June 5, 2019
A VoIP (Voice over Internet Protocol) phone system is an attractive prospect for businesses, because not only is it a lot more flexible than traditional phone systems, it’s also considerably cheaper to purchase, run and maintain.
A hosted VoIP system typically costs between $25 and $40 per user per month. Total costs will vary depending on the number of users, one-time hardware costs, and any needed network enhancements. For a medium-size operation, VoIP systems do invariably work out to a better value than traditional landline PBX systems by thousands per month. This is due to their flexibility, cost-effective licenses, and low hardware requirements making them considerably cheaper to purchase, run and maintain.
If your business is currently operating a wired or traditional phone exchange, take ten minutes to read this guide and learn how you can save thousands of dollars by switching to VoIP. Whether you’re a small business or a large corporation, VoIP can offer you a robust, better and cheaper telephone system than the one you have.
Read on for a closer look at the full costs, or start getting price quotes and saving money by comparing leading VoIP suppliers our dedicated comparison tool.
In this guide:
Pinning down the overall cost of a VoIP phone system for your business depends on a variety of factors, but at its cheapest, it starts from around $25 per user for a hosted set-up. Here’s a quick overview of five leading VoIP providers prices to give you a rough idea of the monthly software costs:
If you own or manage a small operation and already have office equipment for your employees, the above prices should be all you'll need to pay. Your employees' desktop computers can likely be used as softphones, so you won't need any costly dedicated hardware.
If you need equipment like desk phones or headsets, have a large number of users, or want VoIP to communicate with your existing systems, then this will have an impact on your overall costs.
When making the move to VoIP, there are a number of factors that will affect the overall price:
- VoIP Hosting Costs – Hosting your own internet phone system is usually more expensive than buying a hosted VoIP plan, but offers more control.
- VoIP Setup Costs – One-time setup costs may include installation and training.
- VoIP Costs Per User – Most VoIP providers base their per-user costs on the total number of employees at a business.
- VoIP Subscription Level Costs – A higher subscription level costs more but offers greater functionality.
- VoIP Phone Costs – You may need to purchase or rent a deskphone handset for each user.
- Other Equipment Costs – Headsets and adaptors are additional costs to consider.
- VoIP Broadband Costs – A reliable internet connection is a must for VoIP, so you may need to upgrade.
- Costs of Switching from Traditional to VoIP – Operations that already have a landline system will face a few additional costs when migrating to VoIP.
The first decision to make when considering a VoIP phone system is where to host it. VoIP providers usually take care of the hosting for you, which can keep down costs considerably, as there’s no specialist equipment to purchase, no maintenance costs and you don’t have to make hires to deal with the system.
However, it does mean that your business is reliant on the provider in some cases, and will have no direct control over downtime or other issues.
Good news. When it comes to a hosted VoIP system, there are rarely any setup fees involved, thanks to the virtual nature of the system. It is simply turned on and available from moment you sign up.
This isn’t the case when hosting your own VoIP system, whereby the setup fees need to be rolled into the cost of the overall equipment, and there’s also the cost of hiring a specialist to physically set the system up or run a training session. This will vary hugely depending on the size of the business and the systems chosen.
VoIP Costs Per User
Most VoIP providers break down their costs by the number of employees you have as a business. Size is rarely a problem for VoIP – given that it’s a virtual system and the hardware is traditionally hosted off-site, it is simple to scale. Whether you’re after a setup for just one person, or hundreds, it can be accommodated.
Naturally, the more people within your business you want to have access to the VoIP system, the bigger the VoIP cost. However, as with most services, discounts can be had when purchasing in bulk, and you should find reasonable rates per user if you’re looking to sign up large numbers. As an example, provider Nextiva charges $34.95 for 1 – 4 users, but this comes down to $21.95 per user if you want it for over 100 staff.
VoIP Subscription Level Costs
VoIP providers typically offer several tiers of packages depending on your business needs, with more advanced features being rolled into the higher end packages.
Paying more might give you features such as automatic call recording, or integration with other systems, such as Salesforce or Zendesk. Smaller businesses will likely find that the entry-level packages offer enough, but if it turns out they don’t, it’s easy to move to the more expensive tiers as your business needs demand it. For a top end package with all a provider’s available features, expect to pay around $50 per user.
Tiers will vary depending on provider, but we've listed some fairly typical examples of what to expect below:
|Entry level subscription||Mid-level subscription||Premium level subscription|
|Unlimited VoIP calls|
|Unlimited VoIP calls|
|Unlimited VoIP calls|
|Auto call recording|
Voicemail transcription to text
Integration with Salesforce and Zendesk
Large scale video conferencing
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A VoIP compatible phone starts at around $80, and can rise to hundreds of dollars depending on the features you’re interested in
If you’re looking to make the move to VoIP, then having the right equipment is essential. Physical phones are optional for VoIP: With the right software, you can turn your PC, tablet or mobile phones into “softphones” and place business calls directly through them.
However, physical phones may be a more practical solution for employees who place a lot of calls. Most VoIP providers can offer a selection of compatible deskphone handsets that can be purchased or rented directly. VoIP handsets are like standard phones, but connect to the internet. It’s also possible to purchase your own VoIP compatible phones separately from your preferred business equipment provider.
A VoIP-compatible phone starts at around $80, and can rise to hundreds of dollars depending on the features you’re interested in, such as built-in video conferencing. Here's a quick chart of three phone handset systems popular with businesses small and large.
|Grandstream GXP2170||Polycom VVX 600||Grandstream GXV3275|
|Description||An inexpensive Linux-based phone with 5-way conference support and a 4.4" screen (but just 480×272p quality).||A high-quality mid-range business phone with Polycom HD voice quality, a 4.3" touch screen, duel USB ports and 16 line capability.||A wall-mountable system that runs on Android 4.2, this phone handles up to 6 lines for 6 SIP accounts and is great for group calls.|
Bluetooth capability and a touchscreen are two perks that help a phone handset stand out (all three handsets in the above chart offer both). You can dig into Tech.co's list of the top ten VoIP desk phones for more options and information about what handset will best fit your needs.
Other Equipment Costs
Expect to pay around $40 for VoIP compatible headsets
While there’s not too much additional equipment to purchase with a VoIP system, it’s worth noting that if you do decide to eschew a handset approach and make and receive calls via a PC, you’ll need to invest in decent headsets for your operators to communicate with customers.
These are less expensive then headsets, and start from about $40, although the more high-quality and feature-rich options can cost close to $300. Here's a quick look at the different capabilities and prices to expect from the range of headsets available (Check out Tech.co's top ten VoIP headsets list for an in-depth look).
|Microsoft LifeChat LX-6000||Plantronics Blackwire 700 series||Jabra Evolve 75|
|Price||$35 – $55||$103 – $150||$205 – $280|
|Description||An inexpensive option, this headset offers entry-level functionality and is best for light use rather than all-day.||This mid-range model offers a noise cancelling mic and dynamic EQ for greater clarity on both sides of a call.||This high-end model offers great call quality, 15-hour battery life, and leather-feel padding for comfort.|
If you decide to stick with your handsets and want to make them VoIP compatible, it’s also possible to buy an ATA adapter to do just this, instead of purchasing an entirely new suite of phones. These start from around $70.
VoIP Broadband Costs
You'll need a Broadband service that delivers at least 10Mbps for a smooth VoIP experience.
VoIP, unsurprisingly, relies on a sturdy and fast internet connection. Most businesses will already have this in place, but if you’re currently operating a company with a slow connection, it’s important to get this rectified before you seek out a VoIP provider.
It’s not unusual for the minimum requirement in place to be around 10Mbps, which is a fairly modest request and should easily be met by most businesses.
VoIP may look like a great deal for small businesses that don't already have another system in place, but what if your operation needs to migrate away from a traditional phone system before it can upgrade to an internet-based one? What hidden costs can you expect to face, and are the benefits really worth it?
The costs break down to two major categories in addition to the optional VoIP hardware and the monthly licensing cost that we have already discussed:
- Training costs — Your workforce will need to change their habits in order to adapt to a VoIP system with softphones or new headsets, and in order to fully benefit from the additional features available from a VoIP system.
- Learning curve costs — Your workers will temporarily lose productivity while they're switching systems. The true cost is tough to quantify, but you'll need to factor it in.
But these costs are dramatically offset by the cost savings you'll enjoy.
VoIP provider Kunnect has completed a pilot study examining the impact of a mid-sized corporate site's migration to a VoIP system, factoring in hard costs — hardware, software, head count, and expenses — and soft costs — the productivity gains found within a set list of common tasks completed with a VoIP system rather than their previous telephony system. Their findings: The average enterprise site can save $5,000 per year by switching to VoIP due to their reduced data center footprint, even after factoring in the costs of a VoIP system. Soft cost savings were even better, with $480 in annual productivity gains per user, for a total of $24,000 saved per year for a site with 50 employees.
In other words, you can expect a significant ROI savings even just over a two-year period, thanks to more consolidated and integrated work, added flexibility, greater productivity, and the additional features VoIP offers over landlines.
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Is VoIP cheaper than regular landline phones?
Yes, a VoIP system offers the same functions as a landline phone system, but costs far less as there's no need to install additional wiring or hardware. A hosted VoIP system can run entirely on an existing internet connection and desktop computers.
This doesn't mean landlines aren't without their merits. You can visit Tech.co's VoIP vs landline page for a more detailed look at the differences.
Is VoIP free?
Some VoIP services are available for free, but none of them are likely to work well for a business, as they have limited functionality and bandwidth. If you're using VoIP services day in and day out, your operation will save more money by opting for a paid, hosted VoIP service in the range of $25 and $40, per user per month. A paid monthly service will ultimately increase your productivity far more than a limited free service.
What is the cheapest VoIP service?
RingCentral is one of the cheapest VoIP services, starting at just $19.99/user/month for between one and ten users.
But there are plenty of factors to consider, and another top VoIP provider might beat them out for your operation in particular. The only way to know for sure is to collect customized quotes from each of the best services, and the fastest way to accomplish that is to fill out Tech.co's quick quotes form here.
What can go wrong in a VoIP system?
A VoIP system offers more features than a landline system, at a cheaper price. So what's the catch? Below are the factors you'll need to keep an eye on — and that might cost a little extra to address.
- Internet security – Data leaks, breaches, and password phishing are all potential risks when using any internet-based system, including VoIP. If you're using a hosted VoIP system, your provider should cover most of the security, but your users will need to understand the basics of password protection.
- Shaky internet – VoIP calls on a poor internet connection can be choppy or might even drop. You'll need to ensure your bandwidth is strong enough to handle your daily internet use.
- Poor call quality – Even if the call goes through, it might not be crisp and clear. Upgrading your router or handset may resolve the issue. If not, it might be time to switch to a better VoIP provider.
Does VoIP slow down my internet?
In a word, yes. Running a VoIP system will take a toll on an internet system, and you won't want to run them on a public network. You should factor in the costs of running a top-notch broadband network when looking to get a VoIP system for your business.
VoIP costs for a company of 20 users would be around $500 per month, depending on the package
We know there are a number of factors at play when establishing total VoIP cost, but let's break down a typical example.
We’ll assume that your business has 20 members of staff, and wishes to make the leap to a full VoIP system from a traditional PBX setup.
We’ll take RingCentral, one of the providers we recommend, and a popular provider of VoIP. They charge $24.99 per user per month, if you sign up for an annual account (otherwise its $34.99). That’s just under $500 as an ongoing monthly cost for 20 employees, and includes a toll-free or local number, 1,000 toll free minutes, and video conferencing.
In terms of equipment, in this scenario we’ll assume that each user needs a new phone. The Polycom VVX-101 is available from RingCentral for $79, or $5 a month. If you purchase 20 phones outright, that’s a cost of $1,580. For staff that spend most of the day on the phone, a headset is invaluable. RingCentral recommends the EncorePRO 710/720, at $79.
To sum up:
- $24.99 per user per month for 20 users is a total ongoing cost of $500 per month.
- $79 phones for 20 users is a one-time cost of $1,580
- $79 headsets for 20 users is another one-time cost of $1,580
Add this all together, and you have a one-off setup cost of $3,160, and ongoing monthly costs of $500.
Without the need to host any of your own equipment, maintenance or dedicated staff, it’s a small price to pay for what you’re getting. And of course if you can reuse some existing equipment such as softphones or headsets, it works out even cheaper and helps to minimize the total VoIP cost.
Moving over to VoIP is an excellent way to modernize your business and fulfill your customer needs, without having to invest heavily. For a few hundred dollars a month you can ditch your traditional phone system, saving money and increasing the features available to you, such as automated call handling, video conferencing, and real time call monitoring.
If you're ready to start benefiting from productivity gains and a streamlined, internet-powered workflow, your next step is to begin connecting with the best VoIP providers to figure out which one of them offers the features you need at a price you want. Take one minute to use our quick online tool, and you can start collecting quotes today.
How much could you save with VoIP? Find out today
By clicking to compare, you’ll receive quotes from various suppliers, tailored to the needs of your business. If you enter into a contract with a provider, we may receive a payment for the introduction. This helps Tech.co to provide free advice and reviews. It carries no additional cost to you, and doesn’t affect our editorial independence.
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