• 14 Dec 2017
  • By dinesh
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POS Solution – Total Cost of Ownership

Investing in a world-class POS system from a reputed brand may not come cheap, but an investment worth considering for the value it brings to your business. There is more to an acquisition price, and that is what we will cover in this post.

The largest coffee chain in India, Cafe Coffee Day switched from a normal desktop, mouse and printer setup to a more sophisticated and durable Posiflex POS solution where the total cost of ownership factored was for a period of6-7 years.  This only goes to show, a more reliable POS solution pays for itself in the long-run, and balances costs.

Main Cost Component of a POS System

Here is a list of costs associated with buying and mainitaininga POS System:

  • Initial price or the sticker price
  • Installation & Setup cost
  • Warranty & Maintenance
  • Training &Support
  • Consumables
  • Energy/ Power costs

Points to consider while Buying a POS System

It is important to assess price in its totality so as to stay confident right through your purchase decisions till the entire lifespan of the system.

  1. Understanding The Real Price

The real price is synonymous to Total Cost of Ownership of a POS system. It is not just the initial price one pays, but includes all other costs linked to a POS system over the time it is used by the company. It will be naiveto ignore these other cost components.

  1. Providing for Training and Support

As soon as a PO solution is deployed your staff needs to be trained to be able to use it; also when new employees are hired they need to be trained too.

  1. Cost Towards Upgrades

Though, advanced POS systems are scalable and allow for modifications in the future. But these changes could mean paying more, later. The need for adding a new component to it, or changing existing components may come for a cost exclusive of cost price.

  1. Ease of Maintenance

Maintenance and long-term ownership are often looked down upon. Truth is, terminals that are prone to breakdown have huge cost implications and impact business adversely. Expenses on repairs and cost of downtime cannot be ignored.

  1. Measuring Against Risks

The cost of installing a wrong POS system or using ainadequate machine involves greater risk – impact on customer satisfaction and sales. Any delay or waiting could mean crises situation in retail business – lost revenue, cost of maintenance, repair and labor, and errors from manual data entry.

  1. Covering Under Warranty:

Every POS system comes with its own warranty terms and conditions. Making sure that you are covered well, against service and parts, person-to-person contact, sufficient turn-around time for repair and/or replacement, remote management capability, availability of overnight delivery, and installation / support on national deployments.

  1. Features of POS:

There are a variety of POS models, at different price points to cater specific needs of the buyers, nevertheless a modern POS system should be able to perform the following at a minimum:

  • Store contact data base of customers
  • Keep up-to-date record of inventory
  • Allow communication between inter-store or intra-store locations
  • Record cash flows, sales history, employee time and attendance
  • Transfer information from online shop to offline shop and vice-versa

The Bottomline:

There is more to running a POS solution than just the sticker price. There are operational and capital costs involved which multiply your TCO manifold. Though these costs are necessary for smooth functioning of your business, it would be wise to understand them and be prepared for it. If the POS system you have chosen meets your functional and operational requirements, don’t hesitate to pay a higher TCO for it. On the long run, it will only add value to your business in terms of sales, revenue and reduced costs.

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