Are you stuck paying the same subscription amount every month for your EDI solution, regardless of fluctuation in your usage volume? Even worse, is your provider’s pricing model hard to understand and/or too rigid for the seasonal nature of your business?
At Better EDI, we believe EDI pricing is broken – but it doesn’t have to be that way. Here’s why it’s critical to your business profitability to choose a provider with a transparent and scalable pricing model – and how Better EDI’s pricing is different from the industry standard.
Why Most EDI Pricing Is Confusing
When EDI was first introduced in the 1960s and expanded in the 1970s, businesses had major concerns about the cost of data transfer – which was much higher in the days before everyone had broadband internet. So EDI transaction costs were directly related to the size of the documents being exchanged, measured in number of characters. The basis of pricing was the kilo-character (1000 characters), the size of a small purchase order. Today, businesses can pay anywhere from two cents all the way to 40 cents per kilo-character.
That pricing model might work for a business with a small volume of EDI transactions. But if you’re a giant retailer sending huge documents with, for example, all the addresses of your nationwide retail locations, that cost can quickly put a huge dent in your budget. And if you’re not well-versed in the technical aspects of EDI, you may not have a firm grasp on how big all of your purchase orders are. Or, you may have lots of different-size purchase orders making it difficult to estimate what your costs will be in any given month.
That challenge is why many providers don’t provide pricing on their website – you have to talk to a sales representative who can gather your transaction information, crunch the numbers, and estimate cost for you.
Another potential cost to keep in mind is overage fees. Some providers still operate on antiquated long-distance phone service plans, resulting in added costs for going over their plan. This essentially penalizes you for growing your business.
Integration Costs
Some businesses with simple supply chain networks can use EDI as a stand-alone data exchange system. But in today’s increasingly global network, you will likely find yourself having to exchange information between multiple software systems including WMS, CRM, and other third-party solutions. This can add to pricing confusion, because EDI providers add a fee for each integration – so if you have multiple trading partners with diverse systems, your costs can again add up. This can also happen if your provider has to add components in order to make those integrations work.
While cost of integrations isn’t easily avoidable, reducing the opacity in how those integrations are priced in order to accurately calculate your projected costs for a year of EDI service shouldn’t be so difficult.
Why Our EDI Pricing Model Is Different
At Better EDI, we think pricing should be a lot more simple and transparent. We also believe any EDI pricing model should allow you to scale your business easily, whether for overall growth or seasonality, without fear of skyrocketing overcharges.
Using our simple EDI pricing calculator, you can just enter your number of EDI transactions per year, the number of systems you need to integrate with, and the number of busy months you have in a year. The calculator will show you an estimated number of credits you’ll need, along with your cost for the year – no confusion, no complicated math on your end.
To get an even better idea of your yearly cost with Better EDI, you can add in a bit more business information. What did you spend on EDI last year? What’s your projected rate of growth or projected number of transactions in the next year? Do you have any major projects in the works that will affect your EDI usage?
Pricing Illustration
Want to see how the calculator works – and how it compares to figuring out pricing with other providers you’ve tried? Here you go:
When you first land on the pricing page and scroll to the calculator, this is what you’ll see:
With no information on your business usage, you’ll see a basic plan fee with number of included credits. Now, let’s add a little more information using the sliders on the left, assuming you processed 40,000 orders last year (an estimated 160,000 transactions):
This gives you the suggested plan for your usage (Basic), along with the credit bundle you should consider and your updated annual cost estimate. Finally, we can add a little more information unique to your business – your integrated systems and number of busy months. For illustration, we’ll use the mid-range for both:
Now you can see your estimated cost based on your number of transactions, system integrations, number of busy months in the year to account for seasonality, and the discount you’ll enjoy on your credit bundle for this scenario.
Quick note on that “busy months” entry: we include it because with our pricing model, you don’t need to pay the same subscription amount every month regardless of usage. Instead, by including your busy months in the calculation, you can buy based on the number of credits you’ll need throughout the year and use those credits as needed. Didn’t quite buy enough, or (congratulations) had a heavier busy season than expected? You can re-up on credits to cover your needs.
On the other hand, if you only have three or four really busy months due to the nature of your products or industry, you won’t be paying for a high subscription tier year-round to cover just those busy times.
But wait – what’s a credit? How do you know if you need the Basic or Professional pricing tier? Don’t worry – that’s pretty simple too.
How Our EDI Pricing Works
To start with, Better EDI has three pricing tiers: Basic, Professional, and Enterprise. Which tier you need depends on how many integrations you need with other systems, along with your estimated volume of transactions for the year (and number of busy months you have). We also understand that your tier may change, so we don’t lock you into a two- to three-year contract that may not fit your business as it grows.
From there, you can choose a credit bundle that corresponds to the number of transactions you’ll perform in a year. One credit equals one EDI transaction. And while some providers consider each movement of, for example, a purchase order coming into your system and then that same purchase order going out to your 3PL partner as two separate transactions, Better EDI considers it a single purchase order. That single document costs one credit, as opposed to two (incoming and outgoing).
Didn’t quite guess the right number of credits for the year and need more? Business in growth mode and you weren’t sure how many you’d need? No problem – you can add more credits at any time, and all credits are good for a year from purchase. We even have a handy automatic re-up program if you want to add credit bundles as you use them.
One final note about our pricing model: you won’t pay extra for GS1 or UCC-128 labels. Labels are included in our EDI service.
How Better EDI Can Offer Transparent Pricing
So why can’t all EDI providers offer clear, easy-to-understand pricing to their customers?
The simple answer: they can, but they’d have to get rid of a lot of bloat in their products. As we mentioned earlier, EDI pricing is broken, and one big reason for that is that many providers have collected a hodge-podge of added features you don’t really need. And in adding that bloatware and bolting it onto their EDI solutions, those providers have amassed major overhead. This requires constantly rising (and often more complex) pricing in order to cover their expenses on new components or pieces for their systems.
On the other hand, we built Better EDI from the ground up with none of that bloat. Because of our more efficient software model, we can offer much simpler pricing – so you can focus on building your business instead of figuring out how much your EDI expense will add up to this year.
Our main takeaway is this: EDI is mission-critical for your business, but that doesn’t mean it has to be a blind money-hole thanks to impossible-to-understand pricing. We believe you should be able to figure out your EDI expense without having a sales rep explain complicated terms that affect your total expenditure. That’s why we’ve added our pricing calculator right on our website: so you can estimate your expense before you ever get in touch with us.
Ready to see how Better EDI can simplify your EDI integration without added confusion? Get in touch today.