If you are thinking of upgrading your phone system to a VoIP phone system (Voice over Internet Protocol), you have come to the right place. VoIP replaces the traditional (and very old) telephony technology that runs over copper wire cables like it has in most places for decades. VoIP networks run on the same internet and network cabling that connects your office computers, servers, routers, and other network devices. As you may already know, the costs of maintaining those old, dedicated copper wire telephone connections are surprisingly high!
A comparable VoIP phone system can save thousands of dollars when compared to an old, on-premises PBX (“Private Branch eXchange”) business phone system. A well-engineered VoIP phone system will be superior in every way to most PBX systems and cost much less.
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What is VoIP Telephony?
Voice over Internet Protocol Telephony is a communications method based on a set of standards that provides voice service phone calls using an internet connection instead dedicated communications equipment, copper phone lines, and a particular telephone service provider like Verizon or AT&T.
VoIP protocols convert your analog voice sounds into digital signals, compresses the digital signal, and transmits it over the internet just as if the voice signal was computer data. A VoIP service provider manages and routes call data between all users. On the receiving end, the digital signal data is uncompressed and converted back into the analog voice sounds that you hear through your handset, cell phone, computer or speakerphone.
VoIP service is popular because users can make phone calls without any specific, dedicated telephone service, which saves them on call charges. If users have internet access, you don’t need to have any dedicated copper phone lines. This allows employees to easily work from home or other remote locations away from the main company office.
To place a call using VoIP, you need a VoIP compatible desk phone or handset, or a VoIP app. That means the calling device is assigned an IP address so that calls can be made over the data network. Unlike old landline phones, VoIP phones can operate in a HD (high-definition) mode for improved call quality.
Although the previous explanation sounds pretty simple, there are some more technological concepts that make up the basic VoIP phone service that are helpful to understand.
How Does a VoIP Phone System Work?
In its most basic form, a VoIP phone system is a technology used to make phone calls through an internet connection instead of a dedicated copper-wire telephone line. A VoIP system converts analog voice signals into digital signals and transmits them like data packets over a regular internet connection. A VoIP server connects VoIP calls to other telephone networks.
As long as you have a fast and reliable high-speed internet connection, you are all ready to set up VoIP telephone service.
Most VoIP systems consist of a VoIP phone (a VoIP desk phone, handset, speakerphone, cell phone or computer with VoIP software and a headset), and a VoIP Server or SIP server, which typically resides at the VoIP service provider location. VoIP phones almost always work better than a traditional PBX-based analog phone because the capabilities of a digital phone system are so much more advanced.
VoIP runs over the internet, and your data is transmitted securely in the cloud. You can manage your VoIP system through a digital dashboard or control program that runs on a regular internet browser. These management software programs allow users or admins to control access, manage system users, and set up user options.
Now that you understand how VoIP phone systems work you are probably wondering how much does it actually cost to implement a new VoIP phone system? What variables impact that cost? What are the ongoing monthly and annual expenses for a VoIP phone system? This article will give you a good idea of how much you can expect to spend on your VoIP phone system.
So How Much Does a VoIP Phone Really System Cost?
On average, a VoIP phone system costs range between $100 and $500 per extension. Ongoing costs, including maintenance and service fees generally run between $10 and $25 per extension per month.
How is VoIP Phone Service Priced?
There are two chief factors that impact the cost of a VoIP phone system. The first cost factor is the number of extensions that you need. This is the cost to purchase, configure, and install each phone, plus a monthly charge for each extension. To estimate your cost of extensions, think about how many employees will need a phone at their desk, and that should be a fairly accurate estimate of the number of extensions you will need.
The second chief cost factor is the number of outside lines or call paths that you need. You may have 50 phone extensions, but only 10 of those people need to make phone calls outside of the organization at one time. You will need to buy 10 call paths.
There is also a one-time set-up cost of porting your old extension numbers from your existing provider to your new VoIP provider.
What Factors Drive the Price of a VoIP Phone System Up?
Let’s drill down into the factors that drive the price of a new VoIP system up. The chief factors that increase setup costs are the number of extensions, and what existing equipment and infrastructure you have in place.
The Cost of New Phone Equipment
Most customers will purchase new phone hardware to maximize the advanced features their new VoIP telephone system will provide. If you need to put new VoIP desktop phones in place, the typical costs are $100 to $200 per phone. Expect to also pay a labor and professional services fee of $25 to $50 per phone for installation and configuration costs.
If you have existing VoIP desk phones it may be possible to program them to work with a new VoIP system or provider. Expect to pay the going rate ($25 to $50 per phone) for professional services if the re-programming process is even possible. Keep in mind that VoIP desk phones that are even 2 or 3 years old may already be obsolete in terms of their ability to leverage new features and capabilities.
In the event that you will use desktop or laptop computers and cell phones to run the VoIP software and/or app, and not need new desk phones, you will likely pay between $25 and $50 per extension for software, headsets, and professional services for installation.
Network Infrastructure Costs
Each phone extension needs its own connection to the Internet. Many times, we can use the existing network cabling to connect the phones. Even if a desk area only has a single network connection available, most VoIP phones have a pass-through style port that can be used to connect the device without compromising speed or call quality.
If a VoIP phone has to be installed in a location that doesn’t have a network connection, an additional network drop must be installed. This will incur a modest increase in material and labor costs. You may also elect to upgrade your network routers and switches if they are older, slower or if you wish to use PoE (Power over Ethernet) to eliminate the need for additional electrical connections. Costs for infrastructure upgrades and improvements vary widely, please feel free to contact us for more information and for cost estimates to upgrade your network infrastructure.
Don’t Forget Phone Number Migration Costs!
Usually there will be a cost to migrate or port your existing phone and extension numbers to the new VoIP service provider. You should plan to pay a one-time cost per extension of $20 to $30 to switch your numbers over.
Ongoing Monthly VoIP Phone Service Costs
Each VoIP phone extension generally costs about $10 to $15 per extension per month. Additional features and devices can drive this cost up to $25 per extension per month or more.
What Factors Drive the Price of a VoIP Phone System Down?
Let’s explore ways to drive the cost of a new VoIP system down and save money!
The Cost of New Phone Equipment
If you have existing VoIP desk phones it may be possible to program them to work with a new VoIP system or provider. Expect to pay the going rate ($25 to $50 per phone) for professional services if the re-programming process is even possible. This could save you $100 to $200 per extension over the cost of brand-new desk phones.
In the event that you will use desktop or laptop computers and cell phones to run the VoIP software and/or app, you will likely pay between $25 and $50 per extension for software, headsets, and professional services for installation. Again, this could save you between $100 and $200 per extension when compared to the cost of brand-new desk phones.
Network Infrastructure Costs
If you currently have new switches and routers, your cabling was installed in the last 5 years in your office locations, and have previously invested in PoE technology, you are probably in good shape and will not need to make any additional infrastructure expenditures in order to fully implement a new VoIP phone system.
Phone Number Migration Costs
Usually there will be a cost to migrate or port your existing phone and extension numbers to the new VoIP service provider. You should plan to pay a one-time cost per extension of $20 to $30 to switch your numbers over. You will likely not be able to avoid this cost.
Ongoing Monthly VoIP Phone Service Costs
Each VoIP phone extension generally costs about $10 to $15 per extension per month. Additional features and devices can drive this cost up to $25 per extension per month or more.
To save money, take a very close look at the available features, and think hard about what you really need (like 911 service) and what you probably don’t need (per user recording, or built-in digital greetings and messages).
How Do VoIP Phone System Costs Compare to Legacy On-Premises PBX Systems?
VoIP phone system costs can be a fraction of the cost of an on-premises legacy PBX with copper wire landlines. A local company with 20 employees was paying more than $2,000 per month for their old phone system. After moving to one of our VoIP services, they are now paying $700 per month for a monthly savings of over $1300 or 65% per month.
Why are Some VoIP Providers More Expensive?
The most common reason that some VoIP providers are more expensive is that they tend to work with larger businesses who need more features and have large numbers of extensions. As a result, you may end up paying for some features that you will never need or ever use. Also, be sure you ask the VoIP vendors to give you a calendarized implementation schedule. As a customer you may be paying more for an accelerated implementation schedule that you don’t really require.
Why are Some VoIP Providers Less Expensive?
The most common reason that some VoIP providers are less expensive is that they have a great deal of experience working with small to medium businesses that don’t need all the bells and whistles that a larger company would need. That way, you don’t end up paying for some features that you will never need or ever use. Conversely, be sure you ask them to give you a calendarized implementation schedule. Some VoIP companies will throw only one or two implementers on the project, and the schedule may run into several weeks and then several months. By limiting the labor resources, and stretching out the implementation timeline, some VoIP vendors will be able to show you an artificially lower price.
So What Can My Business Expect to Pay?
We will assume a 50-person company upgrading their old PBX phone system to a new VoIP phone system. They would like all-new desk phones, plus a few more for the non-office and conference room spaces. They have 5 numbers to port over – sales, service, admin, a toll-free number, and a number for a remote sales office.
When we looked at their call volume and outbound usage, we estimated 20 call paths would be needed. They wanted call recording for 3 manager lines, and 2 conference call bridges.
Based on these assumptions, this fictitious company would pay about $15,000 in one-time fees, and about $1000 per month in recurring charges.
For an exact estimate of what a new VoIP phone system will cost your business, please contact us for a free, no-obligation, no-hassle evaluation and quote.
Where Does VBS Fit?
Virginia Business Systems has a long history of successful migrations to VoIP telephone service. We offer VoIP phone solutions from Cytracom and Konica Minolta Unified Communications. Both of these providers offer quality, price-effective VoIP phone solutions that are scalable and offer a variety of features to meet the needs of just about any size business.
If you’re ready to upgrade your phone system, please click here to contact one of our VoIP phone system experts. We’ll help you to choose the VoIP phone system and features that are right for your business!
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