December 14, 2020

What is a POS System? A Guide to Choosing the Best Point of Sale


If you’re ready to open a new business, getting a point of sale (POS) system in place is critical to opening your doors, and for long-term success. Unfortunately, most small business owners don’t think about this until it’s too late.

A POS system is something you need to plan for in advance. You can’t just order it online and expect it to show up on your doorstep the next day, completely programmed and ready to go. That’s not how it works. The best thing you can do is to start the vetting process sooner rather than later.

However, before you get started with your research, it’s essential to understand what is a POS system and how to choose the right one for your business. This guide will cover everything you need to know, so let’s dive right in!

POS Systems Overview

POS systems perform all the basic functions of traditional cash registers, such as ringing up sales, processing returns, scanning products, calculating taxes, and printing receipts – but they also do a whole lot more. The main difference between your standard cash register and a point of sale system is that a POS system allows business owners to manage almost every aspect of their business beyond what happens at the point of sale.

Like setting up a computer, every POS system includes two components —  POS hardware and POS software. The point of sale software is downloaded onto the hardware, similar to putting Microsoft Word onto your computer or downloading an app on your mobile device.

The hardware consists of a purpose-built computer, typically with a touchscreen monitor, and various peripheral accessories such as receipt printers, barcode scanners, cash drawers, etc.

Types of POS Software

The software installed on your POS system is the component that makes the system functional and manages your day-to-day operations. Different types of businesses, such as restaurants and retail stores, require varying operational capabilities from their POS systems. There are multiple types of POS software, and it’s important to recognize which one is right for your business.

Retail POS Software

Retail POS software is tailored to fit the needs of a brick and mortar store selling products. Retail POS systems offer retailers unique features like an advanced inventory matrix that supports multiple attributes.

Some other features the retail POS system might include are:

  • Purchase order creation for items in your inventory that dips below a predetermined amount
  • The ability to create gift registries for weddings, baby showers, and other big milestones
  • Layaway programs for higher-priced items

Restaurant POS Software

Whether you’re operating a full-service establishment or a fast-casual restaurant, you’re going to need a POS system to fit your specific needs in the food and beverage industry. Operationally, a restaurant is very different from a retail business, and your point of sale system needs to reflect that.

For full-service eateries, a restaurant POS system should be capable of opening a ticket, allow you to continuously add items, and close out the check when the customer finishes their meal and is ready to pay.

The system should be able to ring up orders in the front-of-house, route them to the back-of-house via a kitchen printer or a kitchen display system (KDS) to the appropriate prep station.

Restaurant POS software should be flexible to use with mobile devices and contactless payment solutions as an extension of your POS system. Having these options opens your restaurant up to opportunities that maximize your business, such as SkyTab for curbside pick-up, delivery, and contactless payments.

Restaurant POS software ensures a seamless flow of real-time information so that the dining process can go as smoothly as possible for ultimate customer satisfaction and ease-of-use for employees.

Salon POS Software

Salons and spas require POS software that differs from the previous two we discussed above. Salons offer a combination of services and products for resale. They also rely heavily on appointment booking, which is why it’s so important to have the right software for the unique needs of salons and spas.

Some prominent features to look for in a salon POS system include:

  • Online appointment scheduling for customers to schedule appointments at their convenience
  • Email and text reminders to remind customers of their upcoming appointments
  • Walk-in management to handle walk-in customers based on the availability of service providers.

POS Hardware

Now that we’ve covered the basics of the three big categories of POS software, let’s talk about hardware. For the most part, POS hardware is generally the same across industries. However, some of the peripherals may vary slightly depending on your specific setup.

  • A cash drawer to store cash and ensure the safety of your funds
  • A touchscreen monitor or tablet to view your business’ data
  • A barcode scanner to scan your products’ unique barcode at the point of sale
  • A credit card reader for customers to complete their purchases with a debit or credit card
  • A customer display screen to allow customers to view the total for their transaction
  • A receipt printer to print receipts for customers who prefer paper receipts over e-receipts

A Complete POS System

When you combine POS software and hardware, this makes up a complete POS system. However, when it comes to the operability of a point of sale system, there are a few different ways to structure it.

Cloud-Based POS Systems

As of late, cloud-based POS systems are all the rage. These systems store data on remote servers (a.k.a. “the cloud”), making all the information accessible through the internet and the system’s dedicated portal or back office. This type of software requires an internet connection to operate and allows business owners to access data whenever and wherever, whether on the go or at the store’s physical location.

Server-Based or Legacy POS Systems

Legacy POS systems are the traditional point of sale solutions that have been around for years. These systems work similarly to saving files in a folder on your laptop, so the data is not accessible via the internet. Unlike a cloud-based system, they operate on a local server, where all of your business’ information is stored.

Hybrid POS Systems

Think of hybrid POS systems as the “best of both worlds” type of system because these POS systems combine cloud data storage and onsite POS storage. Hybrid cloud technology provides the benefits of the cloud such as real-time reporting and redundant back-up while maintaining the advantages of a local system including faster speed and the ability to operate if the internet goes down.

Open-Source POS Systems

This type of POS system grants users full control to completely customize the software, but requires technical expertise to set up. It is catered to tech-savvy business owners. While this is a more customizable choice, the POS data is stored at your business location, rather than on remote servers. This means that you are only able to access the information via your system at your physical location.

Mobile POS Systems

Mobile POS systems utilize tablets or other mobile devices to provide flexibility for your employees to take orders and complete transactions from anywhere at your business. These systems can be used as a stand-alone device for smaller stores or cafes, or to complement a stationary POS system for bigger restaurants and other businesses.

Integrating mobile POS systems into your restaurant increases table turns and the overall flow of your business.


What is a POS system_customer paying at cafe

What to Look for in a POS System

Although POS systems will vary from one industry to another, there are a few key features you want to keep in mind as you start researching point of sale providers.

1. Inventory Management

Whether it’s a small retail shop, full-service restaurant, or salon, keeping track of inventory is vital to your success. Knowing what you need to order and when will keep you organized and profitable. Too much on-hand inventory can hinder your cash flow, and in the case of restaurants, it can result in excess waste and spoiled food.

Your POS system should provide:

  • Inventory tracking including color/size/style attributes for retail and raw goods for the food and beverage industry
  • Track inventory across multiple locations if applicable
  • An inventory valuation report to know how much of your cash flow is tied up in stock
  • Product information that includes an SKU for easy scanning and fast transactions at the point of purchase

2. Employee Management

The performance of your employees can directly affect the success of your business. Having a system that tracks each employee’s performance helps you determine who’s thriving and who needs a little more training.

Along with measuring employee success, your POS system should:

  • Allow for secure individual staff logins
  • Assign job-based permissions and individual user permissions
  • Create and modify employee schedules
  • Track employee hours for accurate labor costs

3. Customer Management

To increase your business’s longevity, fostering loyal patrons and expanding your customer base is critical. Knowing your customers and their purchasing habits opens up opportunities for more personalized marketing. In turn, this keeps them coming back time and time again.

Establishing a strong customer database can be done by utilizing these customer management features:

  • Create and manage customer loyalty programs
  • Collect customer information such as name, birthday, phone number, and email address
  • Use email marketing to keep customers informed on promotions and other upcoming events
  • Keep track of each customer’s purchase history and use this information to create more personalized promotions

4. POS Sales Reports

You need to be in the know on your business’s sales metrics along with insights on inventory, customers, and employees. As your business grows, the need for more information about your sales metrics will be invaluable.

Detailed POS sales reports give you unique insights, such as:

  • The number of items sold and the total cost
  • Sales reports based on product, timeframe, and employee
  • Net profit and gross margin
  • Profit percentage

5. Third-Party Integrations

When it comes to point of sale systems, there is much more going on than meets the eye. A POS system is the center of all your business activities. As such, third-party applications such as payroll software, email marketing platforms, online ordering and food delivery services should all seamlessly integrate with your POS software to make your operations more efficient.

With the right POS system, software applications should be able to share information automatically without you having to intervene manually.

For example, a third-party application such as DoorDash should integrate with your POS system to enable customers to order from your menu through their app. The order is then sent directly to your POS system and kitchen for completion and payment without your employees performing any extra steps.

6. Mobile Wallet and Contactless Payment Options

Now more than ever, contactless payments are becoming the norm at most businesses. As consumer expectations for ultra sanitary conditions increase, it only makes sense that contactless payments will continue to rise at the point of sale.

Most POS systems come with a separate but integrated payment terminal. Make sure this credit card reader can accept not only traditional magstripe (swipe) transactions but also EMV (chip) cards and NFC contactless payments.

How Much Does A POS System Cost?

When buying a POS system, the best way to think of it is as an investment. It’s not something you’re going to buy, use for a few days, and then toss it aside. It’s something that you and your staff are going to use day in and day out, and rely on as a critical piece of business infrastructure. It’s something your customers expect to see at the point of purchase. It’s what will help facilitate sales and manage day-to-day operations.

Hardware Costs

Whenever possible, always try to buy a POS hardware bundle that includes the point of sale system plus the additional peripherals you’ll need. Bundling will help ensure that you’re getting the most cost-effective deal and that everything is compatible.

The cost of POS hardware is highly dependent on your business’ specific needs and desired setup.

Let’s take restaurants, for instance. Traditionally, full-service restaurants have multiple point of sale stations strategically placed around the dining area. This setup is so servers can jot down an order at the table and quickly walk to the nearest POS system and input it. When you have multiple servers on the floor, you can’t have them waiting in line to use the POS system because it will slow down service. Which, in turn, will make for some unhappy customers.

On the other side of the coin, retail businesses may only have one point of sale station at the checkout counter.

Regardless of your setup, you can expect to shell out anywhere from a few hundred dollars to a few thousand dollars per POS system bundle — except with a Harbortouch POS system.

We understand that you may not have the cash flow to lay out thousands of dollars in up-front costs, especially if you’re just starting out. Our free POS hardware program is designed to reduce that burden with our commercial-grade hardware that comes with a lifetime warranty.

Software Fees

Like any other computer program, you will need to purchase software packages to make your POS system function. Software fees vary depending on your business size and needs, just like hardware costs.

There are two popular forms of fees associated with POS software, and they are:

  • One-time licensing fees with additional costs for future upgrades and customer service or support. This structure is popular for legacy POS systems.
  • Monthly subscriptions that include licensing, upgrades, and support for a more budget-friendly monthly fee.

At Harbortouch, we offer you both the software and hardware (plus programming, installation and support) for one low monthly cost – without locking you into a long-term contract! It’s the lowest cost of ownership for any POS system on the market.

Other Services

While hardware and software fees are pretty cut and dry, be on the lookout for additional fees that may factor into your total cost of ownership, such as:

  • Programming, setup and installation fees
  • Service and maintenance fees
  • Leasing or rental fees if applicable
  • Support fees
  • Early contract termination fees
  • Payment processing rates

Final Thoughts

Finding the perfect POS system for your business might seem like a daunting task at first, but it doesn’t have to be. With some research and basic knowledge of how point of sale systems work, you’ll be able to make the right choice for your business.



More Blog Posts

Using Point of Sale Reports to Drive Business Decisions

June 15, 2021

Using Point of Sale Reports to Drive Business Decisions

These days, a POS system is a fundamental piece of infrastructure for successful businesses. Using a point of sale system with top-notch reporting and analytics will eliminate guesswork and help you make critical business decisions with data. Check out this article to learn how you can use point of sale reports to drive vital business...

Read more

6 Ways You Can Support Local Businesses

April 13, 2021

6 Ways You Can Support Local Businesses

Since the start of the COVID-19 pandemic, supporting small businesses has been a focal point in small towns and big cities alike. As the vaccine rollout progresses and municipalities continue to lift restrictions, it’s essential to keep our focus on supporting local shops that make our neighborhoods so unique. There are many ways we can...

Read more

6 Tips for Improving Restaurant Operations

March 23, 2021

6 Tips for Improving Restaurant Operations

Now more than ever, streamlining your restaurant’s daily operations is critical in your small business’s success story. During these unprecedented times, restaurant owners across the country have been forced to adapt to new business models to keep their doors open. If you’re still struggling with improving restaurant operations, this article will help you explore different...

Read more

Join over 100,000 satisfied Harbortouch customers!

Learn how a Harbortouch POS system can
revolutionize your business.