With technology always evolving, it’s critical to have a point of sale (POS) upgrade strategy to keep your business from lagging behind competitors opting for cutting edge systems. However, POS systems are an investment, costing you both time and money — and it’s not just a single expenditure, as POS have ongoing costs as well. With all this in mind, you need to have a POS investment strategy in place.
Software Costs
The first piece of your POS investment strategy should revolve around software expenses. You have two, general options for purchasing software. You can buy a software license outright and install the system on your server. This traditional software purchase model requires you to host the solution entirely onsite. Software purchased in this manner typically has a high upfront cost expense, and it may require you to purchase a support plan to keep it up to date.
You also have the option to purchase cloud-based POS software through a Software-as-a-Service (SaaS) model. Instead of paying an upfront cost for the license, you pay a monthly fee to use the software. One advantage to SaaS is that all software upgrades, security patches and maintenance are handled by the software vendor, and you know you are always running the most recent version of the software.
As you compare your options, be sure to look at the cost over the lifetime of the software, not just initial costs when comparing prices. Also investigate payment processors you can use with the system and the fees they charge.
Hardware Costs
Another critical aspect of your POS investment strategy is hardware. POS hardware for your business may include some or all of the following:
- POS terminals
- Mobile POS tablets or other devices
- Touchscreen monitors
- Receipt printers
- Cash drawers
- Credit card readers
- Barcode scanners
- Kitchen printers
- Backup power supply
Depending on your business needs, hardware costs can vary. If the POS hardware will be used in a harsh environment, you may need to invest in rugged equipment to minimize repair or replacement costs. Keep in mind, you’ll have to multiply POS hardware costs for each station you plan to install.
Total Cost of Ownership (TCO)
The biggest mistake business owners make when creating their POS investment strategy is not considering total cost of ownership. Ongoing expenses and hidden fees can all throw your budget off without careful planning. Costs to consider include:
- Deployment: Deployment services are often an additional expense, which can include system staging, loading and preparing the software and physically installing the hardware at each location.
- Warranty and Repairs: Understand what your warranty covers, for how long, and if you can purchase extended warranties. You’ll want to weigh these expenses against costs like maintenance and repair. Repair costs can vary based on use and environment, so use your current repair trends as a guideline. Keep in mind that repair needs change as the device ages, so be sure you understand the lifespan of the product and budget for those future expenditures as it climbs toward the end of life.
- Hidden Repair Costs: Consider all the costs your business will incur if POS hardware needs to be repaired. How much will downtime cost you? What are the costs of calling into a help desk to troubleshoot issues?
- Energy: Your strategy should also reflect energy costs. It might seem negligible but saving even $5 to $20 per device a year multiplied across all your devices can really add up.
- Credit Card Processing: If your POS system limits your payment processor choices, you may be subject to higher fees. Take these ongoing costs into account.
When you consider these factors throughout the planning process, you’ll be able to create an in-depth POS investment strategy that will save you time and money. For more information on to the best strategy for upgrading your POS system, read our latest eBook.
