The Myth of Free POS

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We recently had a call from a customer who is planning on opening a location in Virginia that will be a full service restaurant with a bar. They were inquiring about a POS system that would be able to handle both operations. They heard that some companies offer “free” Point of Sale equipment.

The customer referred us to one of these companies on the internet and we took the time to read about their offer carefully. In today’s world, anyone can post anything online and reader beware, but the interesting point of this particular Review site was that it stated they do the research so that “you don’t have to.” To their credit, they did state that the supposed Free POS systems were accompanied by long contracts and that the terms/conditions should be reviewed carefully. They listed the top 5 advantages as follows:

  1.  Low Upfront Costs
  2.  Simple to Setup
  3.  Overnight Replacement Part Shipping
  4.  Lifetime Warranty
  5.  They Don’t Make Money Unless You Make Money

I will be addressing each point shortly, but the bottom line is that there is no such thing as Free POS. They still make plenty of money even if you don’t.

RDS POS offers tailored Point of Sale solutions systems focused on Hospitality, Retail, Grocery, and Petroleum/C-Store. Customers demanding an honest single source for their POS solution come to RDS POS for the best in Service, Software, and Hardware.

Most of us have heard the phrase “There’s no such thing as a free lunch.” Or how about “if it sounds too good to be true then it probably is not true.” Then how is it that there are still advertisements claiming “Free POS?” Is it possible there is such a thing as free POS for your business? Here are some common (and mostly misleading) phrases we found when researching this topic:

“Upgrade your Business to Point of Sale FOR FREE”

“FREE POS System for Hospitality, Bar or Retail”

“Is a FREE POS in your budget?”

“A comprehensive FREE point-of-sale solution for your business!”

To better understand, let’s quickly look at the components and pricing of a POS system: 19475626_m
1  Hardware – This could include the POS touch screen, all-in-one touch pc or separate processor (computer), customer display, barcode scanners, cash register drawer, kitchen display, and thermal printers.
2. Software: It is defined as the specific program than runs the point of sale operations and does have a variety of features.
3. Credit Card Processing– you must use their services, no negotiating on rates or terms
4. Training–  all remote, no  local, qualified trainer with any experience
5. Service & Warranty– at their mercy, no qualified support for on-site, nor any night and weekend support

It is easy to understand that all the above components cost money. Some imagine that the revenue from credit card processing may be able to allow sellers of POS systems to offer the system for free. This is typically NOT true. The share of revenues the POS provider receives is way too little to cover the costs involved if you are to get a real system. So, how is it that you see advertisements for “free POS systems?”

We went searching and found the answers. Here is what we discovered when we tried to purchase a two station POS system for FREE for a restaurant from one of the nation’s leading advertisers of free POS:

  1. Basic Package: $60/month per station: Total: $120/month. Includes touch screen with receipt printer and cash drawer
  2. Optional Equipment: Total: $33/month. Includes remote printer (x2)
  3. There is a $250 per quarter maintenance. That is an extra $6,000 in the five year term.

Then we moved on to the fun part– THE FINE PRINT! Commonly, most business owners are so busy with setting up their business that they don’t read the pages of fine print and this is where you can come across surprises. We suggest that you spend the time to always read the fine print and ask questions. Here are a few interesting and frankly scary parts from it:

Terms: The monthly payment agreement is for 60 months and then it is automatically renewed for an additional 48 months if you don’t give them notice 60 days period to the termination of the first 60 months. Early termination fee is equal to the number of months remaining and the entire amount is due upon termination! So if after operating for 36 months, you want out, then you need to pay them 24 months’ worth of payments immediately.

Rate Hike: The POS seller can adjust the monthly service charges upon 30 days written notice. So at any point, they can raise the fees and you have to accept it.

Credit Card Processing: You have to maintain this service with them and pay any fees they like. There is NO OPTION! This is a huge unknown, and does not allow for any comparison in rates or costs. Count me OUT!

Equipment Ownership: They own the equipment and upon termination, you must return all the equipment in working condition.

The actual provider: Your POS provider is actually a bank. Don’t know if I want the bank to know everything about my transactions.  What does a bank know about POS?!?

We know it’s hard to believe, but feel free to read the entire contract yourself.
Cost of ownership: Basic Package + Optional Equipment + Tax
$120+$66= $186 x 60 months = $11,160
Plus 20 quarters of $250 = $6,000
Total: $17,106.00 (Depending on what State you are in, you may have to add applicable taxes to it.

This is the cost if they don’t decide to raise the monthly fee as they see fit and if you forget to cancel the term 60 days before the expiration, then you are stuck for another 48 months or $13,728. You still have to pay whatever they charge for Credit Card Processing and you still don’t own the EQUIPMENT and are at the mercy of the seller. And you are still stuck with low level service and support.

When we tried to bring up this to them and asked “how is this free?” we were told that this is like a cell phone contract. I am no fan of mobile phone companies, but at least with the cell phone companies you own the phone at the end and they can’t just raise rates on you if you are in a contract.

Directly stated, it is not only dishonest, but also grossly deceitful. One must wonder, if this is how a relationship starts, how will the rest of it go? The only factor we are not certain about is the service they provide when you have the system. You are obligated, so you can be at their mercy. They may be wonderful service providers, but in business, trust is everything and if they are this way in the beginning, who knows. A POS System is an investment in your business just like your employees who need to be trustworthy.

If you want an honest and reliable POS solution provider, then contact RDS POS Systems. Our goal is to help you build your business instead of locking you into fine print. Your success directly reflects upon us and brings success to us.

Contact us today with any questions: POS is what we do!

by Garry Easterling

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