Henry David Thoreau once said, “The price of anything is the amount of life you exchange for it,” which puts me oddly in mind of the usual saying “It costs an arm and a leg.” You might imagine paying for things is like going into battle: who knows what limbs you’ll come out with intact?
The good news is paying for something doesn’t have to involve bleeding, so the rest of this article will be painless. In fact, if you’re just starting to research POS software, this post will synthesize all the basic information you need to know about POS pricing models, and what you should plan to pay for each.
Let’s talk basics real quick: there are two components to POS – the hardware and the software. The hardware (depending on the software you get ) will be some combination of a cash register, PC, tablet, receipt printer, scanner, and maybe one or two other odds and ends.
Hardware will cost you between $500-$3000 per pay station, depending on whether or not you already own a computer/tablet on which to run the software. If you already own the computer you plan to run the software on, you will only need to purchase a kit that includes the cash drawer, scanner, etc. Keep in mind, the computer or tablet you use will require all of its power to run the POS software, so make sure you can devote an entire machine to this purpose.
As a very tiny retailer, it is entirely possible to skip the hardware kit portion if you already own a PC. But again, I’m talking VERY TINY retailer. If you have upwards of ten products, you should purchase a register, both for efficiency and professionalism.
Now let’s move to the actual software pricing.
Let’s start with pricing models. How do vendors structure their plans?
Paying for a license all at once is not a very popular model and most companies don’t use it. It’s a huge upfront cost, so there’s a lot of sticker shock involved which can drive potential customers away. But you should be aware, paying upfront could end up costing you less in the long-run than monthly payments over time.
A secondary concern of the pay-all-at-once model is that you will have to pay upgrade fees if you ever want to move to a new version. The upgrade fee is typically only a percentage of the original cost, but that can add up (and, in comparison, most monthly versions always offer free upgrades).
Usually, pricing tiers in this model break down by store number and features, as opposed to register, user number, etc.
The pay-monthly model is far and away the most popular pricing model, mainly because, as I said above, there’s no sticker shock (at least up front). This model can grow quite pricey, though. Before jumping on board for a seemingly reasonable $40/month/register, you should do the math. $40/month/register turns into $480/year/register, plus maybe you need to throw in an additional user at $12/month, that brings you to $624/year. Add in the $19/month/register for full customer support and you’ve got $852/year for just one register. (And yes, my numbers there were very made up and actually quite conservative.) So you have to be wary.
As I’ve hinted above, this model breaks down a couple of ways. The base pricing will generally be set per register and/or per user. That means, prices will look like: $35/month/register. After that, the actual tiers (small, medium, large retailers, for instance), will most usually be determined by some combination of stores and features. For instance:
- Small: $35/month/register, gets you 1 store, CRM functions
- Medium: $40/month/register, gets you 1 store, CRM functions, inventory management
- Large: $50/month/register, gets you unlimited stores, CRM functions, inventory management
Here are some costs I’ve run across that are easy to forget and not include in initial estimates.
- Additional features. Several POS systems charge for additional features. One company, for instance, charges a huge fee for additional reporting features I, as a former retail worker, would consider extremely basic and a must-have. Keep your eye out.
- Those pesky credit card fees. You should absolutely pay attention to what kind of percentage each solution charges because they’re not all the same and those fees can add up. Obviously, it’s hard to figure out what the ultimate cost of these fees will be, but you should, at the very least, take a stab at basic estimates.
- Customer service fees. Not all customer service is made equal. Some companies offer free service of all levels, right up to free training and livechat. Other companies will charge you fairly exorbitant fees for even the right to talk on the phone to them.
- And I’m gonna say one more time: the hardware costs NEED to be included in your estimates. You’re going to have to buy one PC/tablet per register and then you’re going to need to buy the whole kit to outfit it. Most software companies make a kit you can buy. Some are cheaper than others. For instance, the same company that charges for basic reporting features also charges $400 more than the average for a basic tablet kit.
So What Should You Plan to Pay?
You should plan to spend between 2% and 3% of your annual revenue on the initial purchase, and budget between 12% and 18% of that cost for maintenance and annual upgrades.
If you are a small or tiny retailer, there are actually some decent free options out there for you. There are even one or two good open source options available for medium-to-enterprise-sized retailers. (REMEMBER: you still have to buy the hardware.)
Paid options are going to start around $40 or so per register per month. Here are a few real examples for you to chew on, though.
- uAccept: Monthly accounts starting at $39/month, with additional registers at $19/month. (This is the cheapest one I’ve run across in my time perusing the POS systems of the world.)
- Shopify: Starts at $49/month for unlimited registers and staff, only limited features. For larger businesses, Shopify is again a good option for price value – their largest plan is $199/month and again supports unlimited staff, registers and products and well as being fully loaded with all their features.
- VendHQ: Even cheaper – starting at $169/month (when billed annually) for a similar model.
So there you have it. POS pricing in a nutshell. I’d love to know what you’ve found to be the general case with POS software pricing, and if you’ve encountered any other hidden costs I didn’t cover. Please add your thoughts in the comments!