Sky is Falling. Get Skinny

As oil prices approach 18-year lows, companies around the globe are already beginning to feel the squeeze. Everyone we talk to points to corporate spending freezes and cost-cutting.

Bob Ronin, previously SVP at Fidelity Investments, writes on CIO.com that one of his top tips for reducing IT cost is to move to the cloud. "Storage and hardware no longer need to be on-site and the cost of renting can be much lower than the cost of owning as resources are only used when needed."

If history is a predictor of what to expect during the current dip in the economy, we'll see an immediate spending freeze followed by drastic moves to cut costs. The difference during this COVID crisis is that many of us are working from home and scrambling to make sense of what's to come.

So, what can you do now?

  1. Challenge the way you have been doing business and identify opportunities to update your processes and technology so that they better match today’s business environment.
  2. If any of your large expenses are IT platforms, determine whether you can replace them with cloud-based software. Working from home provides a great opportunity to do high-concentration tasks, like evaluating tools.
  3. Gather pricing, deal length, and contract terms for the products you currently use.
  4. Regroup internally for feedback and round-table idea sharing.
  5. Be ready to move swiftly when asked to make a change.

If you believe your department will be asked to cut costs in the coming months, now is the best time to prepare. Evaluate your options while you have an extra hour or two (since we temporarily do not have a commute).

If your company trades commodities and uses an expensive on-premise legacy system for deal-capture and risk management, we're ready to help. As ETRMs go, we deliver value by providing fairly-priced, modern software that automates your life, without the implementation & transition costs you usually see in our industry. Further, in these unpredictable times, a system backed by a team that's always remote, can provide support and reliability that nobody else can.

The sky may be falling, but Molecule is still working, as are many other companies across various industries that can help you get lean before it’s even time to migrate back to the office.

Stay healthy and safe. We're here if we can ever be of help.

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