The True Costs of a POS System for Retail: What to Expect

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A point-of-sale system (POS) is critical for retail businesses navigating daily operations because of its ability to process and streamline payments and includes everything from traditional cash registers to e-commerce payment solutions. However, many retailers question the cost of a custom POS system.

Understanding this system and its price can help you prepare to invest in a POS solution that makes payments effortless. To get you started, this article will explore everything about a simple POS system, its purpose, and its cost, depending on your industry. Let’s get started.

What is a Point-of-Sale System?

A point-of-sale system, or a POS system, is the device that customers use to pay for your products and services. This system processes transactions in retail settings and can include physical devices like cash registered and POS terminals or checkout points for e-commerce stores. Whenever customers make a purchase, they are completing a point-of-sale transaction.

POS systems are evolving for emerging payment types, including contactless payments, mobile payments, and more. They also cover traditional payment methods like cash, debit, and credit card payments. Modern POS systems also include features that allow retailers to collect crucial customer information, including buying trends and marketing data.

How Much Does a POS System Cost?

Understanding the POS machine price can help you prepare to invest in this essential system. While you might prefer a cheap POS system, these systems aren’t always the most effective, and you should ensure that whatever system you choose is capable of handling transactions and other processes like inventory management and monitoring buying trends.

The cost of retail point-of-sale software and hardware depends on several factors, including the type of POS system you use, your industry, scalability requirements, and any add-ons or integrations in your system. Generally speaking, POS systems can range from $0 to over $1,000.

POS systems for small business operations are often free, as these businesses process fewer transactions than large or enterprise organizations. However, as these businesses grow, they might find that a free solution doesn’t have the scalability required to accommodate their shifting needs.

Factors Influencing POS System Costs

Several factors influence your business’s total cost of a custom POS system. A simple POS system like Square and Zettle by PayPal provides free options for businesses on a tighter budget, but these aren’t always the best solutions. Let’s explore factors affecting how much you pay for a point-of-sale system.

How Many Locations Your Store Has

Some point-of-sale systems charge per location, meaning you’ll need to pay for hardware and software costs across different locations. This cost can add up, especially for businesses with several locations. The hardware you’ll need to purchase includes card readers, cash registers, and more, and you might face additional software costs from some POS providers.

The Type of Business

The type of business you’re operating also impacts how much you’ll pay for a POS system, as some businesses will require additional hardware, while e-commerce businesses only require specific software to operate. For example, POS systems for retail stores can be costly because they must operate across multiple locations, include extensive hardware, and provide additional integrations for inventory and employee management. To optimize these operations, it's beneficial to look into recommended employee management tools that can seamlessly integrate with your POS system.

If you're a B2B seller, we also advise you to check out Sprinque, a Netherlands-based platform dedicated to facilitating B2B payments. Sprinque empowers B2B merchants and marketplaces, offering them a B2B checkout experience on par with the existing B2C standards. As part of the offer, B2B customers get the option to settle payments 7 to 90 days later without incurring additional risk or operational burdens.

Add-Ons and Integrations

The total cost for a POS system also depends on the add-ons and integrations required to make your system functional and effective for your business. Some POS systems have integration options to provide greater functionality, including marketing features, online ordering solutions, delivery services, payroll processing, and online appointment scheduling.

There are also additional extensions you can add to e-commerce stores that impact the total cost of a POS system. For example, e-commerce businesses using a Magento 2 store might spend extra on extensions for payment restrictions or recurring payments to improve payment processes, restrict payments based on specific products, and more.

Industry

How much you spend on a POS system depends on your industry, as different industries will require different hardware, software, and add-ons. Let’s break down costs for different industries.

POS restaurant system: The average restaurant POS system costs between $0-$799, including hardware, for popular options like Toast. This cost depends on several factors, including hardware and software, which you can pay monthly.

Retail point-of-sale software: Retail POS systems vary in cost depending on whether you’re operating online or in-store and the type of software you choose for transactions. Options like Shopify range in price from $58-$698 monthly, while options like Clover range from $60-$175 monthly.

Salon POS system: Salon systems are similar to retail prices and largely depend on the subscription and software you select. Options like Lightspeed charge up to $269 monthly for an advanced plan, which doesn’t include the hardware cost.

Small business POS system: For POS systems, small business operations might be able to use free software like Zettle by PayPal. However, if the business operates in-store, they’ll need to pay for hardware costs, which can exceed $800 depending on the POS system.

Scalability Requirements

Most businesses should consider choosing an easily scalable POS system to accommodate future demand fluctuations. Free software can be helpful for e-commerce businesses that want to save money but isn’t always the most practical for small businesses planning on growing and expanding their operations.

Consider long-term requirements when choosing a POS system, such as any future locations you’d like to open or other functions you want your POS system to serve, such as inventory management and marketing. A more expensive system can help you scale your operations more than the average free solution.

Cost of POS Hardware

One of the biggest factors influencing POS costs is how much you spend on hardware. While e-commerce businesses won’t require additional hardware for a POS system, other organizations, such as restaurants, physical retail stores, and salons, need significant hardware to process payments. Hardware costs often exceed $2,000, making hardware a big investment for some businesses.

Below is a breakdown of standard hardware costs.

Cash registers: $100-$1,500

Credit card readers: $0-$300

Self-service kiosks: $700-$4,000

Tablet stands: $99-$199

Receipt printers: $26-$600+

Barcode scanners: $20-$600

POS terminals: $49-$1,799

Cash drawers: $39-$1,000

Cost of POS Software

The software for POS systems requires additional costs and is necessary for businesses with online operations or e-commerce stores. A small business POS system might operate with free software or cheaper subscriptions without needing additional add-ons. However, you might have to spend more as the store grows to accommodate your shifting needs.

How much you pay for POS software depends on the type of software you select: legacy, cloud-based, or hybrid. Legacy POS systems are traditional, including a POS computer or cash register with the required payment software. This system isn’t connected to the internet and only works on-site, making it less convenient for some stores but protecting against data breaches. Legacy systems are often the most expensive solution because they require additional hardware.

A cloud-based POS system stores sales data in the cloud and is much cheaper than legacy systems. These systems include iPads and typically don’t require additional maintenance or installation processes, making them even more affordable. However, these systems are also vulnerable to data breaches and attacks, making them less safe than legacy solutions.

A hybrid POS system connects to the internet but operates with a more traditional computer and hardware system. Sales data is stored on the computer, but hybrid systems might not require as much hardware as legacy systems, providing a balance between legacy and cloud-based options.

POS Payment Processing Costs

A business POS system includes additional costs for payment processing fees. Some POS systems provide a subscription model that charges processing fees monthly or yearly. However, these systems are less common than flat rate systems and interchange plus pricing.

Flat rate processing costs are determined by the type of transaction, such as an e-commerce purchase versus an in-person transaction. Depending on the type of purchase, the store is charged a consistent rate. An interchange plus pricing model includes an additional interchange rate. This rate is charged to processing companies by card companies. You’ll also have to pay fees charged by your payment processing company, making these systems more expensive.

Here are some standard processing costs for popular POS systems:

    Shopify: 2.4%-2.9% plus $0-$0.30 depending on your plan and transaction type.

    Square: 1%-3.5% plus $0.10-$0.30 depending on the transaction type.

    Toast: 2.49%-2.99% plus $0.15, depending on your plan.

    Clover: 2.3%-3.5% plus $0.10 depending on your plan and transaction type.

    Magento: 2.6%-4%, depending on the transaction type.

    Bottom Line

    Several components contribute to the true cost of a POS system, and depending on your organizational needs, you might get one of these systems for free or spend thousands of dollars on hardware and software. Consider factors like scalability and future growth when choosing a POS system.

    Amasty provides solutions and support for your Magento 2 stores to ensure your operations can thrive. With our extensive options for Magento 2 modules, you can uncover new functionality and grow your business.

    December 11, 2023
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