Estimated reading time: 3 minutes, 53 seconds

killswitchEDI pricing is one of those things that's hard to pin down. ec-bp.com has supported the lowering of costs of EDI since its first issue 10 years ago. We recently posted a story about how GXS intends to stop the practice it calls daisy-chaining, a move that would lower the number of options available to trading partners and likely increase overall costs of using EDI. In another counter-productive move, it seems that the costs of the guidelines for the 6050 specifications will increase in price and require annual 'maintenance fees.' Individually these changes may not seem like a big deal, but are they a trend? And will they have any long term effect on the marketplace? Will the price increases lead for a move away from a pricey X12 to a free and more internationally supported EDIFACT?

Time will tell. For sure this isn't the first time there's been pressure on the X12 standard. We still get comments like "Isn't EDI a dying protocol because of data tools like XML?" Granted that most recent comment coming just last week was from an international implementer. But that only begs the question about the relevance of EDI in the international community.

The basic facts about the new pricing schedule are this. Beginning with the 006050 specification, pricing will be based on a per-year usage with an annual maintenance fee equal to 20% of the original cost. The basic standards set now sells for $800, so it's easy to say that the costs are relatively minor. But most commercial translator vendors, or those larger entities that create and maintain their own applications, purchase the table data for as much as $19,000.

Those prices may not be news to those who have purchased the standards set as non-members of the ASC X12. But what is new for 2013 is the annual renewal fee. Here's the text from the store.x12.org site:

"About the Annual Fee
Beginning in 2013, the price of ASC X12 Work Products covers the use of the product for one year. Continued use of the Product requires renewal via an annual fee of 20% of the posted purchase price for members or non-members, depending on your membership status at the time of renewal. An invoice will be emailed approximately 60 days before the annual fee is due.
If updates are necessary because of modifications to the Product, there is no charge for such updates. The initial purchase cost provides the buyer the right to updates to use the Product for one year. In successive years, an annual fee extends the right to updates to use the product. This fee is calculated based on the entity's current membership status. Members pay 20% of the initial purchase price for members at the time of the extension. Non-members pay 20% of the initial purchase price for non-members at the time of the extension. The fee is not simply to receive updates, if the Product, or derivatives built based on the Product, are being executed as part of any organizational function, the annual fee must be paid every year."
 
Certainly the organization has a need to make an income and increase its membership. The renewals handle both those issues nicely by providing an incentive to become a member and then to remain a member so as to avoid having the 20% renewal fee based on the non-member pricing, which also according to the store web site "ASC X12 members receive a discount of up to 70% off."

One issue that Leah Halpin, Senior EDI Consultant with Project Management and Consulting of America raised is how the organization intends to enforce its renewal fees. "If some kind of kill switch is built into the code that disables its use if the renewal fee is not paid, massive disruptions could result." That's because the licensors of the specifications are generally larger EDI service providers who create software applications/translators derived from the specifications and sell that software to customers. Potentially the code delivered to those customers could become disabled if the licensor didn't pay their renewal fees affecting hundreds or even thousands of the software users, and causing significant disruption of the supply chain.

As Halpin puts it, "I think the standards organization is shooting itself in the foot with the fee. It's good that it is not retroactive, but the cost will become significant, and could force a move away, or simply not to use the updated specifications."

We think it's highly unlikely that the organization will, or even is able to deliver a kill switch within the applications that are derived from its use. But it may be that it has gone even farther and added a kill switch to its own business. Last modified on Wednesday, 03 July 2013
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