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.

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.

How much does VoIP cost per month?

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. If you need equipment, have a large number of staff, or want VoIP to communicate with your existing systems, then this will have an impact on your overall costs.

VoIP cost factors

When making the move to VoIP, there are a number of factors that will affect the overall price:

Hosting
Set up fees
Number of users
Level of subscription
Phone equipment
Extra equipment
Broadband

Hosted or not?

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 you business is reliant on the provider in some cases, and have no direct control over downtime or other issues.

Set up fees

Good news. When it comes to a hosted VoIP system, there are rarely any set up 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 set up fees need to be rolled into the cost of the overall equipment, and there’s also the cost of hiring a specialist to physically get the system set up. This will vary hugely depending on the size of the business and the systems chosen.

VoIP allows users to make and receive calls from various devices

Number of users

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 set-up for just one person, or hundreds, it can be accomodated.

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.

Level of subscription

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:

Phones

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. Most VoIP providers can offer a selection of compatible deskphone handsets that can be purchased or rented directly. 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.

One of the beauties of VoIP however, is that it can be delivered through various means. You might want to make business calls via a PC, tablet or your mobile phone. If you already have this equipment in place, it could mean a substantial saving for your business, as such “softphone” devices can be used instead of regular office phone handsets.

Other equipment

Expect to pay around $40 for VoIP compatible headsets

While there’s not too much additional equipment to purchase with a VoIP system,

VoIP handsets are like standard phones, but connect to the internet

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 inexpensive, and start from about $40.

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.

Broadband connection

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 Total Cost Example

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 dollars 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 dollars.

Add this together, and you have a one off set up 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.

VoIP Cost Verdict

Moving over to VoIP is an excellent way to modernize your business and fulfil your customer needs, without having to invest heavily. As our example above shows, 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.