How Much Does a POS System Cost a Business Owner?

A point of sale (POS) system comprises the hardware and software that processes retail transactions. For business owners, a POS system is a crucial piece of technology that not only facilitates sales, but also streamlines the collection of important business data. 

If you are considering introducing a POS system to your business, it’s important to understand the costs associated with both the initial implementation and maintaining the system over time. Costs tend to vary by business size, application, and industry, so in evaluating different POS systems, business owners should consider both their operational needs and their budget constraints. For example, a small to medium retail business could pay about $39 to $89 a month for software, up to $1,500 for hardware and installation, and roughly 2.7% per transaction in payment processing fees.

Understanding POS Systems

In a retail business, a POS system facilitates customer payment transactions. It can encompass both hardware and software, including things like a cash register, barcode scanner, card payment terminal, receipt printer, or web-based checkout. 

Aside from streamlining the payment process, a POS system can provide valuable data to business owners, tracking things like inventory, sales, employee sales performance, and tax calculations. It also provides more flexibility and payment options, enabling businesses to sell online as well as at locations like fairs, trade shows, and farmers’ markets.

Types of POS Systems

Different types of POS systems have been developed as new technology emerges. Traditional POS systems might be as basic as a cash register and drawer, but also might include add-ons like a card reading terminal, barcode scanner, receipt printer, computer or tablet screen, and software system. 

POS systems are often differentiated by the way they store data. For example, a POS system whose data is stored in a fixed server location is referred to as an on-premise POS system, whereas technological innovations have added cloud-based software to POS systems to store, manage, and integrate business data across different locations and systems. A hybrid POS system connects to a local server within a fixed location but can also take advantage of cloud-based data storage. 

Many POS systems have also developed wireless hardware and tablet or mobile phone integrations so that payments no longer have to be taken from a fixed location. For example, restaurant customers might find it more convenient to pay the bill at their table as opposed to having to line up to pay at the end of their meal.

Recently, companies and industry groups have been anticipating how AI might factor into aspects of POS software, such as the ability to forecast sales or inventory or make operational decisions based on past ordering data.

Factors Influencing POS System Costs

POS systems are made up of software and hardware, and the cost of running one may also include one-off or recurring fees. Here are some factors to consider in understanding how much a POS system will cost overall.

Hardware Costs

Depending on the provider and intended purpose, there can be a range of hardware associated with a POS system, including:

• Card readers
• Card payment terminals
• Payment registers
• Cash drawers
• Receipt, kitchen, label, and barcode printers
• Barcode scanners
• Display screens, tablets, and mobile devices
• Chargers and cables 
• Mounts and docks
• Weighing scales

The cost of POS hardware will depend on the number of units and accessories purchased, as well as the type of software it can run. For example, some systems are WiFi-enabled and equipped with an “offline mode” in the event of a power or internet outage. Other systems are designed to withstand the demands of environments like a kitchen, with “spill-proof”–rated restaurant-grade materials.

Software Costs

POS software is typically offered in monthly subscription packages with features that differ according to the use case of the retailer. For example, Shopify and Square offer a range of packages at a fixed monthly rate, plus transaction fees for card payments. Typically, the plan increases in cost as more complexity or customization is required, such as having multiple locations or needing a certain number of user accounts. Some companies also charge setup fees or offer add-ons at additional cost.

Many POS companies offer other software that works in tandem with the POS system, for purposes like appointment booking, restaurant ordering, or inventory management, or their software is designed to integrate with other industry software. Some POS systems are also compatible with apps that unlock additional retailer capabilities, offering things like discounts, loyalty programs, marketing communications, ticket sales, and staff management.

Payment Processing Fees

Most POS providers charge a payment processing fee per transaction at a fixed percentage rate, and sometimes an additional fixed fee will apply. For example, Square charges from 2.6% + 10¢ per transaction.

Additional Costs

Additional costs associated with a POS system might include installation or setup fees, data conversion fees, team training, and tech or customer support. However, these costs are sometimes factored into the monthly subscription fee.

Other Variable Factors

Usually, adding complexity or customization to a POS system will incur further costs. For example, setting up a POS system across multiple locations, having a larger number of user accounts, adding software applications, or scaling the system to increase its speed and capacity can all increase the price of a POS system.

Average Cost of POS Systems

The cost of a POS system will vary depending on the needs of the business and generally increases with the complexity of the system, number of user accounts required, and number of retail locations.

By Business Size

A small to medium retail business should expect to factor in around $39 to $89 per month for software, up to $500 for hardware, up to $1000 for installation, and around 2.7% per transaction in payment processing fees.

Software costs for a larger, more complex business can be in the range of anywhere from $399 per month or higher, although payment processing rates tend to be more competitive (starting around 2.4% per transaction) due to the higher volume of transactions associated with a larger business. Installation fees and hardware costs can also be much higher due to the complexity of the system being installed.

By Industry

POS systems can be designed for a variety of retail applications, but they can also vary greatly by industry due to the features required by particular types of retailers. For example, making a payment at a hotel can be quite different from the payment process at a grocery store.

Certain sectors may face higher expenses due to the level of specificity required to design for their niche application. An all-purpose POS system such as Square is designed to appeal to a wide range of small businesses and has no monthly fee, whereas systems such as ITRetail that are designed for grocery stores can cost up to $149 per month.

How to Choose the Right POS System for Your Business

Choosing the right POS system is a matter of assessing business needs against costs, features, and other requirements. Here’s what to consider in selecting a POS system for your business.

Assess Your Business Needs

Consider the number of locations where you need to have a POS system as well as the number of users who will need to have an account on the system. You’ll also have to determine the amount of hardware you’ll need, such as card payment terminals, scanners, registers, and printers. Access to a fast and stable internet connection is another consideration in deciding between an on-premise vs. a cloud or a hybrid system.

Compare Providers and Get Quotes

In comparing POS system providers, it’s important to consider cost, features, and scalability. You’ll want to minimize cost while ensuring that your POS system has all the capabilities your business requires, both in the short term and as your business grows or changes over time. Most POS system providers offer quotes or demos that are tailored to the specific needs of your business, so it’s a good idea to take advantage of this to ensure you have an accurate understanding of projected costs.

Plan for the Long Term

When picking a POS system, try to anticipate both long-term costs and benefits, such as the reliability of a POS system and the level of customer support offered by the provider. Payment processing fees are something that can add up very quickly, so if your business processes a high annual sales value, it can be a strategic move to choose a POS system provider that offers a better rate over a certain threshold.

Price of the Most Popular POS Systems

Here is a breakdown of the costs associated with some popular POS systems.

Shopify

Shopify offers multichannel selling (both online and in-person) with a variety of software plans aimed at different sized retailers; these range from $5 per month to $399 per month. Hardware costs vary depending on the units and accessories required, but a card reader starts at $49, a mobile POS device at $299, and a countertop kit at $459.

There are no setup fees with Shopify and their payment processing fees range from 2.4% + 10¢ to 2.9% + 30¢ per transaction.

Square

Square provides ecommerce and in-person POS systems for retail, food and beverage, professional services, and beauty companies, as well as scalable solutions for large businesses.

Their hardware starts at $10 for a mobile card reader, with no installation fees or monthly software costs. The only recurring cost is for payment processing, starting at 2.6% + 10¢ per transaction.

Toast

Toast is a POS system for restaurants that offers payment solutions for in-person and online customers. Software and hardware start at $0 per month, and installation costs vary depending on the specific equipment required.

Payment processing fees for Toast are set at a custom rate that is “specific to the characteristics of your restaurant.”

TouchBistro

A cloud-based POS system, TouchBistro is specifically aimed at helping different types of restaurants sell online and in-person. Their POS software plan starts at $69 per month and hardware costs are available upon requesting a quote. They do not specify whether they charge installation fees, only that “hardware and additional fees may apply.”

TouchBistro’s payment processing services are available as an add-on, referred to as TouchBistro Payments; pricing is available upon requesting a quote.

Lightspeed

Lightspeed offers online and in-person POS solutions for retail, restaurants, and golf businesses. Their restaurant plan starts at $69, while their retail plan starts at $89.

Hardware costs depend on the exact equipment purchased, but a credit card reader starts at $79, a countertop terminal at $199, and a mobile terminal at $299.

Lightspeed doesn't specify whether installation fees are included, and they charge 2.6% + 10¢ per transaction for payment processing fees.

Pricing for Lightspeed Golf is available upon requesting a quote, but the business promises “fixed rates” for payment processing, “flexible payment options,” and “no long-term contract.”

The Bottom Line

When selecting a POS system, it’s important to carefully consider the needs of the business when it comes to processing payments. The cost of implementing and running a POS system can quickly escalate depending on the amount of hardware needed to furnish a retail location and the number of transactions processed. Business owners might look to industry-specific POS systems for solutions that are tailored to their application, such as omnichannel sales, specialized retailers like grocery or liquor, or low-volume in-person selling.