Square's $1,999 kiosk: the $99 monthly fee passes hardware cost in month 21

The sticker price is the smaller number. Over three years, one kiosk costs $5,563 before the required $49 or $149 Square plan. Block does not report kiosk revenue, so retention will decide whether the fee works.

Square's new kiosk costs $1,999, but that is the smallest number a restaurant owner will pay. The $99 monthly software fee passes the hardware price in month 21. The screen is the upfront payment; the monthly fee is the recurring sale.

Square released the kiosk on 14 October at $1,999. It needs a Square Plus or Premium subscription, plus a $99 monthly software fee for each device. The $1,999 includes a counter stand, and the total varies with the stand type.

The plan is a separate charge. Plus costs $49 per location per month, and Premium costs $149. The software fee runs $99 a month, or $3,564 over three years. Add the hardware and one kiosk costs $5,563 over 36 months before the plan fee. The software fee alone is 64% of that total.

The fee overtakes the hardware price in month 21 because $1,999 divided by $99 is 20.2. After that point, each payment adds to the larger part of the bargain. The device is effectively a rental seat with a screen attached.

Square has turned the razor-and-blade model around. The handle is priced to be bought on a card, and the blades are the monthly charge that never stops.

The pricing page shows how little cash the first month asks for. Buyers can pay "$97/mo. over 24 months" through a credit sale plan issued by Block at a 15% APR, the annual interest rate. That comes to roughly $2,300 over the term.

Add the $99 software fee and the $49 Plus plan, and the first month costs about $245 per location, or about $345 on Premium. A multi unit operator weighing ten locations sees a number that fits an operating budget line. The recurring fee is already switched on.

Square also requires the buyer to be on its own plans. The page says purchase and use of the kiosk requires an active Square Plus or Premium subscription. An operator on another Square plan has to move first, and the kiosk is not available on legacy pricing plans.

Processing on the page is 2.5% plus 15 cents per tap or dip with Square Plus. Custom rates apply only to businesses above $250,000. The software is available in the United States only and in English only for now.

A kiosk takes the order and the payment at the same screen. That sends more of a restaurant's card volume through Square's rails. Each year on the plan makes switching harder because the menu, screen, and card reader all sit on one vendor's software.

Financing is subject to credit approval and is not offered to merchants in six states, so only some buyers can use the instalment plan. Once the last instalment is paid, the $99 fee is still due, along with the plan fee.

Block's filings will not break any of this out. Its quarterly report for the period ended 30 June splits revenue into commerce enablement, financial solutions, and bitcoin ecosystem. It has no hardware or subscription line.

The Square segment brought in $2,503.6 million in the quarter, up 16%. Block reports no kiosk units, margins, or customer counts. The company did say commerce enablement costs rose in part on higher Square hardware costs from products launched in the second half of last year. Hardware spending is real.

The kiosk is small next to Square's size. Annualising that quarter gives Square about $10 billion of revenue, and 1% of it is roughly $100 million. A device pays $1,188 a year in software fees, so reaching $100 million would take about 84,000 kiosks. Even a successful rollout moves reported results by a fraction of a percent for years.

The value lies in retention. Square is renting a seat that keeps a restaurant on its plan and its processing. Its gross payment volume, the card spending it processes, grew 13% in the quarter, and the kiosk is meant to feed that number.

The operator faces a different calculation. Assume a 30% contribution margin, the share of each sale left after direct costs, and a $15 average order. At that margin, $99 a month needs about $330 of extra monthly sales.

That is roughly 22 orders, less than one additional order a day. A restaurant that cannot find those orders pays a permanent charge for a screen that mostly repeats what its counter staff already do. The plan fee sits underneath either way.

The kiosk has a 21.5 inch touchscreen and a voice layer. Block's Thomas Templeton says the layer "adds a third piece to the solution: intelligence". Both are sold on the promise of a bigger basket.

Square's quoted customers say the same thing from the counter. Baltej Sra, chief executive of Boba Nation Grand, plans to extend the kiosks to the rest of his locations this year. Lawrence Kam of L&L Hawaiian BBQ wants them across a national footprint.

One store, one month, and a count of the orders where the voice layer added an item would settle it cheaply. If that count stays under about 22 a month per kiosk, the $99 is rent on an idle screen.

Block's third quarter report will have no kiosk line to put it in. The first number to look for is a unit or attach count, meaning how many merchants add a kiosk, on the earnings call.