Monday, December 1, 2014

Point of Sale Buying Tip: What to Include to Calculate True Cost of Ownership

Whether you define TCO as "True Cost of Ownership" or "Total Cost of Ownership", it is important to factor in all costs over time to ascertain how much a point of sale system will cost you over an average five to seven year period.  A lot of times it is easiest to create a spreadsheet so you can compare costs for various point of sale solutions in a "side by side" layout.

If you are considering a "pay as you use" system or leasing. then you can multiply the payments out. In the case of a "pay as you use" system, I'd recommend multiplying the monthly payment by 72 as 5 - 7 years is how long a typical point of sale system will last.

Here is an actual example - only the names have been changed to protect the innocent:

Store with one point of sale system as a “register” & one point of sale system in the office as a “manger” System A – Windows
Outright Purchase
System B – Tablet
Purchase Hardware but pay monthly fee for software & support
System C – Windows
Lease everything for 5 years (and own outright at the end of 5 years)
Software $2,860.00 $9,288.00

Hardware & Peripherals $2,689.00 $2,350.00

Training $1,200.00 N/C for initial overview

Installation Labor $1,980.00 N/C – self install

Paper and Labels $179.00 $179.00

Accessories (UPS, etc) $200.00 $200.00

Supplies years 2-6 $895.00 ($179/yr) $895.00 ($179/yr) $895.00 ($179/yr)
Equipment failure/yrs 2-6 $2,500.00 ($500/yr) $2,500.00 ($500/yr) $2,500.00 ($500/yr)
Annual Support years 2-6 $2,750.00 ($550/yr) Included $2,750.00 ($550/yr)
Software Upgrades yrs 2-6 $1,160.00 ($232/yr) Included $1,160.00 ($232/yr)

TCO (over 6 years) $16,413.00 $15,412.00 Will depend on interest %

A video explanation of the above chart can be found at the bottom of this post.

Obviously there are many variables but system A and system B represent the most popular windows based and tablet based retail point of sale systems on the market today.

TCO information does not include merchant services fees as these fees vary greatly from merchant to merchant.

You can draw your own conclusions related to how similar the long term costs are between a windows point of sale system that you purchase and a tablet based point of sale system that you pay an ongoing monthly fee to use.

Confused as heck now or in need of some unbiased point of sale advice? Then visit my contact page for various ways to reach me.

Here is the video explaining the chart:

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