Starting a new small business can be an expensive affair – and the costs are almost always higher than expected. That’s why ‘free’ POS software is so appealing.
You’re busy paying through the nose for permits, rent, staff, unexpected equipment failures, and a million other things, so when someone comes along and says, ‘Hey, I have this amazing thing. And I want to give it to you. And guess what? I want absolutely NOTHING in return’, you’re tempted to listen.
But, of course, deep down we all know that nothing in life of any value ever comes free, and that includes POS software. There’s almost always a catch. That free commercial drinks fridge you’re being offered by your beverage supplier? Not free. They are locking you in, so you only buy drinks from them. What about the email marketing firm offering you a free account? Not free either. They are incentivizing you to join (and get habituated to) their system and they’ll charge you more when you build a decent-sized mailing list. And that free point of sale system you found online? Yup, you’re probably seeing the pattern at this point… Just not free.[/vc_column_text][/vc_column][/vc_row]
If you’re in the market for a POS System, it always pays to be a little skeptical and read the fine print of your deals – and to consider the whole cost of choosing, installing, running, upgrading, and if something goes wrong, terminating your system.
I’ve saved you some time and outlined below the key cost components, so you can accurately compare the real total costs of competing POS systems. You can thank me later.As you can see, there’s a fair bit more going on than you might first imagine. Below, I run through some industry insights and key considerations that will help you make an informed decision on POS system pricing.
Hardware & Hardware Installation
For many years, the point of sale industry operated as what you could call a ‘hit and run’ business model, wherein providers would sell expensive hardware (with installation) at a large upfront cost and then try to distance themselves from the product that they’d just sold. They did this by charging exorbitant amounts for ongoing software upgrades or for any customer support calls. As you can imagine, this left the small business owner to fend for themselves with a steadily depreciating system.
Luckily, the advent of the iPad and cloud-based software has led to a dramatic drop in the cost of POS system hardware. We’ve gone from a world where POS Systems cost upwards of $10,000 to one where the relevant hardware can be had for as little as $600-$1200. This will include things like receipt printers, iPad, cash drawer, iPad stand, wireless router, barcode scanners, etc. Shrinking the cost further is the fact that many providers now deliver ultra-simple ‘plug and play’ hardware that allows small business owners to ‘install’ their own systems without needing to pay an outside technician. It’s still not free – but it’s a heck of a lot cheaper than it used to be.
POS hardware will likely be your biggest expense, so it’s natural to look for bargains but again it’s about exercising prudence and common sense. If you see this hardware being ‘given’ away by a point of sale provider, make sure you fully understand all of the other costs you’re letting yourself in for. These can come in all of the different forms that I’ve listed above.
Software Subscription Fees/Upgrades & More
Simply put, local server-based technology and the associated business model are dead and obsolete. If you are still being asked for a large upfront payment for local servers, Windows touchscreens, or software licensing fees, you should be running as fast as you can in the opposite direction.
Lower margins on hardware have led providers to seek a more sustainable business model. The two main offers you’ll come across are monthly subscription services (such as the one offered by ShopKeep) and companies offering free POS software in order to lock you into a credit card processing contract.
At ShopKeep, we choose to offer a subscription service because within that cost structure, we can provide free, 24/7 customer support alongside completely free POS software upgrades – delivered seamlessly over the cloud. This model works nicely for both parties because we don’t ask our small business owners to sign contracts. That means we have to earn the business – and the loyalty – of all ShopKeep merchants each and every month.
If you’re assessing the cost of any provider who is offering a monthly subscription service, make sure to find out if 24/7 support and free upgrades come as a standard part of that package.
Equally, if you’re assessing a POS System that makes its money through a margin on your credit card processing, make sure they too are providing genuine, 24/7 customer care and regular, free improvements to your POS System. Remember: these updates aren’t just ‘nice-to-have’. Your system must be regularly updated and patched to remain secure and compliant with PCI-DSS security standards.
Credit Card Processing Fees
Credit card processing is a complex world, which is why we recently included an entire section of our Point of Sale University course on the subject. You can read that section and get a sneak peak on the course here.
To sum up some of the lessons from that post, there are some very real costs to using a ‘free’ POS System provided by a credit card processor. They may take the form of a suboptimal rate that eats away at your profits one swipe at a time. They may take the form of extra charges for customer care – or even the cost that comes from poor support and sales lost because of outages.
And finally, these costs may just take the form of a poorly or irregularly upgraded system, that can leave your business struggling to keep up – and to stay safe.
It should hopefully be clear by now how we at ShopKeep feel about upfront costs and termination fees. Small business owners have enough risk in their lives without having to commit to a software provider who can’t meet their end of the bargain. When you’re assessing point of sale providers, be 100% sure that setup is free and that you can leave, cost-free, whenever you like. This puts the onus on the provider to keep earning your business.
One final point on data ownership. While you may not be paying in cash for your ‘free’ point of sale system, you could very well be paying in something far more valuable over the long-term – your customer data.
Most people are now aware that Facebook and Google don’t provide ‘free’ products to consumers. They have turned the consumers themselves into the product and now profit from serving them up on a plate to advertisers (‘if you’re not paying for it; you are the product’).
Similarly, it is becoming clear that there are point of sale providers out there offering ‘free’ POS systems to gain access to the merchant’s consumer data. This should be a big red flag. Clear and consistent lines of communication with your customers are some of the most valuable tools you have at your disposal, so if a point of sale provider doesn’t allow you to easily collect customer emails – or worse, uses your store or restaurant to build their own consumer network, you need to consider the real cost to your business.
Remember, there’s no such thing as free. But there is a free trial.