outrageous billThere’s no question that the cost of EDI service has come down over the years. The availability of inexpensive Internet connections, DIY connections, direct transfer, and the shifting landscape of EDI service providers have combined to reduce the overall costs of transferring order transactions between trading partners. But has transfer pricing bottomed out yet?



Of course you can’t really know if the price you’re paying for VAN service is ‘good’ if you don’t have anything to compare your price to. Comparisons are tough to come by because your trading partners and competitors aren’t always interested in sharing their internal costs. And EDI service providers aren’t particularly anxious to share the details of their billing practices other than the most basic information. So the best action you can reasonably take is to simply review your bill.

When was the last time you actually looked at the details of your EDI supplier’s invoice? For most companies, that time was immediately after their last service incident: that time when something went wrong with your connection, translation, service request, map update, etc. It typically follows a question like, “Just how much are we really paying for this lousy service?” And on reviewing the invoice you may have been surprised to find a few things you didn’t anticipate. Here’s one that can bump your bill substantially.

One of the most common billing methods is by the Kc (kilo-character), a measure of the number of characters transferred during the month. It’s an easy way to measure usage and a simple way for EDI service providers to offer competing pricing. In the arena of digital cameras that shorthand measure is the ‘megapixels’ of the camera’s sensor. For cameras, the higher the megapixel count the better - or at least that’s the assumption. In truth there are many other factors that come into play and affect the actual quality of the images your camera produces.

Another corollary is the cell phone industry’s historical pricing of ‘talk minutes.’ You paid for a monthly number of minutes of talk time over the cell phone carrier’s network. So if you had a monthly quota of 500 minutes for which you paid $50 you could expect a standard bill that covered your talk time, connection fees and taxes. And so your bill was never actually $50 but something more than that, and the detail was buried in the various lines of taxes and surcharges. But the real killer was when you ran over your monthly 500 minute quota and were charged something absurd like 25 cents per minute, making your bill double or triple. Of course those days are mostly in the past as cell carriers now concentrate on data bandwidth rather than talk time.

The same kinds of tactics however, are still at play in the EDI service provider world. When your volume exceeds your contracted monthly Kc count you can be charged significantly higher fees for your overage. One big difference here however is that your cellular bill was a personal bill that you paid. Your EDI service provider bill goes to your accounting department for payment and may only show up when you run over-budget… or review your bill.

The point is that your invoice is not necessarily what you think it should be. And you may never know what your true cost for EDI service is unless your provider messes up and causes you to spend an hour scouring your last few invoices. Rather than wait for that service interruption it may be prudent to pull a few invoices and investigate. You may not be able to actually lower your fees but at least you will know whether you should renegotiate for a different arrangement.

As the Beach Boys so eloquently put it, “Wouldn’t it be nice…” if the bill you receive is the actual amount you expected, no add ons, no hidden fee’s and no overages? I’d be interested in knowing what you find out.

 

 

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