TRADING PARTNER PRICING: MODERN APPROACH, TANGIBLE IMPACT

By
Nicole Wilson
August 27, 2023
5 min read
Share this post

I am shocked when I learn that companies outsourcing their EDI services are still paying for the amount of data they exchange. I am shocked because of its out-dated pricing structure. Shocked because it isn't cost-effective. Shocked because while EDI technology has advanced exponentially over the years, billing systems remain static.1) Cuts EDI Costs SignificantlyI find that many companies find a VAN (Value-added Network) to manage their EDI service and as long as everything is running okay, they forget about it. I understand the thinking: If it's not broken, don't fix it. However, often it is broken and certainly not optimized to meet companies' needs.

No company is too big to save money.

A lot of the EDI data companies are being billed for is redundant data. Companies not only pay based the efficiency of their EDI software, but they also pay based on their Trading Partners' efficiency ( or inefficiency) as well. If big business were to dig into their monthly bills and validate their charged data, the gross waste of money would quickly become evident. But who has time to go through thousands of exchanges? You are only charged for the number of Trading Partners your company has exchanged data with within a billing cycle. Companies have saved as much as 80% migrating to Trading Partner pricing.2) ScalableNew company with big aspirations? Company with one season that is unusually busy? Trading Partner pricing is ideal for these types of scenarios–when a company's needs vary each month, or when a company expects growth. The Trading Partner pricing model varies with the business' fluctuations. This model only charges for the number of partners they exchanged data with per billing cycle. In other words, EDI costs move with a business. Lower in slower months, higher in busier months. Smaller bills for smaller companies Cost grows with a company's growth.3) PredictabilityHaving a predictable EDI cost is important for organizations of any size. Being blind-sided by an unusually high bill from a VAN because a large amount of data exchanged that month may cripple small businesses and startups. For Enterprises and businesses that may absorb an unexpected, massive EDI expense, the cost is still unnecessary, not practical, and a waste of money. Being able to budget and predict an EDI expense is useful in that it allows companies to allocate more revenue to more profitable tasks.

The cost for VANs to move large amounts of data is now a fraction from days of old. Why would companies continue to pay based on data (Kilo Characters)?

4) Cutting-edge TechnologyOne of the biggest benefits businesses experience when outsourcing their EDI service is taking advantage of the latest technologies without shouldering the expense. EDI VANs are evolving and improving their networks every day. No matter the size of a company, keeping an in-house EDI service up to date is nearly impossible. However, the benefits, improvements, and security experienced through exchanging data on a cutting-edge VAN strengthen relationships between Trading Partners. Businesses–and people alike–prefer interacting in the fastest, most efficient, and secure way possible. However, not all VANs are equal. How do you know if your VAN is always striving to better the service they provide? When a VAN is charging based on the number of Trading Partners rather than data, assuming that the VAN is working day in, day out to transfer data efficiently and securely is a safe assumption. Companies should be maximizing value while minimizing risks and inefficiencies. Being with a VAN offering Trading Partner pricing does both.5) It Makes Sense!It is sensible to be proactive in managing all reoccurring costs within an organization. Transitioning to an EDI billing structure that matches the needs of a flourishing business not only makes sense for practical reasons, but it also shows that a company is competitive. Moreover, services should also remain competitive to retain a company's business. Complacency wastes revenue. Diligence creates it!

Nicole Wilson
Engineering Manager, Layers

Latest articles

Compliance
March 26, 2023

Understanding EDI 214 Transportation Carrier Shipment Status Message

Understand the practical applications and benefits of the EDI 214 Transportation Carrier Shipment Status Message in logistics.

Technology
February 7, 2023

Plex Smart Manufacturing Platform Offers EDI Connectivity via BOLD VAN

Discover that BOLD VAN is now an accredited EDI VAN provider for the Plex Smart Manufacturing Platform.

Solutions
January 15, 2023

How Thorough Logistics Planning Strengthens Your Supply Chain

Delve into logistics planning, focusing on optimizing products, equipment, and processes for a seamless supply chain.

Achieve more from your EDI VAN provider.