If you’ve ever explored upgrading your phone system with new hardware, you probably know that on-site PBX (private branch exchange) phone systems are expensive. Capital costs are steep, but the costs don’t end there.

To calculate the total cost of ownership for a traditional on-site PBX system, you need to include the ongoing costs of maintenance and upgrades required to add functionality or grow your calling capacity over time. There’s also the time and resources you have to invest to learn how to use the system. You need to be sure that if your server ever goes down, you have the in-house capacity to get it up and running again fast.

That’s a lot to think about.

And it’s why hosted phone solutions using VoIP (Voice over Internet Protocol) have become such a popular alternative to on-site phone systems.

With VoIP, you never have to worry about maintenance. VoIP providers take care of the technical aspects of your phone system so you can focus on using it productively to grow your business.

Another advantage of VoIP over traditional PBX hardware is the pricing.

You can access VoIP services by paying a low monthly fee based on the number of users (or phone lines). There are no unexpected fees for maintenance or upgrades because all the necessary equipment is owned, operated, and maintained by your provider. That means your telephone system prices will stay low, transparent, and completely predictable.

VoIP is also flexible and scalable.

If you want to add more users or locations to your subscription, it’s easy. Just give your provider a call or login to your service dashboard and make the change. Same thing if you want to add extra features. You’re never going to have to install new hardware as your business grows and your communication needs change.

Why try to predict your telecom requirements 3, 5, or 10 years down the line? When you choose VoIP, you lock-in a low monthly subscription price and can make adjustments to your plan on the fly.

But just how cheap are VoIP plans, anyway?

According to PC Magazine, the price difference between VoIP and standard landline services is significant.

Using the New York area as an example: A landline plan that includes unlimited local and long-distance calling will cost about $50. A similar VoIP plan costs on average $25, with features added in for no additional cost. These features include mobile apps for Android or iOS that let you use smartphones to make VoIP calls, browser-based click-to-call functionality, auto-attendant (sometimes called virtual assistant) to answer all your calls, video conference calling, and more.

But what about setup costs? Can the price of switching to a new phone system outweigh the money saved on a monthly basis?

Most providers will waive all setup and activation costs. Support for training employees on how to use the system is usually an extra cost. However, VoIP is typically so simple to use that training requirements are minimal.

You might also have to invest in some new handsets or, alternatively, adapters that let you use older handsets for VoIP calls. This isn’t a requirement, though, because you can make VoIP calls from your computer using a web-based dashboard or from a smartphone or tablet using your provider’s VoIP app.

A typical desktop VoIP phone set will cost anywhere from $50 to $750.  On the low end of the range, you can get a very simple phone with basic functionality and good sound quality. On the higher end, your phones will include color touchscreen displays with very high audio quality and added features like built-in Bluetooth. If you need phones designed for conference rooms, these can range from $500 to over $1,000.  The pricier models include extendable microphones that can be passed to the person speaking, and speaker detection technology that can hone in on whoever is speaking at any given time.

A great way to save money when you switch to VoIP is to implement a Bring Your Own Device (BYOD) policy at your office.  Companies with BYOD policies let employees use their own personal smartphones and tablets for business communications. Network security is maintained by providing employees with a unique login ID to access the business VoIP system.

How do hosted VoIP costs compare with on-site PBX phone costs?

If you’re keen on owning and operating your own VoIP phone system, prepare to pay a steep price upfront. Exact prices vary greatly depending on the size of the network you need, but range from $1,000 to over $10,000. A small business can expect to pay about $5,000 to own a PBX system. And that doesn’t include installation and maintenance costs.

If you’re a larger company and you want to own your own PBX system to make VoIP calls, you can expect to pay between $500 and $1,000 per user. To put that figure in perspective, it’s about the same cost (paid upfront) as 20-40 months (2-4 years) of hosted VoIP service.

If you have the risk tolerance, the right internal IT capacity, and enough capital to cover startup costs, then you may very well decide that owning your own equipment is the best way to move forward with VoIP. However, for most businesses, particularly those will multiple locations spread across the country, a hosted VoIP option makes the most sense. It’s a lot cheaper upfront, more flexible, and a lot more scalable.

Want to learn more about hosted VoIP?

Contact us today to explore your options. Tell us about your unique communication requirements and we’ll do our best to show you the best options.

We can even put together a customized solution that combines traditional phone systems with hosted VoIP to suit your needs. Read about our Risk-Free Roadmap to VoIP for more information.