A point of sale (POS) system is key to the growth and management of your business. Yes, a POS lets you check out customers, record sales, accept payments, and route those funds to your bank.
But the right POS should be integrated into your business in order to check customers out faster online or in-person (offering traditional and emerging payment types), make smarter decisions about your business using real-time insights, and capture customer data to keep them coming back for more.
The good news it this type of functionality doesn’t mean that a POS system should cost you a ton of your hard-earned money. Considering the total cost of ownership for a POS system and being aware of hidden fees is crucial. Here is what you need to know to make an informed decision.
Why traditional POS systems are costly
Traditional server-based POS systems are expensive due to their hefty setup and licensing fees. Add in hardware and monthly maintenance fees needed to maintain the security and software of back-office servers and your bill is hefty. Traditional POS systems may also not include the ability to accept mobile payments such as Apple Pay and Google Pay, which are rising in popularity.
A small business could end up paying from $0 to over $300 a month for a cloud-based POS system and from $69 to over $1,200 for hardware, according to Forbes. Additionally, merchants pay about 2% or more per credit card transaction, according to QuickBooks. Some recurring fees can also increase depending on sales volume.
But modern POS systems are cloud-based, lowering the costs of the system while improving security, scalability, and uptime. Getting started with Square Point of Sale (POS) can cost anywhere from $69 thanks to Square Reader, which turns your smartphone into a POS system, or $249 for our Square Stand, which works with your iPad. Square POS software is free and doesn’t entail any setup or monthly fees. You only pay when you take a payment, which can translate into considerable savings as you grow your business. Our processing rate is 2.5% for all major credit cards and 0.75% + 7¢ per INTERAC chip or pin tap. Custom discounted rates are available for businesses with annual credit card sales over $250K. There are no contracts or long-term commitments.
Let’s walk through the factors that influence the point of sale cost.
POS system cost breakdown
Most POS systems are made up of three parts: software, hardware, and payment processing. You have to pay for all of them, but with a little research you can determine what makes the most sense for your business.
POS software costs
When you’re evaluating POS software, you want to find one that works for your entire business (if you run a retail store, make sure it has inventory management), has integrated analytics, and is easy to use for your employees. Even with all of these things, it doesn’t have to cost a lot, but it can. With traditional server-based models, as well as cloud solutions, the point-of-sale software often has a monthly fee. But that’s not always the case — Square POS software is free.
POS hardware costs
You can buy or lease POS hardware depending on your budget and your long-term needs. The exact hardware that you need depends on your business type and the setup of your store (or stores).
The first big decision to make is whether you go with a legacy server-based system or a smartphone or iPad system with a cloud POS. An iPad system has its advantages: It takes up less counter space and you can potentially move it around the store to meet customers where they are (this makes for a great customer experience). Being able to accept contactless payments with your phone is also a plus if your business entails processing transactions on the go.
Some modern registers either swivel to face the customer or have a customer-facing display.
Depending on how your business is set up, you may need to invest in a bar code scanner, scales or self-serve checkout kiosks. Or you might be able to get away with the lightweight setup of a tablet, cash drawer and credit card reader.
Payment processing costs
In addition to POS software and hardware, you also have to budget for credit card processing fees. You can choose a point of sale with integrated payments — like Square — or you might need to find a separate payment gateway provider to do the payment processing.
Before you choose your payment processor or your POS with integrated payments, make sure you’re aware of any long-term commitments or monthly fees (Square has neither) and that transaction pricing is clear and easy to understand. This is how small businesses can end up paying more than they have to for their POS system.
Other factors that impact POS system cost
The three components above make up the cost of a POS system, but there are other factors to consider that can impact how much you end up spending.
For example, there are sometimes installation or setup fees involved, as well as costs associated with team training. Some service providers even charge more for tech and customer support. These costs may or may not be reflected into the monthly subscription fee, so it’s important to read the fine print.
Additionally, the more complex and personalized the POS system, the more you can end up paying for it. If you have a business with multiple locations, those extra fees add up. Square offers free multi-location management features including linked locations and transfer options, per-location item libraries and device management.
Save more on your POS with Square
Square offers you a few ways to utilize a compact, modern POS for your business. Below, we show the hardware, features and costs of two of our most popular systems for small businesses.
| Square Reader | Square Stand | |
|---|---|---|
| Total cost | $69 | $249 or $21 per month over 12 months |
| Free POS software? | Yes — Square Point of Sale | Yes — Square Point of Sale |
| Includes all hardware? | No — iPad or smartphone not included | No — iPad not included |
| Accepts chip cards and mobile payments like Apple Pay? | Yes | Yes |
| Processing rate | 2.5% For all major credit cards 0.75% + 7¢ per INTERAC chip and PIN or tap | 2.5% For all major credit cards 0.75% + 7¢ per INTERAC chip and PIN or tap |