How Much Does VoIP Phone Service Cost a Small to Midsize Business?
In the VoIP industry, one of the most common questions we are asked is, “How much does a cloud-based VoIP phone system cost?” The answer is…it depends—primarily on three main factors. To help you get a sense of how pricing is determined in the VoIP industry, we’ve openly and honestly discussed those three factors below.
VoIP Pricing: A History Lesson
Over the last five years, though, VoIP phone technology has become increasingly mainstream, and it’s now been widely adopted by many businesses, both large and small. Consequently, the investment cost and available features have become more and more similar and competitive across providers.
A quick comparative search reveals that most VoIP providers today charge $25 per user per month. That’s not a secret. However, if you want to avoid jarring surprises when you get your first VoIP invoice, it’s essential to know that many additional details go into installing and supporting the VoIP phone hardware, and these details affect what you pay.
Pricing Breakdown of a VoIP Phone System
When it comes to the purchase and installation of a VoIP phone system, there are three primary components that make up your total price:
- Recurring monthly VoIP phone service cost
This fee can be as little as $15 per user per month for courtesy phone extensions (e.g., kitchen phones or wall-mounted phones primarily used for intercom) up to $25 or more per user per month (for phones that offer the feature sets most businesses utilize). The $25 per user per month fee is the most common option.
The $25 per user per month fee includes the following:
- Unlimited phone line usage
- Activation of standard phone system features
- Voice mail extension
- Three or four phone extension dialing between extensions
- End-user portal software
Optional Additions to Your VoIP Phone System
According to your office environment and business needs, some of these additional features might be beneficial:
- Administrative portal: Free (included at no charge)
- TeleCloud Mobile App User: $2 per user per month
- Voice mail to text transcription: $2 per user per month
- Call recording: $3 per user per month
- Main WebFax: $20 per user per month
- Direct inward dial line: $1.50 per user per month
- Call center agent or agent supervisor: additional $10 per user per month, which includes
- basic user
- call center agent license
- call recording
- advanced call reporting
- real-time dashboard for supervisors and managers
(Not sure if call center software is right for your business? Learn more here.)
- Toll-free line: $2.95 + usage
- Conference bridge: $5.00 + usage
- CRM integration: depends on CRM and integration requirements (conversation is needed)
Note, these prices are in addition to the monthly user fee.
*These prices do not include Internet access fees or SD-WAN technology.
- Project cost (IP phones and hardware, onsite phone installation, wiring, and end-user training services)
Five factors make up the project cost for your VoIP phone system:
- Various IP phones (desktop, cordless, conference room)
- Peplink firewall and/or SD WAN appliance
- Network switch or Phybridge appliance
- Ethernet wiring/cabling services
- Professional onsite and remote labor services, including phone system programming, onsite wiring, onsite installation, and onsite training
Most customers prefer to take on the cost for the project and hardware as a sixty-month rental program. We do offer shorter terms (e.g., twenty-four months or thirty-six months), if that’s preferred.
The vast majority of small business clients elect to rent for two reasons: one, it allows the business to maintain working capital, and two, it means we can fully manage and support the overall solution at no additional charge throughout the entire business relationship.
- Ongoing Support Services (Post-installation)
The following are included in your fixed monthly rental rate*:
- Unlimited remote access to our help desk and team through phone and/or e-mail.
- Unlimited remote training.
- Advanced hardware replacement if any hardware we provide fails.
- Proactive monitoring of your VoIP system.
- Call flow and auto attendant recording and programming as your business evolves.
Onsite services (training, service, and account management) are available to all our clients located in Northern or Central New Jersey.
*This is not a fully itemized list of our support services. This is for educational purposes only.
Under our rental program, at the end of your term, you can determine if you want to own the existing hardware, return it, or refresh the hardware with new IP phones and updated firewall.
By the Numbers: An Example
Let’s take as an example a single-location business with twenty users on the system.
- Component One (Recurring Monthly VoIP Phone Service Cost)
This would be $25 per user per month. At twenty employees, the total would be $500 per month.
- Component Two (Project Cost—IP Phones, Router, Network Switch, Onsite Installation, and Onsite Training Services)
Depending on the necessary hardware, the results of the site survey for wiring, and your specific phone selection, the rental price would be somewhere between $100 and $150 per month (for sixty months).
- Component Three (Support Services)
Support services are included as part of the monthly rental payment.
$500 + ($100–$150 per month) = $600/month–$650/month + tax
Price Is About More Than the Numbers
When you’re getting quotes from multiple VoIP providers, it’s easy to fall into the trap of jumping at the lowest number quoted. That can be problematic, though, for a couple key reasons.
- Most providers will be up front about the monthly fee per user but will downplay the importance of onsite services. The reason some providers can charge less is they never step foot in your office—for anything. It’s a 100 percent remote relationship. Your IP phones and router are shipped to you in a box for a “do-it-yourself” installation.
- If the VoIP phone system you get ends up not matching your expectations, it can be incredibly difficult (and painful) to get out of that arrangement. Once your phone numbers port to the new provider, contracts make it difficult to undo what you did. It’s worth taking your time, asking lots of questions, and ensuring you end up with the right company for your business.
National VoIP Providers versus Local VoIP Companies
With so many VoIP providers now offering similar services and products, one critically important factor in your decision-making process is whether you prefer to work with a larger national VoIP provider or a local company.
In our experience, opting for a local provider provides a couple benefits:
- National VoIP providers don’t want to come on site for your “small” business (under one hundred users). When this onsite assessment is skipped, important account nuances are bound to get overlooked—from the technical, hardware, and wiring perspective to the interpersonal dynamics. You’ll also have to deal with remote installation, end-user training, and account management. (For more information about the differences between a local company and a national provider, read here.)
- Local VoIP providers know the geography, third-party IT vendors, local infrastructure, and quality of Internet connectivity and can offer solutions based on those factors. This single fact can have a significant impact on your call quality, call reliability, and network stability.
- Most national VoIP providers downplay the complexity of phone system installation, and most small business clients are not aware of the potential headaches or risks often associated with a do-it-yourself solution. Working with a local company for your VoIP phone system install means you never have to go it alone.
Other Cost Considerations for Your VoIP System
- Determine how much you are currently spending on phone lines, fax lines, phone system maintenance, and any third-party providers, such as conference calling or toll-free lines. All these expenses can go away when you port your phone numbers to a VoIP provider.
- The numbers provided here are for educational and illustrative purposes. Your actual bill will vary based on your company’s setup and particular specifications. (Note, this budgetary guideline is a good starting point for companies with fifty phones of less. If you're a larger company, e-mail to inquire further.)
As you can see, there are numerous choices and decisions to make prior to selecting your VoIP provider. However, the cost of a VoIP system shouldn’t be mysterious or perplexing. A company’s pricing structure should be both easy to understand and transparent. Take the time to continue to educate and to inform yourself before making any final decision. Have questions? Call or e-mail us for more answers.
By Vincent Finaldi
Vice-President, Tele-Data Solutions
E-mail: firstname.lastname@example.org | Direct Line: (908) 378-1218
What brings me satisfaction is meeting with New Jersey–based businesses and genuinely helping them solve communication and business problems. As someone who has lived in New Jersey my entire life, I love working and playing here. I live in Morristown with my wife, Lisa, and root for the New York Giants.