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What is a Point of Sale (POS) system & software?

Discover frequently asked questions about what a Point of Sale is, what it does, how much it usually costs and more, or click the link if you want to learn specifically about BonApp’s POS system.

A Point of Sale (POS) system is a combination of hardware and software that allows businesses to process sales transactions. It typically includes a register or terminal, a card reader, and software to manage sales, inventory, and customer data. POS systems streamline transactions, track sales, and provide reports to help businesses manage operations efficiently.

POS stands for Point of Sale. It refers to the location or system where a transaction occurs between a customer and a business, encompassing both the hardware and software used to process sales and manage transactions.

A POS system works by processing sales transactions through a combination of hardware and software. When a sale is made, the POS software records the transaction details, updates inventory, and calculates the total amount due. The hardware, such as a register or terminal, facilitates payment through cash, card, or digital methods. The system then generates a receipt and updates financial records and inventory in real-time.

A Point of Sale (POS) system refers to the complete setup used for processing transactions, including both hardware (like terminals and card readers) and software. Point of Sale software, on the other hand, is the application that runs on the hardware, managing transactions, inventory, and reporting. In essence, the system is the whole package, while the software is just one component of it.

The three types of POS systems are:

  1. Traditional POS: A stationary system with a cash register, barcode scanner, and receipt printer, typically used in physical retail locations.
  2. Mobile POS: A portable system using tablets or smartphones with POS software, allowing transactions to be processed anywhere, often used in restaurants or for on-the-go sales.
  3. Cloud-based POS: A system where the POS software is hosted online, enabling access from any device with an internet connection and offering real-time data and remote management.

POS skills refer to the ability to effectively operate and manage Point of Sale systems. This includes understanding how to process transactions, handle payments, manage inventory, generate reports, and troubleshoot technical issues related to POS hardware and software.

In the hospitality sector, an example of a POS transaction is when a guest orders food and drinks at a restaurant. The POS system records the order, processes the payment, and updates the inventory. The system generates a receipt for the guest and sends the order details to the kitchen.

In software, POS stands for Point of Sale. It refers to software applications designed to handle sales transactions, manage inventory, track customer data, and generate reports. POS software is typically used in retail, hospitality, and other businesses to streamline sales processes and improve operational efficiency.

All of these POS systems are generally recognized as excellent options for the following industries:

  • Hospitality: BonApp is a strong contender, especially given its focus on hospitality-specific features.
  • Restaurants: BonApp is also a popular choice for restaurants due to its features tailored for the industry.
  • Services: Square is a versatile option, while FreshBooks and BooksTime offer more accounting-focused solutions.
  • Retail: Lightspeed is a well-regarded choice for retail businesses, known for its inventory management and customer loyalty features.

Each system has unique strengths though, so the best choice depends on your specific business requirements and budget.

The cost of a new POS system can vary widely based on several factors:

Software Cost:

  • On-premise POS System: Typically involves a one-time license fee ranging from $1,000 to $10,000, depending on the features and scalability.
  • Cloud-based POS System: Usually involves a subscription fee, which can range from $30 to $300 per month, with additional costs for advanced features or higher tiers.

Installation Costs:

  • On-premise POS System: Installation costs can range from $500 to $5,000, depending on the complexity and hardware requirements.
  • Cloud-based POS System: Installation is often minimal or included in the subscription fee, but there may be costs for initial setup or integration, usually between $0 and $1,000.

Hardware Costs:

  • Both systems require hardware, such as terminals, barcode scanners, and receipt printers. Hardware costs can range from $500 to $2,000 or more, depending on the number of stations and features.

Additional Costs:

  • On-premise POS System: May include ongoing maintenance, support, and upgrade costs.
  • Cloud-based POS System: May have additional charges for extra features, transaction fees, or support.

Overall, the total cost for a new POS system can range from a few thousand dollars for basic setups to tens of thousands for advanced, feature-rich solutions.

On average, a POS system can cost between $30 and $300 per month for cloud-based solutions. This range depends, sometimes, on factors such as the number of users, features included, and the level of support.

Basic plans start at the lower end, while more advanced systems with extensive features and support are priced higher.

POS systems typically charge per transaction in the following ways:

  • Fixed Fee: A common model is a fixed fee per transaction, often ranging from $0.10 to $0.30 per transaction.
  • Percentage Fee: Alternatively, a percentage of the transaction amount is charged, usually between 1.5% and 3.5% for credit card transactions.
  • Fixed Price + Percentage Fee: Some providers use a combination of both models, charging a fixed price per transaction along with a percentage of the transaction amount.

The exact fees can vary based on the POS provider, the type of card used, the country and the volume of transactions.

BonApp offers a comprehensive hospitality POS blog featuring articles about restaurants.

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