'Free' Retail POS Systems: The Hidden Costs To Look Out For...

In recent decades there have been a range of Point of Sale (POS) software systems which have introduced'free' options. However, while the notion of free is always going to be very appealing, there are typically numerous methods retailers wind up'paying a price'.

With rental costs, invoices, salary and other overheads to continuously cover, it can be very tempting to search at no cost or'freemium' applications to run your retail performance -- particularly at the start up phases. In recent decades there have been a range of Point of Sale (POS) software systems which have presented these'free' options. However, while the notion of free is obviously going to be very appealing, there are typically numerous methods retailers wind up'paying a price', either through extra / hidden costs, or missed business opportunities as a result of inadequate software features.

We've found that if a merchant is generating $20k turnover or more per month per store, a free POS seriously limits their capacity to execute the retail practices to sustain profitability and expand further.

There are surely some retailers a free POS can make complete sense for. But this is typically at the start of their enterprise, for lifestyle/hobbyist retailers turning over less than $20k/month and for specific sectors like small salons, food trucks, farmers markets stands or cafes.

The advantages of a free POS are extremely clear -- cost. So, in this report, we'll examine what's not so obvious -- the company costs and risks. For many growth-focused retailers carrying physical stock, we anticipate that the phrase"there is no such thing as a free lunch" will ring true.

Free POS Systems Will Have Associated Costs & Charges

When you're presented with a free POS system, a vital question you should consider is"how can this software vendor wish to create money?" .

Many free POS systems will have stipulations that lock you into their own payments processing support (with related merchant fees), permitting them to recover their costs of providing the POS applications at zero cost. An important thing to take here would be to research other payments suppliers and determine whether merchant fees are relative. However, even if they're relatively low, many retailers would still feel uneasy building their business on a POS platform which does not offer them the flexibility to change / work with multiple payment providers. Additional"tied expenditures" used by vendors to create a return on giving their POS applications include selling high-margin, compatible hardware.



It is important to realise that a free POS system is generally a gateway for software vendors to obtain new customers and move them into paid programs. As we will cover off in the following two sections, key features and integrations are often missing from free versions of the software you'll wind up needing to update to earlier rather than later.

Free POS Systems Have Restricted Features & Allowances

Using a free POS, you will likely only have the ability to use 1 register, and monthly transactions will be limited. Several have a capped allowance at approximately 1,000 SKUs, while others permit only five or six stock items.

When it comes to logistics & inventory, CRM, loyalty, marketing and analytics functions, you will discover a free POS can only handle basic retail practices in these areas, and is more akin to a glorified software based cash register. Your ability to get rid of stock overstocking and understocking, streamline your fulfilment to the client, create personalised marketing and purchasing adventures and unveil insights that inform profitable decisions will inevitably be diminished. For a small, basic single shop that's just starting out this might not be a significant concern for the first month or two of trading, but if you mean to profitably scale your company then this is most likely not the perfect base to build on.

Free POS Systems Have Restricted Integrations

Most retailers want to make the most of built-in integrations with their other software platforms for accounting, eCommerce, shipping, CRM, email marketing, and much more. But these are usually limited with free POS systems or are billed as an add-on fee. Constantly jumping back and forth between multiple applications and attempting to replicate data and procedures is time-consuming and exceptionally inefficient.

Retailers which are selling both online and in-store can be especially challenged when using a free POS as do not provide any direct integration into the leading eCommerce platforms like Shopify to synchronise your data and processes between these various channels. This can cause friction in the shopping experience and business inefficiencies because inventory levels, pricing & products and orders are handled in a disconnected way

Free POS Systems Have Restricted Implementation & Support

In regards to setting up / migrating to a free POS system, anticipate to this to be completely self-serve. Accurate organisation of your company data (products, pricing, stock levels, clients etc), effective system setup and worker training are crucial to a new profitable POS project so that you'll probably need to be ready to survive without assistance from a project manager and guided execution support.

Free POS plans do not have the choice to call customer service, and a few don't even enable you to email with queries. In other words, expect to be left to your own devices. If you can not find the solution to your problem on an individual forum or the vendor's site, you might not have the ability to solve it.

Is a Free POS System Right For My Company?

So as to keep pace in the dynamic retail business, it is important to have a POS system that equips you with the ideal tools to fuel expansion. The perfect system is a considerable advantage in retail and can offer valuable insights to affect business decisions.

A free POS system can be a viable option for retailers but typically only for those that fulfill the following criteria:

  • Monthly turnover per shop of less than $20k
  • Keen to operate with no/minimal installation and ongoing support
  • Retail profitability can be maintained with only fundamental practices in areas like in-store sales & support, eCommerce, inventory & logistics, dedication, CRM, marketing and reporting / analytics
  • Fundamental retail operations like a Little salons, food truck, farmers market stand or cafe

But for many Australian & New Zealand retailers, a free POS system will tend to quickly show signs of restricting their growth as a result of limited features, implementation, support and integrations capacities. ConnectPOS provides an innovative, affordable cloud POS & Retail Management platform for growth-focused retailers which excels in each these areas, providing the correct foundations to build your company on.

References

https://www.connectpos.com/shopify-pos/

https://www.connectpos.com/bigcommerce-pos/

https://www.connectpos.com/ebook/

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