A little info from an artist who has worked with embroidery digitizers/embroiderers for around 10 years:
When a logo or artwork is "digitized" for embroidery, it is setup by someone who knows how to get the stitches to "plot" correctly and most efficiently by the 'sewing machine.' It's not just changing it from one file format to another. An embroidery program is used to digitally plan out pretty darn accurately how the thread will go onto the item. As in, all the stitches, thread changes, thread trims, etc. will be set up and previewed prior to the information being sent to the machine(s).
There are different stitch types, stitch densities and lengths, and stitch directions used for different purposes that go into making artwork look and embroider best (not pucker, pull, draw up, etc.). The item material type, surface shape, and all sorts of things are taken into account.
The digitizing process only relates to the file format you provide in that they have to import your file into their embroidery software to start their work on it. Some embroidery software programs auto-digitize...to a degree at least; and most of those still require a knowledgeable person to tweak the trims, stitch types, thread changes, etc. Pretty much unless you are an embroidery digitizer, there's little to no chance that you have or will have access to the software to set up your own embroidery file that will be usable by the pro equipment most shops use. Thus, you provide whatever file format they can work with and they digitize it for you.
You can get artwork digitized by many different companies/sources, possibly for cheaper than Lidz $50 fee. Some digitizers work independently; some work for embroidery shops. In my experience, you're better off letting the company who will be embroidering your goods do the digitizing. They know what particulars will work best with their equipment. If your separate digitizer provides a file they have to re-work, they may charge you the fee anyway.