- 1 What does a POS system run you? Here’s a breakdown for SMBs
- 1.1 Cost components of a POS System
- 1.2 Choosing your POS provider
- 1.3 Here are four popular POS purchase options
What does a POS system run you? Here’s a breakdown for SMBs
Any business that operates offline needs a cloud-based point-of-sale (POS) system. It allows brick-and-mortar business owners to manage inventory, employees, and checkout. POS is essential for multichannel businesses. It allows users to provide a seamless omnichannel experience, unify cross-channel operations, and gives them a single view of sales performance across all channels and tools. This helps to deliver better customer experiences.
It is not surprising that such a powerful resource would cost a lot. A POS was a costly resource ten years ago. It could cost anywhere from $5,000 to $10,000 for the equipment. Bulkier systems required expensive maintenance, setup and licensing fees. Today’s POS systems have become much more compact and efficient than their predecessors.
There is always a cost to everything. The potential benefits of using a modern, POS system are far greater than the initial investment.
It is important to understand the cost structure for a POS system. Fixed and variable costs are both part of POS systems. These variables, along with their impact on the overall cost, will help you select the POS system that is best suited to your business and within your budget.
Cost components of a POS System
The total cost of a POS system is determined by three factors.
01. Hardware: One-time payment upfront
Over the past decade, POS technology has advanced significantly. Tablets that are lighter than heavy desktops or servers have been replaced by light tablets. The prices have fallen. Overall, POS systems have become more accessible to merchants than ever.
A full-featured POS hardware set should cost between $750 and $1,700 today. The setup usually includes the basic touchscreen and card reader as well as a selection of POS accessories like a receipt printer, barcode scanner, charging dock, cash drawer, and receipt printer. You can buy individual pieces, but if you have a business that requires them all, an all-inclusive package will be a better option. Below is an overview of the average price of each item.
The needs of your business will determine the hardware you select. A complete package will benefit you if you own a brick-and mortar shop.
A card reader and charging dock are great if you sell mostly at festivals, pop-ups, and other events.
You might also need to set up a complex system if you own a restaurant. This setup will allow you to connect multiple tablets and a printer with additional functionality. This setup can run upwards to $3,000.
02. Software: Fixed fee or free software
It is important to choose POS software that matches your business type when evaluating POS software options. This is more than just payment capabilities. Software that can sync inventory and create a single product catalogue is a must if you work in retail. Software that allows you to book and manage appointments is a must if you offer services. How do you manage events? Software that can sell and check tickets at the gate is essential.
Access to POS software is usually charged by the provider. These fees can be as high as $130 per month. On average, providers charge between $40 and $100.
Cloud-based POS systems can also be integrated with software, essentially giving it away for free. Wix is one such platform. Wix provides a POS with native software that allows users to sell offline straight out of the box.
03. Variable usage cost: Processing fees
The fee to process credit card payments is another cost that you should consider. This additional fee is charged for every POS transaction. It is usually applied by your POS provider’s third-party processor or internal payment processor. The fee is typically a percentage of the payment plus a fixed amount. The percentage-based rate can vary from one company to the next.
It is a smart decision to select a POS system that has a native online payments solution. It is generally cheaper to have the payment processor and POS work together. This setup allows for smoother operations.
Here’s a comparison between POS transaction fees for providers using a native payment system.
|% per Transaction
|Flat Fee per Transaction
Choosing your POS provider
Do your research before you choose a provider. Identify the key features that you will need to manage cross-channel businesses and ensure that your provider supports them.
Know the pricing structure of your provider and, if possible, inquire about discounts. Pay attention to any long-term commitments or additional costs for value-add service.
Consider the pros and cons for each provider and then map out how each fits into your budget and business strategy. The solution that best suits your business needs and goals will be the one you choose.
When evaluating POS providers, ask questions
- What POS features should be considered essential and what are nice-to-haves
- What is the cost of each component, individually or as part of a package?
- Are there any discounts offered by the provider for retailers with high volumes?
- Is the POS system able to support your future needs?
Here are four popular POS purchase options
01. All-in-one supplier – Purchase
You can purchase a POS system directly from the eCommerce platform you have built your online business. This will allow you to streamline your operations and enable you to manage all of your sales activities from one location.
This is often the most cost-effective option. All-inclusive packages are offered by providers that include POS hardware, software, payment solution, and website-building tool. This makes it a more attractive option for omnichannel merchants.
Transaction fees will likely be lower than if you connected a third party provider to your platform. You also won’t have to do the manual work required to build custom integrations between systems.
02. Third-party hardware
Unless you are looking to build custom integrations between your in-person and online business operations, you will have to choose payment providers who already have partnerships with your eCommerce platform.
Third-party hardware can have the downside of dividing up your business management. Your eCommerce platform would handle the online portion, while your POS provider would manage the offline.
This could result in a fragmented view on business performance, payment history, and inventory count. It is difficult to see the whole picture.
03. Install POS software to your tablet device
Some providers let you install your POS software directly on your tablet or iPad. This is a great option if you are a mobile seller and require a more robust solution to your card reader. It’s not scalable if you have a large store or require multi-register and/or multiple-store solutions.
Your tablet was not designed with POS in mind. This means that its firmware and processing power may hinder your business’s ability to reach its full potential. Additional troubleshooting may be required. Your tablet was not designed to improve your store’s customer experience.
Retail POS solutions, on the other hand, often include customer-facing displays to optimize customer checkout experiences. This feature would be missing from a personal tablet.
You should keep in mind that not all providers offer a software-only option. Wix, for instance, does not. This would mean that you are sacrificing the main advantage of an all-in one provider, which is the ability to manage your entire business from one place.
04. Rent a POS
Leasing plans are offered by some providers that allow you to spread out the cost of POS hardware over time, in small increments. This is great if you only need hardware temporarily (e.g. for events or pop-ups), but it’s not ideal if your needs are long-term.
The monthly rent payments for point-of-sale rentals will increase as you use them more often and soon surpass what you would have paid upfront to purchase hardware.
Consider your options for POS. Let your answer be the guiding factor in your decision.
When evaluating your options for purchasing, ask questions
- Do you sell offline in a brick and mortar store? Or are you selling sporadically at events, markets, and pop-ups?
- What amount of your spend can you allocate to POS costs?
- Does your website building platform offer a unified POS solution?
- Are you looking for a POS solution that is both long-term and short-term?