EDI outsourcing cost and charges for third-party vendor service
EDI outsourcing cost can be calculated according to different provider’s formulas. While there are similarities in how outsourcing vendors charge for their services, each one employs a different pricing formula. One vendor may charge a fee for a particular service, another vendor might not charge a fee. Or he will bundle fees into a total package price. Vendors who offer a Service Bureau or Web/Desktop Access follow a subscription service. This way you pay EDI outsourcing cost for what you use. Remote Administration involves people. In this case you pay for their time.
Keep the following points in mind, regardless of the outsourcing method you choose:
- There is an EDI outsourcing cost to integrate EDI with your business application. It doesn’t depend on whether you assume the task or pass it on to the service provider.
- There is a cost associated with someone in your organization to manage the business relationship with your service provider.
- Remote Administration assumes you have an in-house EDI system – therefore you still have to pay EDI outsourcing cost for hardware, software, maintenance and upgrades.
Service Bureau and Web/Desktop Access
The fee structures for Service Bureau and Web/Desktop Access are similar. Depending on the service provider, the structure may include any combination of the following:
- One time setup fee – no cost, flat rate or up to $750 per trading partner.
- Subscription fee – from $25 to several hundred dollars per month depending upon transaction volume. No subscription fee for vendors who offer blocks of transactions. Seasonal users may not be required to pay the fee during their off-season.
- Transaction fees – up to $3 per transaction based on volume. Some transactions, such as an Advance Ship Notice (856), can be higher. Transactions can be sold in blocks; when you run out, you may purchase more blocks. Vendors who offer a VAN service may charge by kilo character5 instead of by transaction. One-time users may have to pay a premium.
- Fax-to-EDI only – transaction fees can be higher because data entry is involved. Long distance or courier charges are extra when sending paper documents.
- Web/Desktop Access only – typically no cost to use the software.
- VAN charges – if your trading partner uses a VAN, the service provider will connect to the VAN on your behalf. They will pass the cost on to you at a rate of 5¢ to 50¢ or more per KC4 . Some service providers will bundle the VAN charges into their transaction fees.
- New trading partner or document setup fees – similar to one-time setup fees.
- Integration – up to $150 per hour, or a fixed fee per document type, per trading partner. Third party integration software is extra, if needed.
The fee for Remote Administration is fairly straightforward. The service provider will charge up EDI outsourcing cost to $150 per hour based on the estimated time it will take to monitor your in-house EDI system each day. A 12-month contract with a minimum of one hour per day is common. Adding new documents, adding new trading partners, or integration with your business application is extra. The service provider will quote an estimate beforehand. As your EDI program expands, you can expect an increase in the number of required monitoring hours each month.