How to Choose a POS System
Choosing a POS system is one of the most important technology decisions you'll make for your business. The right system streamlines operations and boosts revenue. The wrong one creates daily frustration. This guide walks you through the selection process step by step.
Define Your Business Type
POS systems are built for different industries. Restaurant POS systems have table management and kitchen displays. Retail systems focus on inventory and e-commerce. Service businesses need appointment booking. Start by identifying your primary business type.
- •Restaurant: Toast, Square for Restaurants
- •Retail: Shopify POS, Square for Retail, Lightspeed
- •Service (salons, etc.): Square Appointments
- •Multi-purpose: Square, Clover
List Your Must-Have Features
Don't get distracted by flashy features you won't use. Focus on what your business actually needs today. Common must-haves include payment processing, basic reporting, and inventory (for retail). Industry-specific needs vary.
- •Restaurants: Kitchen display, table management, online ordering
- •Retail: Barcode scanning, inventory, e-commerce sync
- •Services: Appointment booking, client management
- •All: Reliable payment processing, basic reporting
Set Your Budget
POS costs include software (monthly fees), hardware (upfront), and payment processing (per transaction). Free options exist but come with tradeoffs. Budget $0-100/month for software, $0-2,000 for hardware, and 2.3-3% per transaction.
- •Free software: Square (but higher processing fees)
- •Budget hardware: Use your own iPad + $49 reader
- •Premium setup: $1,000-3,000 for full terminal system
- •Watch for hidden fees: setup, contracts, cancellation
Check Payment Processing Options
Most modern POS systems include integrated payment processing. This is convenient but locks you into their rates. Compare processing fees carefully—a 0.5% difference adds up to thousands annually for busy businesses.
- •Flat-rate (2.6-2.9%): Simple, predictable (Square, Toast)
- •Interchange-plus: Lower for high volume, more complex
- •Avoid: Systems with unclear or variable pricing
- •Calculate: Your monthly volume × rate difference = savings
Evaluate Hardware Requirements
Some systems let you use your own tablets (Square). Others require proprietary hardware (Toast, Clover). Proprietary hardware is often more reliable but locks you in and costs more upfront.
- •BYOD (bring your own device): Square, Shopify
- •Proprietary required: Toast, Clover
- •Consider: Durability, warranty, replacement costs
- •Restaurants: Look for spill-resistant options
Read the Contract Carefully
Some POS providers require multi-year contracts with early termination fees. Others offer month-to-month flexibility. For most small businesses, avoid long contracts—the POS market changes quickly.
- •No contract: Square, Shopify
- •Contracts common: Toast (2 years), Clover (varies by reseller)
- •Red flags: Auto-renewal clauses, equipment leases
- •Negotiate: Contracts are often negotiable, especially for larger businesses
Test Before Committing
Most POS systems offer free trials or demos. Use them. Build a sample menu or product catalog. Process test transactions. Have your staff try the interface. A few hours of testing can prevent months of frustration.
- •Free trials: Square (always free), Toast (demo), Lightspeed (14 days)
- •Test: Your actual menu/products, not just defaults
- •Involve staff: They'll use it daily
- •Check offline mode: What happens when internet goes down?
Common Mistakes to Avoid
Choosing based on hardware looks
Pretty terminals don't matter if the software doesn't fit your workflow. Function over form.
Ignoring processing fees
A 0.5% difference on $500K annual sales = $2,500/year. Do the math.
Signing long contracts
Your needs change. The market changes. Month-to-month gives you flexibility.
Over-buying features
You don't need enterprise features for a small cafe. Start simple, upgrade later.
Frequently Asked Questions
What's the best POS system overall?
Square is the best starting point for most businesses due to free software, transparent pricing, and flexibility. Toast is best for restaurants. Shopify POS is best for retail with e-commerce.
How much should I spend on a POS?
Most small businesses should spend $0-100/month on software and $50-500 on hardware to start. You can always upgrade later. Don't over-invest before you know your needs.
Can I switch POS systems later?
Yes, but it's not trivial. You'll need to migrate products, retrain staff, and possibly buy new hardware. Choosing carefully upfront is worth the effort.