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How Much Does VOIP Phone System Cost for a Business?

Due to the many benefits and flexibility for businesses of all sizes, VoIP is quickly becoming a workplace telecom staple. It’s even taking over the traditional landline phone! Thanks to cloud-based technology, VoIP has improved by leaps and bounds in the last few years. It’s now the leading technology for a business phone – in terms of large-scale efficiency, voice quality, and cost-effectiveness.

But exactly how much does VoIP business phone system cost, and how much could you be saving by switching over?

The short answer is: it depends on your company’s size, needs, and communication preferences. Here’s the good news. Since VoIP utilizes Internet connection (something most businesses have and already pay for), you’ll cut costs right off the bat.

With VoIP, you’ll generally have two types of costs to consider – start-up costs and ongoing (monthly) costs. Your start-up costs will vary depending on how drastically you’re changing your telecom system. For example, what is your current system? Do you already own VoIP-compatible equipment? Regardless, start-up costs for VoIP are almost always lower than those for traditional phone systems – for both small and large companies. In terms of ongoing costs, you’ll want to account for things like add-on features (there are dozens these days) and number of lines. So before you come up with your VoIP budget, sit down with your team and decide which features you use regularly, which new features you might want to add, and how many phone lines you’ll need. All in all, companies that switch over see much lower bills and a higher ROI in the long run.

Start-up Costs

Hosting

One of the first things to consider is whether you want to host your PBX phone system on-site (“on-site PBX”) or use a hosted PBX phone system (“off-site PBX”). Of course, as with any important business decision, there’s pros and cons to each.

If you’re interested in all that VoIP has to offer, you’re probably enticed by its hefty cost-saving options. With a hosted PBX, you’d be leaving hosting expenses to the VoIP provider. (This means the phone provider will take care of the maintenance of the physical server.) As a result, you’ll enjoy very low costs for hardware, installation and configuration, as well as ongoing maintenance and support. Essentially, once you have the appropriate VoIP-compatible equipment, sign up for the service, and schedule a configuration appointment with the provider – you’re all set!

Choosing to host your PBX system on-site is the more costly upfront, compared to hosting off-site. You’ll have to take care of costs like installation, hosting equipment, and hiring a specialist to run a training session. You’ll also need to outsource ongoing maintenance costs or hire an IT team internally. On the other hand, hosting on-site does give you some considerable benefits. You’ll have much more autonomy with your system to configure it the way you want. For example, you can install a CTI port (computer-telephony integration) and streamline your computer and telephone systems. You also have immediate access to your system if it were to “go down.”

A third option is using a cloud-based VoIP phone system. This is a good option if your business is on-the-go and you want to save extra money. Learn more about cloud-based VoIP phone systems here.

Equipment

Does your company already have telecom equipment that can connect with a VoIP system? If you’re not sure, a provider will be able to advise when you’re receiving a quote. Whether you already have compatible equipment or not, you’ll want to think through what type of equipment is the best fit for your workplace. You have several options here…

business-phone-systems
  • Utilize equipment employees already have – smartphones, tablets, desktops, laptops – and direct your business line through them, purchasing only headsets for call privacy
  • Install VoIP desktop phones
  • Purchase VoIP handset (wireless) phones
Conference phone$300+ per unit
Desktop phone $80+ per user
Handset phone $40+ per user
Headset equipment $20+ per set

Some businesses enjoy the flexible, on-the-go perks of setting up smartphone or wireless compatibility. But other businesses that do most of their work in the office may prefer a desktop or handset phone. In terms of pricing, desktop phones will be the priciest option, handsets will be mid-range , and headsets, or equipment-free will be the cheapest option. Keep in mind that many desktop models also require Ethernet cables to connect to the internet, which would be an add-on to your budget. However, make sure whatever equipment option you go with, you’ve considered the long-term benefits and drawbacks to each.

Broadband

Concurrent CallsRecommended Bandwidth
1100 Kbps
5500 Kbps
101 Mbps
151.5 Mbps
202 Mbps

Something to keep in mind with VoIP is that you’ll see the best voice quality with high internet connectivity. Most businesses already have this in place, since multiple employees are sharing Internet connection on an everyday basis. But if you’re currently experiencing issues with your internet running slower at times, it would be smart to consider upgrading your bandwidth. The cost to add a higher bandwidth to your current subscription is slim to nothing compared to the ROI you’ll see from using VoIP.

VoIP experts recommend broadband service around 10 MBPS for good VoIP service. If you’re unsure about your current internet quality, you can always ask your current internet provider or check your router information. If you’re looking to upgrade to an even faster and more VoIP-compatible internet, look into cable- or fiber-based options for the best quality voice results.

Training

Usually, when a company is used to using traditional phone lines, they benefit from hiring someone to train employees on-site when configuring the new system. VoIP trainers can show your employees how to operate their new equipment, route business calls to their smart-devices, connect their headsets to their desktop or laptop, add new users when hiring and on-boarding, and how to utilize all the features your company is paying for. The add-on training price will vary across different VoIP providers. According to Robin Gareiss, Partner at Nemertes Research, some providers may include training if they’re hosting your service, but it can cost between $1,000 – $5,000 to train internal IT staff. This is something you can negotiate with providers when signing up. 

Ongoing Costs

Cost per User

In terms of company size, no matter how many employees your business needs to accommodate with VoIP, it can be done. One of the top perks of VoIP companies typically enjoy is its easy scalability. Adding more lines when your business grows and hires is a piece of cake. Of course, the more employees you want to add to the plan, the larger the monthly cost. However, as with many business services, you’ll be rewarded for buying in bulk – signing up a large number of lines usually means discounts and lower rates.

1-5 users$30+ a month, per user
5-20 users$26+ a month, per user
20-75 users$22+ a month, per user
75+ users$20+ a month, per user

Some plans will allow you to pay per usage rather than line – meaning, you pay for the time you spend on the phone monthly, regardless of how many users you have. This might make sense for businesses with fewer employees in industries that use the phone infrequently. Make sure you ask your provider about different options.

Subscription and Features

As with traditional phone plans, your VoIP provider will offer different tier packages depending on your business’s needs and desired features. The highest tiers will have the largest selection of features – including call recording, video conferencing, voicemail transcription, integration with external mobile systems and CRM’s, and so on. Lower tier packages will typically give you all your telecom basics – calling, voicemail, mobile app connectivity, as well as customer support – but you’ll be limited in what you can use your system for. Of course, each provider has their own tiers and different features included in each, so make sure to analyze your different options before choosing a provider. To look through a fuller list of VoIP features, read here. So you can get an idea of what is “average” to spend, most frequently used business subscription plans range from around $20 – $50 monthly – per user.

What’s the catch?

We knew you’d ask! VoIP oftentimes seems too good to be true as a business solution. “Hidden costs” is a phrase that makes all business owners cringe, so it’s best to be aware of “worst case scenarios” right off the bat.

What you’ll want to think about – generally – is the risk of using the internet for any business assets and what it could mean for your company’s daily functioning. To start, it will streamline and quicken productivity. On the other hand, as with any internet-based asset, you’ll run the general risk of internet security (data leaks, password phishing) that essentially every business is subjected to, if they are online. Another common concern with VoIP is choppy internet connection and poor call quality. This is directly determined by the internet provider and subscription you pay for, so if you assure you have sufficient internet quality before switching over, you won’t have to worry about these hidden payments down the road.

Overall, VoIP technology is rapidly improving and businesses across the U.S. and elsewhere are quickly adapting it. Studies across the board show you will save money from making the switch. For example, VoIP provider Kunnect recently came out with a study that demonstrated the cost savings for a mid-size company with all expenses (start-up and ongoing) considered, as well as productivity gains compared to their previous phone system. They found that the average amount saved per year was $5,000, even after start-up costs were factored in. in terms of productivity, they estimated almost $500 in gains per user, totaling almost $25,000 a year for ~50-person company. Add that onto your annual revenue and see what you’re missing out on!

If you’re interested in a VoIP phone system, the best next step is to research top providers. We’re here to help! Compare Nextiva vs. RingCentral and Vonage vs. RingCentral. Also consider top mobile VoIP providers such as Grasshopper.

Visit us here to get started on price comparisons and find out exactly what you can expect to pay for your company’s specific needs. Our goal is to find you the best telecom service, increase your ROI, and ultimately make your business happier! Remember that for the best buying experience possible, we recommend comparing just 3-5 different suppliers and what they have to offer (don’t over-complicate the decision by comparing too many options!) and prepare for your call with these tips to get the most out of your phone call with each supplier.

Looking to analyze VoIP for your particular industry? Check out why VoIP is a winning option for call centers, restaurants, and more.

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