So recently, I’ve been involved with helping out the family business.  I’ve been researching something called Eletronic Data Interchange, but more commonly known as EDI.  EDI is an electronic medium used to communicate transactions between companies.  Purchase orders and invoices are the main things I’m looking at, although it’s also used heavily by the medical field and a whole lot more.

Well, as a small business, obviously we don’t have the bankroll that large corporations do, so every penny is important. In my recent studies, I’ve found that since EDI is so new, there’s a HUGE variation in cost for the service, even for the SAME service.

Here are some examples:

COMPANY 1
Setup - $499.00
Monthly Fee - Starts @ $69.00 (75 EDI transaction limit) up to $169.00 (300 EDI transaction limit)

COMPANY 2
Setup - $2,500.00 (They emphasize ONE TIME fee)
Monthly Fee - $2.50 - $5.00 per transaction depending on volume

COMPANY 3
Setup - $0.00
Monthly Fee - $45.00 (includes 5 transaction, 6-50 $1.50/transaction, 51-100 $1.25/transaction…)

WOW! To be honest, I can’t believe how expensive this stuff is.

Now imagine a small business trying to decide whether to do this or not…Each invoice (or transaction) is ~$200-300…it adds up! Imagine if each transaction is smaller, $20.00. Which it can be, because we’re talking every single invoice and PO is a single transaction. Does EDI make sense? For big companies it does, because they no longer need paper and all the EDI costs are absorped by their in house EDI investment.

This leads me to another problem…Wal-Mart is nicer to small business is than an the US Goverment…because Wal-Mart doesn’t require EDI. How odd is that? Or is it not odd at all…