Updated : November 6, 2025For a long time, business phone systems were just another checkbox: necessary, predictable, and boring.
But that’s changed. Today, they’re a real competitive edge. In fact, the global VoIP market is expected to hit $278 billion by 2031, powered by businesses chasing smarter, more cost-efficient communication.
So, how do you find the right balance between features, reliability, and cost without overspending?
This guide breaks it all down, from setup fees to long-term value, so you can see what your business phone system really costs and how to make it pay off.
What Drives an Impact on the Cost of a Business Phone System?
Cost does not come from just one section of a business phone system; it arises from hardware, software, connectivity, and ongoing management. Knowing what drives telephone costs for small businesses and others will help in truly maximizing your savings.
1. Hardware & Infrastructure (On-premise equipment, handsets)
If your business relies on on-premises PBX setups or hybrid installations, the devices will be a key part of the investment. A standard setup comprises of PBX servers, switches, cabling, desk phones, and IP phones, all of which contribute to the initial upfront cost for the setup. Basic SIP capable phone types can be as low as $50 and ranging $300 for executive units and video-enabled phones.
2. Software & Licensing (VoIP software, PBX licenses)
The digital backbone of today’s phone systems is VoIP software. It does not matter if you are subscribing to a cloud-based phone system; you are going to pay levels of licensing for software and advanced features such as video conferencing, call routing, and recording.
3. Communications Lines & Connectivity (SIP Trunking, PSTN, broadband)
The costing heavily depends on the providers you select. Businesses typically operate on a user model for traditional formats of services delivered using SIP Trunking and organized through a phone vendor, paying monthly costs in the range of $15 to $50. Here, bandwidth is important; Internet Protocol Telephony must have high-quality and low-latency connectivity.
4. Features & Add-Ons (IVR, call recording, analytics, integrations)
The number of features offered (and add-ons) will be considered in the pricing plan. Some businesses might require caller ID, call forwarding, team messaging, call monitoring/recording, and testing. While some businesses need premium systems offering AI-based summaries of calls, voice classification, sentiment analysis, or transcriptions of voicemail.
5. Maintenance and Ongoing Support (upgrades and changes)
Post deployment, your business phone system provider will offer ongoing support with some additional charges. Most systems include a maintenance contract where the vendor handles technical issues, software updates, and faulty hardware replacements. If you manage VoIP equipment in-house, you’ll need to factor in IT labor and any tools or services required to upgrade or fix your hardware.
6. Scalability (number of users)
In most cases, the cost of a phone system grows exponentially with the number of users. With each user, you will require a license, IP phones, and possibly an increase in the allocation of telephone bandwidth as well. While many vendors offer bulk pricing, costs can rise quickly once you go beyond 50 or 100 users, especially if you add advanced features or system integrations.
Typical Price Ranges You Can Expect for Business Phone System
Understanding these ranges can help you choose your business budget effectively and rely on the solution that best balances cost, control, and functionality.
1. Small Business / Entry Level (1–10 users)
- Cloud: ?400–?7,500/month (~$5–$90); handsets ?4,000–?16,000 each (~$50–$200).
- On-Premise: ?14,000–?30,000 upfront for PBX + ?4,000–?16,000 per handset (~$50–$200); annual maintenance ?5,000–?10,000 (~$60–$120).
Small businesses often favor cloud VoIP for minimal upfront investment and simple scalability.
2. Mid-Size Business (10–100 users)
- Cloud: ?2,500–?8,000/month (~$30–$95); optional add-ons like call analytics ?800–?1,600/user/month (~$10–$20).
- On-Premise: ?60,000–?2,00,000 upfront; maintenance ?15,000–?80,000/year (~$180–$960).
Feature sets expand here by including IVR, call routing, CRM integrations, and more, which can increase monthly spend significantly.
3. Enterprise Level (100+ users with advanced features)
- Cloud: ?7,000–?35,000/month (~$85–$420); advanced analytics, AI call routing, and integrations often included in premium tiers.
- On-Premise: ?2,50,000+ upfront; support contracts ?10,00,000–?50,00,000/year (~$12,000–$60,000).
Enterprises benefit from custom solutions but face steep office phone system cost and complex licensing.
4. Comparison: On-Premise vs Cloud Deployment
- On-Premise: High upfront cost, lower monthly fees, greater control, higher maintenance responsibility.
- Cloud: Low upfront cost, predictable monthly pricing, easier upgrades, limited control over hardware.
In general, cloud phone systems dominate small to mid-size markets due to ease of deployment and predictable expenses, while on-premise solutions still make sense for enterprises requiring full control over data and advanced custom setups.
Calls with CallHippo!
- 1Cloud VoIP
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- 3Call features
- 4CRM ready
Understanding Cost Components
Before you choose a business telephone system, it is helpful to know where your money actually goes. Here’s how it breaks down.
1. Per Line / Per Extension Costs
Every telephone system begins with lines or extensions. These are the bases of internal and external communication. Generally, traditional on-premise PBXs charge you per line, and the costs escalate from there.
Conversely, cloud-based VoIP providers usually contain virtual lines/extensions within their user blocks. This means scaling will generally be easier and less expensive.
2. Per-Seat / Per-User Licensing Costs
Licensing is probably one of the largest end costs you incur during ownership of a modern business telephone system. Typically, every user (or “seat”) will require a license that allows calling, voicemail, conferencing, and tools for collaborating. Monthly rates range anywhere from $15 to $40 per user, per month, but the cost is based on feature sets and providers.
3. Call / Minutes Charges
Even though VoIP providers advertise “unlimited calling”, it generally only applies to domestic calling within the U.S. and Canada. For rules and guidelines on calling internationally, refer to international calling regulations from the International Telecommunication Union (ITU).
International calling, toll-free minutes or any high-volume outbound campaign will include “per minute” rates such as $0.01 to $0.05 per minute, based on their destination.
4. Setup, Installation, and Training Costs
On-premise PBX set-up includes hardware, new cabling costs, as well as IT configuration-related costs. Consequently, the total charges to replace an existing system can range from $3,000 to $10,000. Cloud PBX will incur simple setup and training charges ($300–$500). A flexible provider may even include training with their set-up charges.
5. Integration / Configuration Costs
Many modern VoIP phone systems use a multitude of integration options with a CRM platform for call and message history, helpdesks, and collaboration tools. Basic integrations will generally require about $500–$2,000 for simple setup, or $1,000–10,000 for advanced configuration with automation or workflows with multiple apps.
6. Ongoing Maintenance / Support
Typically, a wire-line or cloud provider will offer maintenance contracts for software upgrades, troubleshooting, and bug fixes. However, in the event of a hardware failure will replace a damaged component. Even though the cloud provides ongoing support remotely, the cloud-hosted service incurs ongoing costs based on cloud network and telephony availability.
In an on-premise PBX set-up, you cannot ignore the cost associated with the IT labor requirement as it relates to maintenance of a telephone system. If you choose to use an on-premise PBX, it is best practice to have a separate budget for the hardware Inventory and ongoing service.
- Regularly audit your usage, which includes checking the active users, call volume, and feature usage. If you are paying for and not using a specific feature, save your budget and reduce costs.
How Much is a Business Phone Line?
A standard business landline through a carrier averages $20–$40 per month, while SIP trunks or virtual lines used by VoIP providers cost roughly $10–$50 each. When bundled in a hosted VoIP system, these lines are virtualized, making unlimited domestic calling far more economical.
Even the best phone systems have costs involved with services that have not been disclosed. In addition to your subscription or licensing fees, almost all businesses have to deal with other costs that can impact your budget.
1. Costs for Set Up and Installation
You may feel confident about using your new system; you should still be prepared to incur costs for initial installation and configuration by an in-person technician visit. The cosing can range from hundreds to thousands of dollars.
2. Hardware and Devices
Your plan may not include the phones, routers, or headsets you need to support the system or the business. Business owners usually purchase this hardware upfront or replace it. These devices can add costs quickly.
3. IT Support and Maintenance
Sometimes, technical support is most likely included in your phone system when employees need troubleshooting, software upgrades, or equipment issues. This is something that adds on to costs, which is not upfront.
4. Integration Fees for CRMs or Other Tools
Your phone system may need some of its functionalities to integrate into your CRM, helpdesk or other enterprise solutions. Whether working with a vendor/integrator or simply using another license, the costs may add up and could be over your budget.
5. Network & Bandwidth Costs
VoIP and cloud systems provide some stability and reliability over the internet. If you will need additional bandwidth at some point or a backup network, that is a further cost that you must wrap into the overall monthly service cost.
6. Taxes, Regulations, and Compliance Fees
Some regions have taxes, like telecom tax, and/or regulator compliance fees, which you must consider when budgeting. U.S. businesses may incur telecom taxes or compliance fees. Check FCC telecom regulations to ensure your phone system stays compliant and avoids unexpected costs.
7. Early Termination or Contract Renewal Costs
Switching providers before your contract ends can trigger penalties, and some renewal terms include price increases.
- Create a simple spreadsheet listing all potential hidden costs like installation, hardware, integrations, and support, and assign estimated amounts. Review this before signing any plan to see the true three-year expense.
Business Phone Rates Around the World / Regionally
Ultimately, business phone rates differ greatly based on geographic and infrastructure conditions. Here are the business phone rates by country (U.S., Europe, Asia)
- U.S.: The monthly service cost per business averages $20 – $50/user, the forecasted average cloud system business phone service cost.
- Europe: Slightly higher, around $25–$55 per user, influenced by VAT and telecom regulation.
- Asia: Rates vary widely, from $10–$40 per user, reflecting local competition and technology adoption.
What are the Factors Affecting Price?
Call volume, international usage, feature sets, regulatory compliance, and network reliability all affect pricing. Even exchange rates and provider competition can make a difference.
Business Phone System Cost Reduction Strategies
When you want to reduce your overall business phone system cost, it begins with the smarter decisions you make around the setup, usage, and negotiations with your provider. Whether you’re a manager of a small business or multiple teams, these decisions will help you narrow down what works for your communication needs without breaking the bank.
1. Choose a Cloud/Hosted System
The first way to save cost with your phone system is to switch to a cloud or hosted phone system.
You can save thousands of dollars on your hardware costs, installation costs etc. Plus, most hosted VoIP systems will not require complex setups on your premise. You can even pick and choose the users you want and what features, so you’re only billed for what you need.
- Start with a hosted VoIP system that has a month-to-month billing option, so you can check whether you will actually save before committing to a contract.
2. Use Bundled Plans & Annual Contracts
Many VoIP providers give bundle plans that will allow unlimited calling, video meetings, team messaging all for one monthly fee. The bonus to using a bundled plan is that most providers will give you a discount for billing annually.
3. Scale Your Users & Optimize Usage
Don’t pay for lines that are not in use. Track your call volume for a week and look for patterns in inbound/outbound calling. You’ll want to scale your phone system over time. Adding new users or deleting old and inactive phone numbers can save you hundreds of dollars a month.
4. Consolidate through Unified Communications
Consolidating your video calls, file sharing, call forwarding, and CRM integrations to one service/platform means you will have less services to worry about. Unified communications systems can simplify management, and may also lower your overall systems costs.
5. Ask your Providers for Volume Discounts
If you are a growing team ask your system provider for a discount on volume or per-user savings plan for VoIP hardware, phone models, and monthly plans. Small businesses can take advantage of negotiating.
Subscription Model vs. One-Time Payments – Which is Better for Your Business?
Deciding on a recurring managed plan vs. a one-time payment will significantly influence your businesses communication budget for the long run. Here is a description of how they function and how to evaluate which model best fits your business.
Key Difference between Subscription and One-Time Model
Subscription plans typically include cloud-based features, VoIP software updates and maintenance, and continued support. Subscription plans are usually billed monthly and/or annually.
Conversely, one-time purchases typically refer to on-premise PBX, or desk phones, etc. One-time purchases usually incur add-on costs such as installation, maintenance, and hardware upgrades.
1. Subscription-based Pricing Advantages
- Cost-predictable monthly plans per-user
- Easy to scale small business phone systems
- Advanced features, call recording and video meetings, and CRM integrations
2. One-time Model Advantages
- No recurring monthly plans
- You own IP phones and/or VoIP
- Lower long-term total costs for stable teams/new growth
3. Which Model Works Best for Your Growing Team?
Teams with increasing call volume requirements, international calls, or constant phone hardware upgrades will likely benefit from subscription models. One-time fees may be a great option for organizations with little or no fluctuations in size or changes in their system.
4. Long-Term Cost Comparison (3-Year vs 5-Year)
When you move to the subscription model for 3- to 5-year pricing, you will often encounter hidden costs for add-ons (for subscription services) that you did not anticipate. On-premise PBX usually incurs costs for hardware, maintenance, and installation upfront.
5. When to Switch Models for Better ROI?
Change your pricing sideline when the cost of your small business phone system increases. It is usually caused by the inclusion of other features, extra phone lines, or added calling features that are more cost-efficient as a subscription service.
Smart Ways to Save Money on Your Business Phone System
After you have finished the installation and implementation of your system, the cost/savings strategy is ongoing. Our meticulous calling strategies will help you reduce costs on your business phone systems.
1. Use Free Internal Calling within Your Network
In your Network, if available, use your VOIP business service for unlimited domestic calling. Even a mobile phone, desk phone, or IP (Internet Protocol) phone can make internal calls for free.
2. Remove Unused Add-on Features to Reduce Bill
Keep track of which phone features, video conferencing tools, or call analytics your team does not use. Removing extra costs associated with unused features can help you optimize monthly plans.
3. Negotiate for Multi-Year or Volume Discounts
You can negotiate with your VOIP provider for deals on per-user plans, as well as voicemail transcription or hosted Voip bundles. Even if you are a smaller business, by talking to them at the time of renewal for costs associated with installing the service or hardware, you can often negotiate and cut the installation cost significantly.
4. Try Free Trials or Promotional Credits Before Buying
Consider taking some time to research the VoIP software calling features as well as the collaborative tools with either trials or promotional credits from your telephone system provider. This way you can then make sure that this telephone system is suitable for your business before committing to a long-term associated cost.
How to Estimate Your Own Business Phone System Budget?
Before your purchase, you will need a good understanding of how to estimate the costing of your own phone system. Below is an example of how to model and ultimately estimate your total costs for your phone system that includes hardware options and hidden costs associated with your phone system.
Step 1: Audit Your Requirements(users, features, calls)
Take a moment to consider how many phone lines you may need, what model of desk phone or IP phone you will want, and how many calls you think you will be making.
Consider if you need video calling and what collaborative capabilities are being requested by your team (in case this touches on international calling)
Step 2: Model Hardware + Software + Recurring Costs
Combine VoIP hardware, phone models, monthly plans, setup fees, system provider charges, and additional costs for call recording or CRM integrations.
Step 3: Add “Buffer” for Future Growth
Include 10–20% extra for team expansion, unlimited calling upgrades, or advanced features like call routing, call monitoring, and voicemail transcripts.
Sample Cost Estimation Worksheet / Template
Create a worksheet table that outlines steps 1-3 and includes columns defining users, phone type/model (IP vs desk phone), costs related to the monthly VoIP plan, growth-associated VoIP hardware costs, one-time costs (or setup charges), add-ons with expanded cost, and total gross per month.
We have created a sample sheet for your reference:
| Step | Category | Description | Quantity / Users | Unit Cost (USD) | Monthly / One-Time | Total (USD) | Notes |
|---|---|---|---|---|---|---|---|
| Total Monthly Cost | |||||||
| Total One-Time Cost | |||||||
Wrapping Up
Managing your calls and related costs for a business phone is not simply a matter of finding the lowest pricing plans. Rather than that, overall functionality and the right setup are more important to address scalability, performance, and long-term savings. So, take time to audit your real needs, estimate your future growth, and choose a provider that aligns with your business goals. A well-planned system today can save you thousands in hidden costs tomorrow while keeping your communication effortless and professional.
FAQs
1. What is business phone system prices per user?
The price of a business phone system will depend on your model. The price of a small business phone system will typically range from $20-50 per user, per month for hosted VoIP systems that include unlimited calls and many more features.
2. How much does a phone system for an office cost?
For small businesses, installation costs, hardware, and monthly VoIP plans can total $500–$2,000 initially, plus $20–$50 per user per month for unlimited nationwide calling, CRM integrations, and advanced features.
3. Are VoIP systems cheaper vs traditional line systems?
Yes. VoIP systems typically reduces the overall cost of hardware, installation, per-line charges, and business calling costs. VoIP systems will additionally provide some features, such as call recording and video meetings, within the monthly cost. Therefore, VoIP systems are more pocket-friendly in comparison to business phone systems.
4. How to choose the right plan based on business phone rates?
Evaluate your team size, call volume, need for international calls, IP phones, advanced features, and integration tools. Subscription-based VoIP plans often suit growing teams, while one-time purchases may fit stable teams with minimal expansion. Always check for hidden costs, setup fees, and hardware costs.
Published : October 22, 2025
Juhi is a senior content writer with over 4 years of experience in the B2B SaaS industry. A passionate storyteller at heart, she transforms complex ideas into compelling narratives with an adaptive and audience-first writing style. Juhi has helped multiple brands strengthen their voice, connect with their audience, and drive measurable growth through content. When she is away from the screen, she enjoys winding down with a well-written book!
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