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Senior Writer: Akarsh Jain
Date: April 8, 2024Selecting the right business phone system is a crucial task that extends beyond mere dialing. You need a robust system that meets your business needs, but you also have to consider cost.
“Approximately one-third of businesses use VoIP systems“; hence, the cost of VoIP and on-premise business phone systems is a crucial factor. The question, “How much does a business phone system cost?” is top of mind for most entrepreneurs. Prices can vary widely. Factors such as the type of system, the number of lines, and extra features all come into play.
In this article, we’ll explore these key aspects and analyze the expenses for on-premise and VoIP systems.
"When evaluating the cost of a business phone system, it's essential to recognize that there isn't a one-size-fits-all answer. The total expenditure depends on various factors, including the system's type, features, and the size of your organization."
Factors Affecting Business Phone System Cost
To accurately gauge the cost of a business phone system, you need to examine several influencing factors.
The five most pivotal aspects of business phone systems that you should not overlook are as follows –
1. Number of Users
The number of employees in your organization plays a critical role in determining the cost of a business phone line and system. More team members mean more phone lines, extensions, and potentially more complex routing setups. While a small business with a handful of employees may find a multi-line system sufficient, larger corporations with hundreds of employees will likely need a more intricate system, such as a PBX. In either scenario, you can generally expect costs to rise with an increase in the number of users.
2. Type of System
The architecture of the phone system itself is a major cost determinant. Systems can be categorized primarily as on-premise or VoIP (Voice over Internet Protocol). On-premise traditional phone systems often demand physical hardware, often necessitating an in-house IT team for maintenance, which hikes up the initial and ongoing costs. On the other hand, VoIP systems operate over the internet and tend to be less hardware-intensive, translating to lower upfront costs. However, VoIP systems usually involve recurring monthly or annual subscription fees that can accumulate over time.
3. Features
Advanced features can significantly affect the cost equation. Functions like auto-attendant, call forwarding, voice mail, and video conferencing aren’t just bells and whistles; they serve practical business needs. But every extra feature usually bumps up the price, sometimes significantly. It’s crucial to find a balance between what features your business genuinely requires and those that are nice but not necessary, as the latter can inflate your costs without adding substantial value.
4. Scalability
Future-proofing your investment is a wise strategy. A phone system that can easily scale to accommodate your growing business will spare you the headache and considerable cost of having to replace an outdated system later on. Initially, a scalable telephone system may be more expensive, but the long-term benefits often justify the upfront expenditure.
5. Maintenance and Support
No matter what system you choose, you’ll face ongoing maintenance and support costs. On-premise systems often require regular hardware upgrades and software patches, which add to the overall expenditure. VoIP systems, although less reliant on physical hardware, still need periodic software updates and troubleshooting. Factor in these ongoing costs when evaluating a new phone system’s total price tag, and consider packages that include robust customer support as part of the deal.
You May Also Read: 11 Best Cloud Phone System for 2023
On-premise Phone System Cost
On-premise phone systems have been the conventional preference for businesses. With this setup, all the hardware and software components are housed within your office. This includes servers, desk phones, wiring, and actual telephone sets. Due to this, the initial setup costs can be relatively high.
Below are the factors affecting on-premise phone system costs.
1. Initial Setup
Expect significant upfront costs for purchasing the hardware. High-quality servers, phone units, and other equipment can easily run into the thousands of dollars. Installation adds to this cost, as you’ll need skilled technicians to set everything up correctly.
2. Features
While many advanced features come standard with on-premise systems, some may require additional modules or hardware upgrades. Whether it’s advanced call routing or video conferencing instant messaging capabilities, each add-on increases the price.
3. Maintenance and Upgrades
An often overlooked cost of an on-premise system is its maintenance. Regular software updates, hardware replacements, and potential downtime can significantly affect the bottom line. And remember, you’ll need either an in-house IT team or a contracted service for maintenance, both of which are ongoing costs.
4. Long-term Costs
Though the initial investment is substantial, the long-term costs could potentially be lower than other VoIP phone systems if you don’t require frequent upgrades or additions. Once set up, the system is yours, and there are no monthly subscription fees. On average, the cost of on-premise PBX phone systems goes up to $1000 per user.
Average VoIP Phone System Cost
VoIP, or Voice over Internet Protocol, is increasingly popular due to its scalability and lower upfront costs. Since VoIP operates over the internet, it eliminates the need for expensive on-site hardware, except for IP phones or adaptors for traditional phones.
Here are the main factors affecting VoIP phone system cost.
1. Initial Setup
Setup costs for a VoIP system are typically lower. You’re mostly looking at the cost of IP phones and possibly some network equipment like routers or switches, depending on your existing infrastructure. Many VoIP providers offer cloud-based solutions, making the initial setup even simpler and less expensive.
2. Features
VoIP systems often come with a host of features like call forwarding, auto-attendant, call recording, and video conferencing. These usually come as part of your subscription package, but premium features can come with additional costs.
3. Recurring Costs
Unlike on-premise systems, hosted VoIP system usually involves monthly or annual subscription fees. This recurring cost includes maintenance and periodic updates, which are generally handled by the service provider.
4. Scalability
VoIP systems offer excellent scalability options. Adding a new line or even a new location on ip phone can often be accomplished with a few clicks in a web interface, making it much easier and less expensive to scale compared to on-premise systems. Based on these factors, the cost of a business VoIP phone system starts from $20 and goes up to $500 per month.
Why CallHippo is the Most Affordable Business Phone System?
CallHippo is a leading business phone system that offers flexibility and cost-effectiveness through cloud telephony. It’s an ideal choice for businesses looking to enhance communication and customer service.
The average cost of VoIP phone systems starts from $20 to 40 for the basic plan. At the same time, CallHippo offers an advanced VoIP phone system, starting at only $0 per user per month! Its paid plans are also available at $16 per month.
With CallHippo, businesses can stay connected, adapt to changing expectations, and thrive in today’s dynamic commerce landscape.
So, if you’re looking for a VoIP phone system that is cost-effective and scalable, you can get started with CallHippo!
Conclusion
The choice between an on-premise telephone line and a VoIP phone system hinges on various factors, including your budget, business size, feature requirements, and long-term growth plans. On-premise systems usually demand a higher initial investment but can offer lower long-term costs if your needs remain stable. VoIP systems provide greater flexibility and scalability, albeit with recurring fees. By understanding the cost implications of each system, you can make a more informed decision that aligns with both your operational needs and your budget. Either way, the goal is to invest in a system that not only meets your current needs but can also adapt as your business evolves.
FAQs
1) How much does a multi-line phone system cost for a small business?
The cost of a multi-line phone system can vary depending on whether you opt for an on-premise or VoIP system. For on-premise setups, the initial investment can range from a few thousand dollars to much higher, depending on features and hardware quality. On the other hand, VoIP systems often have lower upfront costs, ranging from a few hundred to a couple of thousand dollars for a small business. Don’t forget the ongoing subscription or maintenance fees for each phone line cost each type of system.
2) How do I set up a small business phone system?
For an on-premise system, you’ll need to buy the required hardware, like servers and phone units. You’ll then need either an in-house IT team or contracted technicians to install and configure everything. With a VoIP system, the process is simpler. Purchase IP phones, connect them to your existing internet network, and then subscribe to a VoIP phone service. Most VoIP providers offer easy-to-follow setup guides, and some even provide installation services.
3) Is VoIP cheaper than a landline?
Generally, VoIP tends to be cheaper than a traditional landline, especially in the initial setup phase of right business phone system. You save on hardware and installation costs. However, VoIP systems usually have recurring monthly or annual subscription fees. On-premise systems have higher upfront costs but can potentially have lower long-term costs if you don’t require frequent updates or changes. It’s crucial to consider both the short-term and long-term costs when making a choice.
4) Is VoIP a good idea for small business?
VoIP offers several advantages that can be particularly beneficial for small businesses. The lower initial setup cost makes it accessible for businesses with tighter budgets. Its scalability makes it easy to add new lines as your business grows. Moreover, VoIP services often include a variety of features like call forwarding, auto-attendant, and even video conferencing, which can enhance your business operations. So, for many small businesses, VoIP is not only a good idea but an excellent one.
Akarsh is a B2B & SaaS content writer, having experience of over 3 years in the industry. His expertise lies in creating targeted content for Telephony, VoIP, and CRM domains. His proficiency also includes fine-tuning content for SEO optimization, guaranteeing enhanced visibility and engagement. Akarsh is committed to remaining at the forefront of emerging SaaS trends to ensure the creation of relevant and relatable content that adds value.
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