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How Much Does a VoIP Phone System Cost?


When businesses want to cut telephone costs, they often switch to VoIP, which is short for Voice over Internet Protocol. Simply put, VoIP systems make calls over the Internet, rather than traditional landlines.

VoIP systems are more affordable because there are no long distance charges when calls are routed via the Internet. This makes VoIP a great option for companies that do business internationally, those with multiple locations, or those with employees working remotely. The only perquisite is that all the locations are connected on a Local Area Network (LAN) or Wide Area Network (WAN).

Types of VoIP Phone Systems

There are three basic types of VoIP phone systems, but only one is suited for business use, unless you’re operating a very small or home-based business:

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  • PC-to-PC systems make phone calls between one computer and another, often using just the computer’s microphone, not a handset. Free services like Skype fall under this category, but they’re primarily for consumer use.
  • PC-to-phone systems place calls from a computer to a traditional landline. They require a paid calling plan, and they’re also geared toward consumers.
  • IP telephone systems connect one telephone to another using a broadband connection. These systems offer all of the same features as traditional hardwired systems (and usually many more). They are ideal for business use.

Large corporations usually opt for PBX-style VoIP systems, while smaller companies and startups choose simpler and less expensive systems. Some businesses opt for hybrid systems, which route calls either through landlines or VoIP - whichever is cheaper in that particular circumstance.

Another choice to make is on-premise or hosted VoIP. With on-premise systems, all hardware is located in your building and managed by your IT staff. The service is usually billed on a per-user basis. Hosted VoIP systems, as the name suggests, are hosted by an off-site company. They cost less and require less equipment. The service is often billed on a per-call basis.

Cost of VoIP Phone Systems

The cost of a VoIP phone system depends largely on the size of your business and your existing network infrastructure. Typically, there’s a one-time fee for hardware and installation, then monthly fees for the service.

In some cases, you can use your existing digital phones and computer network to run the VoIP system. Other times, upgrades are required. Some companies have to invest in all new hardware, but even if that’s the case, you’ll likely recoup the investment over the long term in telephone bill savings. Many companies see a return on investment (ROI) within a few years.

Complete VoIP systems for smaller businesses start at about $500 per user, including installation, and can range up to about $1,000 per user. If you have 20 users, a system with standard features might cost $10,000. A more robust system with complex installation requirements could cost $15,000 to $20,000.

For large enterprises, the per-user costs are much lower due to volume discounts. Companies with up to 1,000 phone lines might pay $100 to $200 per user, while those with more than 1,000 lines could pay as little as $50 t0 $100 per user.

Pros and Cons of VoIP Systems

In addition to being cheaper than traditional phone systems, VoIP systems typically have more features. Calls can be seamlessly transferred between locations or to employees working remotely. Employees can make calls from the road without racking up expensive cell phone or long distance fees. Voicemail messages can be translated into text and sent to email inboxes. VoIP systems also have all of the same features you’ve become accustomed to with regular phone systems, such as call waiting, call forwarding, call monitoring, call recording and auto attendant.

On the downside, VoIP systems put a lot of extra strain on your company’s network. Some networks can’t handle the extra flow of data and need to be upgraded. And if your network is running slowly or there’s not enough bandwidth, calls may not be clear. Also, if your network is down for some reason, the phones will also be down.

Choosing a VoIP System

The process of choosing a new phone system can be long and difficult. Making the right choice is crucial because a phone system is something your company will have to live with for a long time. Here are some tips to guide you through the process:

  • Talk to other businesses - Reach out to similarly-sized companies who have switched to VoIP to get their feedback. How does the system compare to a traditional phone system? Were network upgrades necessary? If so, how expensive and time consuming were they?
  • Take it for a test drive - Never buy a phone system - VoIP or not - without doing a demo first. You’ll never know if the system is user-friendly if you don’t actually use it. Are the phones comfortable to hold? How easily can you transfer a call to another extension? Are speakerphone calls clear?
  • Shop around - Always shop multiple dealers to compare prices. But don’t base your decision on price alone. Consider each dealer’s experience, reputation and quality of service.
  • Buy at the right time - The best time to buy is at the end of the quarter, when sales teams are scrambling to meet their goals. You’re likely to get a better deal than if you bought at the beginning of the quarter.

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