So, here’s a question for you. Do small businesses value price over everything else or is the cost of a solution secondary to how well it fits their situation? This isn’t a rhetorical question but rather is what will decide the success or otherwise of a new initiative by cloud point of sale (POS) vendor Pose who is today announcing that its solution will now cost… nothing.
First some context, Pose makes a POS solution that is targeted squarely at the small business market. It’s a busy space – standalone vendors such as VendHQ and Pose compete with solutions from the big boys. Square and PayPal in particular have broadened their payment solutions to include core POS functionality.
So if you want to get heard above the noise, one way to do so is via price. And this is what Pose is doing, suggesting that their move mirrors a similar “race to zero” in the cloud storage space, Pose is cutting its price from the former $49 per month to nothing. By partnering with specific credit card transaction processors, Pose can monetize indirectly. Rather than charging customers, they make money off the credit card companies. This isn’t, of course, unheard of.
In this case it could be a win/win for customers, Pose is hoping that they gain enough momentum and customer numbers to justify some very sharp pricing from the processors. At launch they are contrasting what they can do, as they write: “other online POS vendors charge north of Square’s 2.75% transaction fee, yet compare this to Pose’s transaction fee that will be as low as of 1.09% + 10¢ per swipe.” Pose is natively integrated with QuickBooks and covers multi-lingual and multi-currency applications.
What Pose doesn’t do however is well-support the multi retailer use case. In order to run multiple outlets with Pose, customers would need to use spreadsheets to view and manage group sales. And this then raises the questions about how well this new pricing will work. Will customers forego a little bit of function, in order to get the best price in the marketplace?
I put this question to Nick Houldsworth, head of marketing at Pose competitor Vend. I asked if they’re seeing any push back in terms of pricing. He replied that”
We're not experiencing a significant push back on pricing in our target market. There will always be SMB businesses for whom price is the primary purchase driver, and there appears to be a race to the bottom to serve those customers with a proliferation of free or loss leading apps, especially in transactional or payments apps. However, the slightly larger, multi store retailers (2 to 20 stores) who choose a cloud-based retail management solution like Vend, to streamline their complex business operations, like inventory, omni-channel selling, staff management and back office reporting, are looking for quality of product and great customer service, and are prepared to pay more for that. However, even at $100 or $200 per month, it is still considerably more cost effective than traditional, desktop based retail software, and a fraction of the cost of enterprise retail systems like SAP
He raises a good point – on the scale of things, a couple of hundred dollars a month pales in comparison to the inefficiencies that disconnected systems have. The question will come for customers whose use case is covered well by both Vend and Pose. For these customers it would seem the answer is obvious and that free is going to be seen as beneficial.
It’s interesting to see vendors start to chose one of two paths: either moving up the food chain and offering higher value, but higher priced solutions (as Vend is doing) or moving down the channel and competing on price (as per Pose). Neither is right or wrong, but I will say that Pose is entering a shark’s tank of competition – it could get bruised and battered in the process.
