Home Channel Trends How to Combat Discount or Free POS

How to Combat Discount or Free POS

by James Korte

Estimated reading time: 2 minutes


One of the latest – and most hotly contested – trends in the point of sale industry comes from merchant service providers (MSPs) who are offering heavily discounted or free POS systems to customers. In exchange, these customers often times have to sign long-term payment processing agreements. As we all must learn in life, nothing is ever truly free. Other free POS solutions might offer customers the bare minimum needed to run a business; additional features and services do, in fact, cost money. One of the best ways to counter this popular new business model is to offer a Solution as a Service (SaaS) model.

However, before we discuss the benefits of the SaaS model, let’s discuss free POS solutions more in-depth.

What are the limitations of free POS solutions?

If business owners don’t have to pay for the free POS software and hardware, how do merchant service providers make money? MSPs that offer free POS bundles typically build in higher processing fees to recoup the money lost on the free hardware and software. Another common way to make the money back is to charge fees for installation, support, training, and upgrades. Upgrades are often needed for growing businesses because the free versions of these solutions place limits or caps on the support offered, active products/items you can track, number of customers, and how many employees/user logins are available.

How can VARs combat the rise of discount and free POS?

Inexpensive options are great for small businesses or those with limited cash flow, and discounted or free POS solutions can be difficult to beat. The SaaS model has emerged as a way for VARs to combat the move toward free or discount solutions.

SaaS allows resellers to offer complete POS solutions to customers in exchange for an inexpensive monthly fee. While it isn’t free, the SaaS model does offer end users a complete solution for a single, recurring price. Hardware/software, installation, services, and training are all included in the monthly payments. This is something free POS cannot promise, and SaaS is able to do it without requiring an up-front investment from the end user.

In addition to being an attractive option for business owners, the Solution as a Service model also provides numerous benefits for VARs. One of the biggest benefits of the SaaS model is that it provides predictable financials. License-based software sales tend to be cyclical, with most of the sales coming at the beginning of the year. A subscription-based method allows for more sustainable income levels, so financial responsibilities are easier to predict.

The SaaS model can boost orders for VARs and will also boost margins; plus, the full revenue is received at the time of the sale. The best way to combat the discount and free POS trend is to offer a subscription-based solution that gives customers everything they need – without any hidden costs. End users that do their due diligence in searching for point of sale solutions will see the value of SaaS. The point of sale landscape is constantly changing, and new trends and technologies will continue to arise. The best way to stay afloat in the point of sale industry is to readily adapt to these trends.

To find out more on BlueStar’s unique Hybrid SaaS program, click here.  http://www.bluestarinc.com/us-en/hybridsaas.html

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