The Cost of “Free”: What Procurement Teams Need to Know
A look at the hidden costs that come with “free” offers and what business leaders need to look out for when selecting technology solutions.
There’s an increasingly common scenario cropping up in commerce tech purchasing cycles: a vendor for one solution offers a bundled technology deal that includes a “free” or a highly discounted add-on solution you also need.
At first glance, it seems like an excellent cost-saving measure, especially in the eyes of CFOs and procurement teams. But these so-called free solutions come with significant hidden costs, and more importantly fail to account for the core objectives of making a change. Opting for a dollars-led evaluation of a solution often leads to lengthy implementations, ballooning consultancy hours, and unmet expectations. Without alignment to the primary goals, the project is set up to fail from the outset.
It tends to be legacy solution providers making these free bundle offers, especially as composable solutions have entered the mainstream. Unfortunately for businesses who opt for the free deal, this can mean substantial sunk costs and a challenging road to recovery— ultimately derailing plans for digital agility and customer satisfaction.
Why Free Isn’t Really Free
The reality is that free technology licenses can lure retailers into complex and costly situations. CFOs, looking strictly at cost, decide to go with what they believe is the cheaper option— a free or highly discounted point-of-sale (POS) license from an enterprise resource planning (ERP) vendor, for example. This approach, however, often overlooks essential aspects like implementation timelines, adaptability, and the required investment in professional services.
Often the companies that offer free or reduced solutions are not the experts. They might be the expert in the initial solution you selected them for, but that doesn't mean they are or should be your POS provider, for example. That’s not their area of expertise, and POS will never be their main focal point. The POS specialist, by contrast, will always be at the forefront of the space. They’ll be the most agile and as customer needs change, will be able to pivot most easily, most effectively, and most quickly.
Businesses, especially those new to composable technologies, may lack the information needed to assess the total cost of ownership (TCO) accurately. It’s not just about the licenses; decision-makers need to consider factors such as how adaptable the solution is, the extent of professional services required, and what actually comes ‘out of the box.’ Without this understanding, they’re making an incomplete—and inaccurate—comparison of costs. In the example above, the specialist solution might cost a little more upfront, but the “and also we do this” option comes with significant hidden costs.
Hidden Costs and Implementation Headaches
When retailers opt for these bundled solutions, they’re frequently blindsided by the additional expenses that come later. There have been instances where global retailers have incurred several thousands of consultancy hours trying to implement a “free” POS license, only to find it wasn’t meeting their needs. It’s the sunk cost fallacy in action: brands feel compelled to continue with a failing project rather than cut their losses and invest in a more flexible solution.
Adding to these hidden costs are the time implications. Bundled solutions rarely meet initial implementation timelines, leading to delays in go-live dates and further extending consultancy fees. Many companies spend months—if not years—trying to get these systems operational, only to find they’re left behind on market trends by the time they do.
The Operational Impact of Delayed Solutions
For retailers, a slow or clunky implementation can have significant ramifications on daily operations, especially when it comes to things like point-of-sale (POS) solutions that impact both employee and customer experiences every day.
Free add-ons to existing solutions often fall short in meeting the needs of store associates and managers. They aren’t always intuitive or easy to use, which can impact employee efficiency and customer service. In contrast, a composable architecture is designed for adaptability, allowing retailers to pivot quickly and meet evolving consumer demands, and the best-of-breed solutions that populate the composable landscape are often developed with specific retail processes in mind, enabling a more seamless and standardized experience across stores.
The bundled solutions can also be difficult to upgrade, as they often require customized workarounds that are layered on top of the foundational technology. This customization means that when an upgrade is finally released, retailers must undertake additional customization to ensure compatibility—a costly and time-consuming process. Adding to the uncertainty and variability of outcomes for bundled solutions is that without consistent guidance from the technology vendor, retailers face the risk of inconsistent implementation across different regions, which can lead to issues in standardization and scalability. With best-of-breed solutions, new releases are built into the core solution, which keeps systems up-to-date and reduces the need for extensive reconfiguration.
The Path to Future-proof
So how can retailers avoid the pitfalls of these free solutions?
The key is to look beyond the upfront costs and consider the long-term implications, like adaptability and TCO, of any solution. The focus should be on whether this solution is future-proof— can it adapt to evolving retail demands, and can it deliver a reliable return on investment over time?
It’s important to select a truly cloud-native solution over one that’s merely cloud-based. While cloud-native solutions leverage microservices to maximize scalability and flexibility, many “cloud” offerings are simply on-premise solutions repackaged for cloud hosting, lacking essential cloud capabilities. True cloud-native solutions provide offline capabilities and seamless updates that keep systems aligned with the latest technology advancements.
It’s also important to select adaptable technologies that can keep up with rapid shifts in consumer behavior and market trends. The only constant is that everything is changing faster than ever. If you’re not implementing a solution that keeps you ahead, you’ll fall behind.
In short, agility isn’t a luxury— it’s essential.
Retailers today are under greater pressure than ever to provide seamless, engaging experiences that meet consumer expectations for speed, convenience, and reliability. Best-of-breed solutions that align with MACH principles allow retailers to innovate continually and meet these expectations head-on.
No Free Ride in Retail Technology
Ultimately, the cliche is true: there’s no such thing as a free lunch. Every solution comes with a cost, whether it’s an initial licensing fee or substantial investment in customization and consulting down the road.
The best advice to retail and commerce leaders is simple: prioritize adaptability, consider the TCO, and be cautious of offers that seem too good to be true. With MACH-based, best-of-breed solutions, retailers can avoid the hidden costs and inefficiencies that often accompany bundled solutions, ensuring they’re equipped to meet the challenges of the modern retail landscape.
Leigh Bryant
Editorial Director, Composable.com
Leigh Bryant is a seasoned content and brand strategist with over a decade of experience in digital storytelling. Starting in retail before shifting to the technology space, she has spent the past ten years crafting compelling narratives as a writer, editor, and strategist.