Last week Square shocked their customers by announcing a shift away from their traditional flat-fee price of 2.75% to a new pricing model set at 2.6% + $.10 per transaction. At first glance, a business owner may think they are saving money on the percentage paid but this new pricing strategy has a catch as it will adversely affect businesses whose transaction volume mostly consists of small tickets.
So, if you are a coffee shop that has an average transaction size of $5 you could be paying more and feeling some pain under this new pricing. We break down the numbers below in more detail:
$5 Grande Coffee Macchiato - $5 x .0275 = $.14 under old Square Pricing
$5 Grande Coffee Macchiato – ($5 x .0260) +$0.10 = $.23 under new Square Pricing
Guess what Coffee Shop owner? Looks like you are paying an extra $0.09 per transaction and that is a win for Square and a loss for your bottom line.
The $0.10 increase adds up really fast on small-ticket purchases. If the business above averages 150 Grande Macchiato’s a day the math adds up to an additional $15 per day. Over a month this increase accounts for an additional $450 per month or $5,400 per year paid to Square’s already robust bottom line.
Small businesses make a majority of Square’s customer base and this new pricing model hits them hard. If you are a small business using Square it may be time to make the switch to Clover. Not only will you save money and avoid the pain of Square’s price increase but you will have access to apps that will help you manage inventory, schedule employees, do payroll and increase traffic and build loyalty.