Written by

Tara Farmer

June 24, 2024

Edited by

Jennifer Carlson

Fact-checked by

Kristen Cramer

POS system cost

A POS system costs anywhere from $0 to $2,000+ for the initial hardware and setup, plus a monthly POS system software fee and a fee per transaction. Software subscription fees for point-of-sale systems cost $0 to $200+ per month, depending on the provider, business type, size, and specific features required.

The three main components of a POS system are hardware, software, and payment processing.

Software

POS software subscription fees range from $0 to $200+ per month, depending on the provider and software capabilities. A POS software license for indefinite use costs $1,500 to $10,000, though one-time payment models are not as common in today's market and often come with extra fees for support.

Free POS software plans provide basic features and often have higher payment processing fees, so they are best for new businesses with minimal requirements. Providers with free plans, like Square and Clover, offer add-on services and the option of upgrading to a paid plan with more advanced capabilities as the business grows.

Hardware

The cost of POS hardware depends on the specific components you need for your business. A new small business may only need a simple tablet or card reader, while a large retail chain may spend tens of thousands on multiple payment terminals, cash drawers, scanners, and printers.

The table below details common POS hardware components and their typical costs:

• Some point-of-sale systems allow you to use your own hardware to save on upfront costs. However, this increases the risk of software and integration issues.

• Hardware is typically a one-time purchase, but many providers offer financing to rent, lease, or spread the cost over time if needed.

Payment processing

Most POS systems charge a percentage of each transaction plus a flat fee per transaction. The exact fees vary depending on the payment processor and the payment method used. Credit card processing fees generally range from 2% to 4% of the transaction amount, plus a flat fee of $0.10 to $0.30 per transaction.

There are two common pricing models for payment processing fees:

• Interchange plus pricing has two components—the interchange fee that the banks charge the payment processor and an additional markup fee set by the payment processor. This model works well for high-volume businesses that can benefit from potentially lower fees on certain types of transactions.

• Flat-rate pricing has one fixed rate for all transactions, regardless of the type, amount, or payment method. This pricing model is more predictable and easier to budget for—ideal for small businesses with lower transaction volumes.

Add-on features & integrations

Most POS providers offer a wide variety of advanced features and capabilities ranging from $5 to $500+ per month each. Depending on the type and size of the business, beneficial add-on features may include:

• Advanced inventory management

• Appointment or reservation scheduler

• Email marketing

• Gift cards

• Online ordering

• Integration with other business systems

• Syncing physical and online sales data

• Loyalty programs

• Payroll functionality

• Industry-specific tools

• Extra training and technical support

Point-of-sale system cost by type

When selecting a POS system, consider not only the cost but also the operational benefits and potential risks associated with each type. Traditional systems are more secure but require a bigger upfront investment and cost more to maintain. Cloud-based systems are less secure but more affordable, flexible, and user-friendly.

Traditional system

The initial setup cost for a traditional or legacy POS system ranges from $2,000 to $10,000+, depending on the business size and needs. These systems are secure, self-contained networks with all data stored on-site. Although secure, legacy POS systems often require more training and maintenance and have limited scalability compared to other systems.

Traditional POS systems may not have a monthly subscription fee, but any system updates, maintenance, or technical problems must be addressed on premise for and incur additional ongoing costs.

Cloud-based system

Cloud-based POS systems cost $0 to $1,000 for the initial setup, depending on the business size and whether you use your own hardware. These systems offer flexibility and the convenience of using familiar devices like tablets and cell phones but with a higher risk of being connected to a remote server.

POS system cost factors

In addition to whether it's a traditional or cloud-based POS system, several other factors impact the overall cost:

• Business size: Large companies with multiple locations require more hardware components and more advanced software functionality than a small business with one store and a few employees. However, high-volume sales typically mean lower payment processing rates.

• Per terminal vs. per location fee: POS systems that charge per register typically charge a monthly fee for the first one and a lower monthly fee for additional terminals. However, in most cases, paying per POS terminal or register typically costs more than paying per location.

• Number of users: User limitations vary from system to system. Some providers limit the number of users and charge additional fees for users beyond that limit.

• Add-ons & apps: Every additional feature beyond what's included in the chosen plan increases the cost.

• Payment processing: Some POS systems require you to use a built-in or specific payment processor, while others are "payment agnostic", meaning they allow you to use any or multiple third-party processors. Built-in functionality simplifies the process, while third-party integration lets you shop around for the best rates.

• Contract vs. month-to-month: A contract may initially seem like a better deal than month-to-month service, but a long-term commitment may lock you into a service that no longer works for your business as it grows.

Hidden / unexpected costs

While many POS system providers are transparent about their fee structure and pricing, not all of them offer upfront details about every potential cost. Make sure you know whether you're committing to a month-to-month service or signing a long-term contract with limited flexibility.

Things to ask about before signing up and look out for on your monthly statements include:

• Contract lengths

• Interchange rates

• Non-compliance fees

• Processing fee rate changes

• Fees for chargebacks or returns

• Termination fees

POS system providers

Most providers offer several plans with increasing features, services, and costs. Popular for small businesses, a Square POS system costs very little to start, with free POS software, affordable hardware, and transparent payment processing fees. The table below details the average monthly and payment processing costs for some of the top-rated POS systems:

POS system FAQs

What is a POS system?

A POS or "point-of-sale" system is a combination of hardware and software that allows businesses to process customer transactions, manage inventory, track sales data, and perform various other business operations. It serves as the central hub for managing sales and customer interactions in a retail or service environment.

How does a POS system work?

When a customer makes a purchase, the POS system scans the items and calculates the total amount due. The customer can then pay using cash, credit card, debit card, or other payment methods accepted by the business. The POS system stores the transaction data and updates the inventory accordingly.

What is the best POS system for a small business?

The best POS system for a small business depends on the industry you operate in and your specific requirements. Some of the top-rated POS systems include Square POS, Lightspeed Retail, Toast POS, and Clover POS. Evaluate the options each system offers and choose the one that meets your needs and budget.

What to consider when evaluating potential POS systems

Carefully consider the following factors to help you choose a POS system that meets your business needs, fits your budget, and provides a seamless and efficient experience for both you and your customers:

• Features & functionality: Ensure that the POS system offers the features and capabilities you need, such as inventory management, customer management, reporting tools, or industry-specific features.

• Ease of use: Look for a POS system with an intuitive and user-friendly interface that won't require extensive training for your staff.

• Integration capabilities: Confirm whether the POS system can integrate with other software or tools you use, such as accounting software or e-commerce platforms.

• Scalability: Choose a POS system that can grow with your business, offering the ability to add more users, locations, or advanced features as needed.

• Customer support: Evaluate the level of support offered by the POS provider, including training resources, technical support, and ongoing software updates and maintenance.

• Cost: Consider the total cost of ownership, including the initial hardware and software costs, ongoing subscription fees (if applicable), payment processing fees, and any additional costs for add-on features or customizations.

• Hidden or additional costs: Be aware of any potential hidden costs or additional fees that may not be immediately apparent, such as setup fees, training costs, or ongoing maintenance and support charges.