Last month we commenced a multi-part series on the ten reasons that gun store owners are migrating to modern Point-of-Sale software. Today, we’ll lead off the series with a discussion on the financial benefits offered by cloud-based applications. In particular, we’ll focus on SaaS payment structures (and what that means) and the impact on hardware purchase. Although the term cloud has been around for some time, it means different things to different people. So, before we begin, lets define what “cloud” actually is. In short, it doesn’t just mean electronic and there really isn’t any defined location, physical device or amorphous entity that is “The Cloud.” The term means, in contrast to computer services hosting an application at your physical premise (“on-prem”), the servers are hosted remotely by you or a third party and accessible through internet connectivity as shown in Image 1 (courtesy of CloudFlare).
SaaS Applications and Payment Structures for Gun Store POSSoftware as a Service (or “SaaS”) refers to the method of contracting and deployment of computer programs. Legacy software platforms and some present day platforms that are significant in size required firearm dealers to purchase a copy of the POS code for a one-time fee plus annual maintenance costs. This method of software acquisition could cost upwards of $10,000, $30,000 or even $100,000+ as it assumes full ownership for the application. More often than not, the retail POS is hosted on-site at the gun store on its own servers. The downside to this approach is the significant upfront cost to retail gun store owners who already operate at thin margins. In contrast, a SaaS structure is most often a month-to-month (or annual) licensing arrangement between the POS software provider and the retail FFL. Rather than owning a copy of the code, the gun store licenses use of the application but never retains full ownership. In most, but not all cases, SaaS agreements and payment structures are aligned with cloud-based Point-of-Sale applications and can drop a large, one-time expenditure down to monthly payments of $100 or more. While the licensee would pay for the license indefinitely (or as long as they use it), gun store software such as Orchid POS and others commonly offer a cancel any-time clause reducing the financial commitment on behalf of the buyer. Additionally, some SaaS payment structures already factor the cost to maintain the software into the monthly price so that the user isn’t stuck with additional annual maintenance fees. There is a hybrid model which can be somewhat confusing. Gun store POS vendors who can’t offer a cloud-based, SaaS payment structure may split the large one-time payment over a period of time to replicate a SaaS structure. But, buyer beware, in many instances that’s actually a finance payment in disguise and bears hidden interest fees. Higher Volume Customers – Shared Code Another difference between on-prem and cloud point-of-sale software relates to the cost of feature enhancements and the retail labor required to manage deployment. Cloud software exists as a shared software application where many clients access to the code on one or more servers. While the databases that hold the customer data may be separated, the application is often centralized. As the retail POS software provider makes updates to the applications, they are deployed to all customers simultaneously (absent special circumstances). Often, little to no work is required by the customers and their cloud POS remains updated and current “real-time.” In contrast, on-premise software, as we’ve discussed, is created by separate installs of the same code to different client servers located within their gun store. Customizations may or may not benefit all customers and could result in individual expenditures to receive basic feature enhancements. Furthermore, when the POS code is updated, it needs to be “deployed”, often through human or automated routines to the local stores server and in many cases require the gun store owner to perform an action. Cloud-based software, such as Orchid eBound which integrates with gun store POS systems truly benefit from the shared, real-time update. Given the nature of an ATF regulated industry, it’s comforting to know that “your” FFL applications will remain current as regulations change. The Cost of Hardware for Cloud-based Gun Store POS Systems In general, cloud-based point-of-sales systems are considered “light” applications. Although they can be just as if not more powerful than on-premise software, the manner in which the system functions is very efficient and touches small pieces of code and data at a time, often through an API. This “lighter” processing environment requires less computing power and offers greater flexibility of hardware use. For example, many cloud-based retail software applications run on an iPad, smart phone or all-in-one devices. The cost to purchase and maintain hardware with fewer processing, memory and display requirements is cheaper making the overall purchase experience cheaper for gun store owners yet with greater flexibility. Save Money by Shopping Wisely for your Next Gun Store POS In closing, there are many things to consider when shopping for FFL software. We hope this article provides a clear understanding of the advantages for considering Cloud and SaaS applications and how their structure could save your business considerable money. If you have any questions regarding retail POS software for your gun store, eCommerce applications or payment processing, feel free to contact the experts at Orchid.
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