What is VoIP?
Voice over Internet Protocol (VoIP) is a communications technology based on a set of standards that allows phone calls to be placed over an internet connection instead dedicated communications equipment, copper phone lines, and a particular telephone service provider.
VoIP converts your analog voice sounds into digital data, compresses the digital data, and transmits it over the internet just as if the voice signal was computer data. A VoIP service provider routes the call data between all users. On the receiving end, the signal data is uncompressed and reverted back into the analog voice sounds that you can hear through your handset, cell phone, computer or speakerphone.
VoIP service has come into wide use because users can make phone calls without a dedicated telephone service, which saves on call charges. If users have internet access, you don’t need to have any dedicated phone lines. This allows users to easily work from home or other remote locations.
To place a call using VoIP, you need a VoIP compatible phone, or a VoIP app. That means the calling device is given an IP address so that voice calls can be made over the data lines. Unlike older technology phones, VoIP phones can provide improved call quality.
Despite the previous explanation sounding pretty simple, there are some more technological concepts that compose a VoIP phone service that are helpful to understand.
How Does a VoIP Phone System Operate?
A VoIP phone is a technology used to make calls through an internet connection instead of a dedicated copper-wire telephone line. It 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.
If you have a reliable high-speed internet connection, you are all ready to set up your new VoIP telephone service.
Most VoIP systems consist of a VoIP phone (a VoIP desk phone or computer with VoIP software and a headset), and a VoIP Server, which is usually located at the VoIP service provider. VoIP phones work better than a traditional PBX-based analog phone because the capabilities of a digital phone system are so much better.
VoIP uses an internet connection, and signal information is transmitted securely. You can manage your VoIP system through a control program that runs on Chrome or Firefox. These management programs allow users to control access, manage system users, and set up user accounts.
how much does it cost to implement a VoIP phone system? What can impact that cost? What are the monthly and annual costs for a VoIP phone system? This article will explain how much you can expect to pay for your VoIP phone system.
How Much Does a VoIP System Cost?
VoIP phone system costs range between . Ongoing costs, including maintenance and service fees run between
How are VoIP Phone Service Prices Calculated?
There are two main factors that impact the cost of a VoIP phone system. The first cost factor is the number of extensions. 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 succinct estimate of the number of extensions you will need.
The second cost factor is the number of outside lines or call paths that you need. You may have 50 phone extensions, but let’s assume only 10 of those people will 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 transferring 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 explore the factors that drive the price of a new VoIP system up. The critical factors that increase setup costs are the number of extensions, and the existing equipment and infrastructure you have.
The Cost of New Phone Equipment
Many customers will purchase all new phone hardware to maximize the advanced features of their new VoIP telephone system. If you need to purchase new VoIP desktop phones, the typical costs are . Expect to also pay labor fees of $25 to $50 per phone for installation and configuration costs.
If you have existing VoIP desk phones it may be possible to modify them to work with a new VoIP system or provider. Expect to pay the going rate ($25 to $50 per phone) for professional services for the re-programming process. Some VoIP desk phones that are even a few years old may already be obsolete in terms of their ability to support new capabilities.
If 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 and installation.
Additional Network Infrastructure Costs
Each phone needs its own connection to the Internet. Sometimes we can use the existing network cabling. Even if a desk has a single network connection available, many VoIP phones have a pass-through style port that can be used to connect the device without decreasing speed or call quality.
If a VoIP phone is in a location that doesn’t have a network connection, an additional network drop must be installed. This will result in 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). Infrastructure upgrade and improvement prices vary widely, please feel free to contact us for cost estimates to upgrade your network hardware components.
Phone Number Migration Costs!
There will be a cost associated with migrating or porting your existing phone and extension numbers to the new VoIP service provider. You should budget to pay a one-time cost per extension of $20 to $30 to switch your numbers over.
Monthly VoIP Phone Service Costs
Each VoIP phone extension will cost about . Additional features and devices can push this cost up to $25 per extension per month or more.
What Helps Lower the Price of a VoIP Phone System?
Let’s discuss ways to push the cost of a new VoIP system down and save some money!
What Does New Phone Equipment Cost?
If you have existing VoIP desk phones it may be possible to make them to work with a new VoIP system or provider. Expect to pay $25 to $50 per phone for professional services. This could save you $100 to $200 per extension over the cost of new desk phones.
If 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 labor. This could save you between $100 and $200 per extension.
Network Infrastructure Costs
If you currently have new or newer network hardware, and your cabling is less than 5 years old, and have previously invested in PoE technology, you probably will not need to make any additional infrastructure investments in order to install a new VoIP phone system.
Number Migration Costs
There will likely be a cost to migrate or port your existing phone numbers to the new VoIP provider. You should budget to pay a one-time cost per extension of about $20 to $30 to switch your numbers over. You will likely not be able to avoid this cost.
Other Monthly VoIP Phone Service Costs
Each VoIP phone extension generally costs about . Additional capabilities can drive this cost up to $25 per extension per month or more.
Take a close look at the available features, and think hard about what you really need (like 911 service) and what you may not need (per user recording, or built-in digital greetings and messages).
VoIP Phone System Costs Versus Legacy On-Premises PBX Systems
VoIP phone system costs can be much less than an on-premises legacy PBX with copper wire landlines. A company with 20 employees was paying more than for their old phone system. After moving to a VoIP system, they are now paying $700 per month for a monthly savings of over $1300 or
Why do Some VoIP Providers Cost More?
The most frequent reason that some VoIP providers are more expensive is that they usually 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 do Some VoIP Providers Cost Less?
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 features and capabilities that a larger company would need. So you don’t end up paying for features that you will never need or ever use. Conversely, be sure you ask for a calendarized implementation schedule. Some VoIP companies will put only one implementer on the project, and the schedule may run into several weeks and then several months. By limiting the labor resources, and increasing the implementation timeline, some VoIP vendors will show you an unrealistic lower price.
What Can My Business Expect to Pay?
We will assume a 50-person company upgrading their old copper wire phone system to a new VoIP system. They want all-new desk phones. They have 5 numbers to port over – sales, service, admin, a toll-free number, and a number for a remote sales office.
When we examined their call volume, we estimated 20 call paths would be needed. They also wanted call recording for 3 manager lines, and 2 conference call bridges.
Based on these findings, 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.
How Does EBS Fit?
Edwards 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 high-quality, price-effective, and dependable VoIP phone solutions that are scalable and offer a variety of features to meet the needs of almost any business.
If you want to upgrade your phone system, please click here to contact one of our VoIP phone system experts. We’ll help you to choose the right VoIP phone system for your business!