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How much should I spend on a POS / Retail Management System?

- By Bob Twain


This is a difficult question to answer. Most retailers are TOO concerned about the price. When buying software you get what you pay for. And you don't want to skimp when it comes to POS software.

In certain situations you can get by with a good single user POS system for around $1000. But that's NOT usually the case. Typically a small to medium sized retailer will spend $3,000 to $30,000 for software and training at one store. It completely depends on your size and type of business.

You also need to consider hardware, upgrades and on-going fees. On average, retailers spend 1% to 2% of annual sales on retail technology, systems and supplies. Given the speed of changing technology, it is recommended that retailers spend 2% to 3% on technology.

To calculate a budget, you need to consider the useful life of your computer system. On average, your hardware, printers and software will last about five years. Software can last much longer, but it's reasonable to use five as an average useful life for the total retail system.

Here's an example that shows you how to calculate your budget for a retail system, including hardware, software, training and implementation, and personnel costs.

Retailer's Annual Sales $1,000,000
Estimate of the average life span of the entire retail information system 5 years
Estimate of the percentage of sales the average retailer spends on information technology 2% = 0.02
Retail System Budget $1,000,000 x 5 x 0.02 =$100,000

In this example, the retailer would have $100,000 to spend on retail technology over the course of 5 years.



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