POS System Pricing: What You Should Be Paying In 2024
POS Price Range: Small businesses typically see POS system costs between $200-400 per month, excluding initial setup and transactions fees.
Avoid Overpaying — Know Your Needs: Modern POS systems streamline operations like accounting, inventory management, and customer service, going beyond simple transaction tracking. Be clear on what you need, and pricing will follow suit.
Hardware Variability: Pricing also depends on the tools you need. Terminals, barcode scanners, customer-facing terminals, and more will increase the bill.
Your Business Specifics Change Processing Fees: Processing fees are variable, just like bank loans. Travel and hospitality businesses with low average transaction size will get worse rates. Sorry.
A typical small business might be seeing POS system pricing anywhere between $200-400 per month, not including setup costs and transaction charges.
With the huge variety of cloud-based and on-premise POS solutions in the market, each catering to users with different budgets, you could easily end up overpaying if you don’t know what to look for.
To keep you on budget, this guide will break down all the costs associated with setting up, managing, using, and maintaining a POS system for your restaurant or retail business.
2024's Best POS Systems
Simply wondering which POS vendor to go with?
In the old days, you could have just chosen a representative from each software provider to compete in gladiatorial combat for the benefit of your business.
But since we live in modern times, here are the top vendors — evaluated by my team and I — to help you choose the right POS in 2024.
Introduction to POS Systems
From accounting to inventory management to customer service, POS systems simplify a lot of day-to-day operations for your food or retail business. They’re like your typical cash register but on steroids, with powers that extend beyond just keeping track of coins.
What is a POS System?
POS (Point-of-Sale) systems are a combination of hardware and software that enables businesses to process transactions, accept payments, manage inventory, and a whole lot more. They can be cloud-based or on-premise, with features that range from ecommerce integration to predictive analytics.
Importance of POS Systems in Retail and Restaurants
If you're running a restaurant or retail shop without a modern POS system, you might as well be using an abacus to count your cash. POS systems have become indispensable for streamlining operations, boosting efficiency, and keeping up with ever-changing consumer expectations.
For restaurants, they can help manage menu items, track ingredient inventory, optimize floor plans, and even integrate with online ordering platforms. Retail businesses are best suited to retail-specific POS systems, as they can benefit from features like:
- Inventory management
- Sales reporting
- Supply chain optimization
- Customer loyalty programs
- Employee management
Shopping habits have changed a lot over the past few years, with contactless payments and online shopping inching ever closer to becoming the primary consumption method. That’s why having a system that keeps up with the latest POS trends can make all the difference.
Components of POS System Pricing
From software subscriptions to hardware essentials to payment processing fees, I wanted to break it all down, so you know exactly what you're getting into when implementing a POS.
POS Software Costs
Software is the brain of your POS system. From ringing up sales to tracking inventory to managing customer data — this is where it all happens.
Naturally, software is also the most expensive part of the equation, so you can expect to pay an ongoing monthly subscription based on the features you need and the scale of your business. There are a few free options, which offer an accessible entry point for new users.
Free vs. Paid Software
So now, the question is: free or paid?
Free software can be a tempting choice, especially if you're just starting out or have very basic needs that don’t require a premium solution. Some popular POS solutions with free plans include Square, Loyverse, and Toast. These platforms’ free plans typically offer basic features like sales tracking, inventory management, and reporting with certain restrictions.
On the other hand, paid software usually comes with a monthly subscription fee, which can range between $15-200/device/month. Popular paid POS software options include Square, Lightspeed, and Shopify. Paid software often includes lower transaction fees, more advanced features, and better customer support.
Features and Benefits
So, what do you actually get for your money when it comes to POS software? The features and benefits can vary widely depending on the provider and plan you choose, but here are some common ones to look for:
- Sales Tracking and Reporting: Keep tabs on your sales data, your busiest times, and generate reports to help you make informed business decisions.
- Inventory Management: Track your stock levels, set low-inventory alerts, and easily manage your product catalog.
- CRM Features: Collect customer data, track purchase history, and create loyalty programs to keep your customers coming back.
- Employee Management: Track employee hours, manage schedules, and set user permissions to keep your operation running smoothly.
- Third-party Integrations: Connect your POS system with other business tools like accounting software, email marketing platforms, and online ordering systems.
When choosing a POS solution, think about which features are essential for your business and which ones are just nice to have. A café, for example, might prioritize features like menu management and online ordering, while a retail store would focus on inventory tracking and customer loyalty programs. Remember to take note of the fine print so that you aren’t blindsided by unexpected costs.
Now that we've covered the brain of your POS system, let's talk about the body.
POS Hardware Costs
POS hardware is the physical equipment you need to run your system, from the screen where you ring up sales to the printer that spits out receipts. Let’s talk about the different components and what you might expect to pay for each of them.
Essential Hardware Components
At a minimum, POS systems should have the following hardware components. Depending on your business type and size, you may need multiple sets of these essential components.
- Touchscreen Terminal: This is the main interface where you'll ring up sales, manage inventory, and access other features. POS terminals can range from a simple iPad to a purpose-built POS screen. Prices can range from around $300 to $1,500, depending on the size and features.
- Cash Drawer: Unless you're running a cashless business, you'll need a secure place to store your dough. Cash drawers can range from basic manual models to more advanced automatic ones that connect directly to your POS system. Prices typically range from $50 to $200.
- Receipt Printer: While some businesses are moving towards email receipts, many still rely on good old-fashioned paper receipts. Receipt printers come in various types (thermal, impact, inkjet) and sizes (2-inch to 4-inch). Prices can range from $100 to $500, depending on the type and features.
- Card Reader: For any modern business, accepting credit and debit cards is a must. Card readers can be simple swipe-only models or have more advanced EMV (chip) and NFC (contactless) readers. Prices can range from $50 to $500, depending on the type.
Optional Hardware Add-ons
Beyond the essentials, there are plenty of optional hardware add-ons that you can attach to your POS:
- Barcode Scanner: If you have a large inventory or need to quickly ring up items, a barcode scanner can be a huge time-saver. Prices can range from $50 to $300, depending on the type (handheld or in-counter) and features (1D or 2D scanning).
- Kitchen Printer: For restaurants, a dedicated kitchen printer can help keep orders flowing smoothly from the front of the house to the back. These printers are typically more durable and heat-resistant than standard receipt printers. Prices can range from $200 to $500.
- Customer-facing Display: Some businesses like to give customers a clear view of their order and total, especially in quick-serve environments. Customer-facing displays can be simple pole displays or more advanced touch screens that allow customers to sign for tips or enter their email for a receipt. Prices typically range from $100 to $500.
- Weighing Scale: If you sell products by weight (like produce or bulk items), a digital scale can integrate directly with your POS system for easy pricing and inventory tracking. Prices can range from $100 to $500, depending on the size and capacity.
Payment Processing Fees
Since you can’t just ignore them till they go away, understanding the different transaction fees associated with your point-of-sale system can help you make more informed decisions when scaling your business. Let’s take a look at them now.
Flat Rate vs. Interchange Plus
When it comes to payment processing vendor fees, there are two main pricing models: flat rate and interchange plus.
Flat Rate Pricing
Flat rate pricing is exactly what it sounds like you pay a fixed percentage of each transaction, regardless of the type of card or transaction. It’s very simple and easy to calculate. However, as a downside, you may end up paying more per transaction.
For example, Square charges a flat rate of 2.6% + $0.10 for all swiped, chipped, or tapped transactions. This pricing model is simple and predictable, making it a popular choice for small businesses or those just starting out.
Interchange Plus Pricing
Interchange plus pricing is a bit more complex. With this model, you pay a fixed markup on top of the base interchange rates set by credit card companies (like Visa and Mastercard). These interchange rates vary based on card type, transaction amount, and more.
The markup on top of these interchange rates is where your payment processor makes their money. For example, a processor might charge interchange + 0.2% + $0.10 per transaction. This means that if the interchange rate for a particular transaction is 1.5%, you would pay a total of 1.7% + $0.10… but if the interchange rate increases to, say, 2.5%, you’re suddenly paying more than you would for a flat rate.
Factors Affecting Processing Fees
While payment processing fees can be a complex and sometimes frustrating part of running a business, understanding how they work can help you make informed decisions and potentially save money in the long run. In addition to the pricing model, there are several other factors that can affect your payment processing fees, such as:
- Business Type: Some industries (like travel and hospitality) are considered higher risk and may face higher fees.
- Average Transaction Amount: Businesses with a high average transaction amount may qualify for lower rates, as the fixed per-transaction fee ($0.10 in the examples above) makes up a smaller percentage of the total.
- Card Type: As mentioned above, different types of cards (debit vs. credit, card vendor, rewards vs. basic) can have different interchange rates. Businesses that accept a lot of high-rewards credit cards may face higher fees.
- Processing Method: Transactions where the card is present (swiped, dipped, or tapped) typically have lower fees than those where the card is not present (online or over the phone).
- Monthly Sales Volume: Businesses with high monthly sales volumes may be able to negotiate lower rates or qualify for volume discounts.
Factors Influencing POS System Costs
Now that we've covered the basic components of POS system pricing, let's dive into some of the factors that can influence your total costs. From the size of your business to your total sales volume, here are the most important things to consider:
Business Type and Size
A single-outlet retail shop will have very different needs than a multi-city restaurant chain.
While the former might be able to get away with a single touchscreen terminal, cash drawer, and receipt printer, the latter will likely require multiple stations, kitchen printers, and handheld ordering devices for each server. All of this affects upfront and maintenance costs in a big way.
Beyond the initial hardware costs, though, a multi-location food business is also likely to need more features out of its software, with support for dedicated supply chain management and a customer relationship platform.
Sales Volume
The restaurant chain is likely to also process a much larger volume of transactions each day, which may impact the type of payment processing they choose and the cost per transaction for each sale.
On the upside, businesses with high sales volumes are typically in a good position to negotiate better per-transaction rates from vendors. While higher sales volume means more transaction fees, the cost per transaction is more economical given the profits retained.
Integration and Add-Ons
While many POS systems come with features like sales tracking and inventory management, you may need additional functionality that can only come from integrating with third-party data sources and software vendors.
For example, an e-commerce business may need to integrate its POS system with accounting software like Quickbooks or Xero. On the other hand, a restaurant may want to integrate with a third-party delivery platform like Grubhub or UberEats.
Tips For Choosing The Right POS System
With so many POS systems on the market, choosing the right one for your business can feel like a daunting task. Here are some tips to help you along if you’re feeling overwhelmed:
Assessing Your Business Needs
The first step in choosing a POS system is to take a hard look at your business needs.
- What type of business do you have?
- What are your day-to-day operations like?
- What features and functionalities are essential for your business?
- Do you have multiple locations or a complex inventory system?
- Do you need to integrate with specific third-party tools or platforms?
Take some time to make a list of your must-have features and prioritize them based on their importance to your business. This will not only help you narrow down your options for the right vendor but also choose the correct plan to suit your needs.
Budget Considerations
While it's important to invest in a system that meets your needs and can grow with your business, you don't want to break the bank. Always look at the fine print. Apart from the initial setup fees and monthly subscription, consider other ongoing expenses like payment processing rates, employee training and support, as well as any integrations you may need.
It's also important to consider the long-term costs of a POS system. While a cheaper system may be tempting in the short term, it may end up costing you more in the long run if it can't keep up with your business's growth or requires frequent repairs and replacements. When setting your budget, be realistic about what you can afford, but also consider the potential ROI.
Scalability and Future Growth
Speaking of scaling, while your current needs may be simple, your business may expand or evolve in the future, so you don't want to be stuck with a system that can't keep up. Look for a POS system that offers a range of plans and pricing options that can accommodate businesses of different sizes and stages of growth.
Some scalability-related features that are need-to, or nice-to-have:
- Ability to add new locations or users easily
- Capacity to handle increasing sales volumes and transactions
- Flexibility to add new features and integrations as needed
- Option to upgrade hardware components as technology evolves
In addition to scalability, consider the overall longevity and stability of the provider. Read reviews and case studies from other businesses in your industry to get a sense of how well the system performs over time. Personally, I always turn to Reddit when I need raw, unfiltered opinions of a system that’s foreign to me. Sure, you have to sift through the sponsored spammers, but you can also find a lot of real testimonials in there.
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