POS Pricing Decoded: Software vs Hardware vs Processing
The three cost lines you must model
Every POS has three cost components. Vendors advertise one and bury the other two.
- Software subscription — monthly or annual fee for the POS software
- Hardware — one-time purchase of terminals, readers, printers, displays
- Payment processing — percentage (and often fixed pence) charged per card transaction
Most comparison sites lead with the software subscription. This guide leads with the cost structure that actually matters at scale: payment processing.
Software costs in plain terms
| Vendor | Entry plan | Usable plan (real-world) | What “free” hides |
|---|---|---|---|
| Square | £0/mo | £0–£89/mo | Processing fee is the revenue model |
| Shopify POS | £29/mo (Shopify plan required) | £108–£338/mo | POS Pro + underlying Shopify plan |
| Toast | ”£0 Starter” | £69–£165/mo | Starter uses higher processing rate |
| Lightspeed Retail | £79/mo | £149–£239/mo | Entry plan is too limited for real use |
| Clover | Varies by reseller | £60–£165/mo | Price set by your reseller, not Clover |
The practical rule: add £30–£60/mo to every advertised “entry” plan to get the real cost of a functional configuration for a live business.
Hardware costs
Hardware is a one-time cost (with refresh cycles every 3–5 years). The meaningful comparison is whether the hardware is proprietary (cannot be used with another POS) or portable (data and device are yours when you leave).
| Vendor | Entry hardware | Full setup | Lock-in? |
|---|---|---|---|
| Square | £19 (reader) | £429 (Register) | No — hardware is portable |
| Shopify POS | £49 (reader) | £459 (bundle) | Partial — reader works elsewhere |
| Toast | £799 (Flex) | £1,799 (full setup) | Yes — proprietary, becomes e-waste if you exit |
| Lightspeed | £349 (reader) | £999 (full setup) | No — open hardware |
| Clover | £499 (Mini) | £1,649 (Station) | Yes — tied to processor agreement |
Toast and Clover hardware lock-in is real money. A 3-terminal Toast restaurant that exits its contract loses £2,400–£5,400 of stranded hardware value in addition to the early termination fee.
Processing costs — the number that dominates
Payment processing is billed as a percentage of every card transaction. At modest volumes it looks like a small line item. At scale it is your largest POS cost.
The maths at £20,000/month card volume (£240,000/year):
| Rate | Annual processing cost |
|---|---|
| 1.75% (Square UK) | £4,200/yr |
| 2.0% (Shopify Basic) | £4,800/yr |
| 2.49% (Toast Essentials) | £5,976/yr |
| 2.6% (Lightspeed Payments) | £6,240/yr |
| ~1.4% (negotiated interchange-plus) | £3,360/yr |
The processing spread between the cheapest (negotiated interchange-plus) and most expensive (Toast or Lightspeed Payments at rack rate) is £2,880/yr at £20K/mo card volume. That is more than the annual software subscription for every vendor in this comparison.
The Gate-20 insight: processing eats software
Here is the arithmetic nobody shows you, applied to a real operator decision:
Scenario: Single-location restaurant, £20,000/month card volume. Toast Essentials vs Square for Restaurants (free plan).
| Toast Essentials | Square (free) | |
|---|---|---|
| Software (yr 1) | £828 | £0 |
| Processing (yr 1) | £5,976 | £4,200 |
| Hardware (yr 1) | £799–£1,799 | £49–£429 |
| Contract | 2–3 years | None |
| Year-one total | £7,603–£8,603 | £4,249–£4,629 |
The processing rate differential alone (0.74 points) costs £1,776/yr — more than Toast’s software fee of £828/yr. The vendor marketing frames this as “Toast £69/mo vs Square £0/mo”. The real frame is “Toast costs £3,000–£4,000 more per year at this volume.”
Negotiated rates: the line item you can control
Above £15,000/month card volume, most UK acquirers will negotiate below their rack rate. The acquirer’s markup (the 0.85% on top of interchange and assessment) is the only component anyone can move.
To access negotiated rates, you need a POS that supports an open payment API. Lightspeed Retail and Lightspeed Restaurant support this. Square and Toast do not without significant integration complexity.
The one step most business owners skip: calling their processor and asking for a rate review at their current volume. We wrote the guide to negotiating processing rates specifically because no other site in this category tells you to do it.
Building your 12-month model
Before choosing a POS, build a 12-month cost model with three inputs:
- Estimated monthly card volume (look at last 3 months of bank statements)
- Software at the tier you’d actually use (not the entry tier)
- Processing rate at the rate you’d actually pay (include the hardware one-time cost amortised over 36 months)
The vendor comparison tool on this site does this automatically. Or use this formula manually: (software_monthly Ã- 12) + (card_volume_monthly Ã- 12 Ã- processing_rate / 100) + (hardware / 3).
Related pages
- Interchange fee explained — the wholesale cost inside your processing rate
- How to negotiate your processing rate at £15K+/mo
- Square POS review — processing rate in context
- Toast POS review — why the 2.49% rate adds up