Migrated from eDJGroupInc.com. Author: Sarah Hankins. Published: 2012-03-06 03:00:00Format, images and links may no longer function correctly. Throughout the evolution of eDiscovery in the marketplace, service providers have struggled to meet client expectations from a cost standpoint.  In order to accurately estimate the cost of a project in the absence of a flat fee model, service providers required a certain amount of information up front as discussed in Jason Velasco’s pricing article earlier this month.  Often this information was unobtainable unless the client shared sample data or had a good understanding of the composite of their data.

Therefore the natural types of pricing models relied on the size and makeup of the raw client data.  It did not make sense to price a project and give a client an estimate based on information that would only be obtained downstream.  Each stage in the eDiscovery process was treated individually from a pricing perspective since it was typical that many different providers worked on the same matter.  The price to host data was reliant on what was processed, so even if assumptions were made, there was a good chance the client would be unhappy about the upfront cost estimate.

Pricing still remains an issue holding back growth in eDiscovery since prospective clients aren’t sure how to do comparison shopping.  I know the eDJ Group is trying to help address the issue with their eDJMatrix site launching soon. Comparing apples to apples is difficult because service providers use different units of measure for pricing for the same or similar work.

One pricing model that has gained some traction recently is the “Data Out Model”, a flat pricing schedule based on the final processed data rather than the size of the original data set as it enters the service provider’s door.

The change to this type of pricing model is made possible through many advances in the industry.  Early case assessment tools, as well as more sophisticated tools in general, allow service providers to have a better idea of what the client’s data looks like earlier in the process and price accordingly.  Additionally, providers have gotten better at handling high volumes more efficiently so an unexpectedly large data set does not take up nearly the resources as it would have in the per gigabyte in pricing days.

The shift to all in pricing is a natural progression for providers who offer most, or all, eDiscovery services within their organization.

Basing that pricing on the virtual end product instead of the initial data is a change meant to address the client concern around value based pricing.  Value based pricing is an attempt to line up what the client pays with what the client receives.  The size of the original dataset has no meaning to the client, so the client has no way to match the value with the work performed by the vendor.

By providing pricing on a per document reviewed basis, eDiscovery vendors are able to provide a billable unit of measure that provides the client with useful and workable data.  Additionally, clients can use this to predict eDiscovery costs, as the pricing depends on a figure over which they have better control.

Using the “Data Out Model” may suit a particular client or matter depending on many factors considered when selecting a service provider.  This pricing model also means relying on one provider for end to end service – certainly a decision that entails more than simply the pricing element.

As new pricing models emerge in the eDiscovery landscape, there will no doubt be a continued drive towards pricing that is transparent and sensible from a client’s perspective.  By utilizing more advanced processes and methods, eDiscovery providers are able to now move towards pricing that has a real meaning to clients, which will hopefully make eDiscovery a more welcoming litigation tool.

I am interested in hearing your comments and thoughts on pricing issues.  Please feel free to comment below or email me directly.

eDiscoveryJournal Contributor – Sarah Hankins


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