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Business Phone System Cost: From Budget to Quality

Benjamin Knox | Last updated Tuesday, July 25th, 2023

In today's highly competitive business environment, a reliable business phone system plays a pivotal role in driving success. The smooth flow of communication is crucial for establishing strong connections with clients, partners, and team members. A reliable business phone system ensures that every call is attended to promptly, preventing missed opportunities and reinforcing professional credibility.

When considering a business phone system, understanding the cost implications is vital. On average, companies allocate approximately $1,250 per month for a phone system that caters to their unique needs. This initial investment is a crucial step towards long-term efficiency and growth.

This guide aims to equip businesses with the knowledge they need to make well-informed decisions regarding their communication infrastructure. By shedding light on the factors influencing business phone system costs, companies can confidently select a solution that aligns with their requirements and budget. In the following sections, we will delve deeper into cost determinants and provide actionable tips to optimize expenses while maximizing the benefits of a modern business phone system.

How Much Do Business Phone Systems Cost?

Contrary to common belief, business phone systems are remarkably cost-effective. The expense is influenced by factors such as phone types and required functionalities. On average, a basic plan may only cost around $15 per month, while more advanced enterprise plans could be around $35 monthly.

Implementing a business phone system allows companies, regardless of their size or location, to enjoy consistent and clear communication. By integrating these systems with internet services, businesses can significantly reduce the costs of long-distance and international calls, resulting in lowered overhead expenses.

For modern organizations, investing in a high-quality voice phone service is paramount. Access to a reliable VoIP system offers flexibility, ensuring businesses can cater to their customers' needs effectively.

While telephones are indispensable, they can pose significant financial challenges for small businesses. Recognizing that companies generally update their phone systems every seven years can help in budgeting and planning for the future.

VoIP Phone System Cost

VoIP phone systems, also known as voice over Internet protocol phone systems, have revolutionized business communication by leveraging broadband Internet connections for making phone calls. Unlike traditional analog phone lines, VoIP systems offer a range of features and options to suit diverse business needs.

VoIP phone systems come in various forms, including computer-only setups and VoIP adapters that work with conventional phone lines. These options cater to different business preferences and infrastructures.
Versatility in Services

VoIP services provide a wide array of calling options, allowing users to make local, long-distance, international, and mobile calls. However, service packages may vary, restricting some calls to only in-network users.
Understanding the Costs

When considering VoIP phone systems, it's essential to comprehend the cost structures. The pricing for these systems can vary significantly, depending on the service provider and the features included.
Average Cost Analysis

On average, a VoIP phone system cost falls around $899. Nevertheless, the market offers diverse price points, with some systems available for as low as $200 and more comprehensive setups reaching around $1500.

3CX Phone System Cost

Looking for a reliable and cost-effective business phone system? Consider the 3CX Phone System, which offers exceptional features at an attractive price point. Unlike traditional phone systems, 3CX is a software-based private branch exchange (PBX) that enables both VoIP and PSTN calls. This SIP standard-based system works seamlessly with Linux and Microsoft operating systems.

The 3CX PBX boasts a range of advantages, including easy backup and restoration, unlimited extensions, Microsoft 365 integration, and a digital receptionist. What's more, it caters to the evolving needs of modern businesses, providing options for on-premise and cloud services, as well as live chat and video conferencing capabilities through smartphone apps and extensions.

One standout benefit that attracts businesses is the initial free year of service, making it an enticing option for companies looking to upgrade their communication infrastructure. After the first year, the average cost typically falls within the range of $200-$300 per year, depending on the selected package.

Speaking of packages, 3CX offers three main tiers: Standard, Pro, and Enterprise. The Standard plan is free for the first two years, while the Pro and Enterprise plans are complimentary for the first year. The subsequent annual costs are $145 for the Pro plan and $180 for the Enterprise plan. Additionally, each hosted plan incurs a $100 yearly fee, and support tickets are priced at $75 per plan.

The real cost-saving feature lies in the scalability of the system. By adding more users, businesses can significantly reduce the per-user monthly cost. For example, increasing your plan by just one user beyond the initial 12 decreases the cost per user per month. As you add even more users, the savings continue to compound.

Virtual Phone System Cost

Virtual phone systems offer a modern alternative to traditional PBX and VoIP services, enabling users to make and receive calls over the Internet. The key advantage lies in its accessibility, allowing users to connect from any device with an Internet connection.

Unlike PBX systems, virtual phone setups eliminate the need for physical hardware, reducing maintenance costs. Moreover, these systems provide additional features such as text message and voicemail transcribing.

For small businesses, virtual phone systems prove to be a cost-effective choice, with an average cost of just under $50 per user per month. When considering compatible desk phones, the additional expense is approximately $215 per phone.

Comparing prices from various companies selling virtual phone systems in the market can help you find the most suitable option. Costs may vary depending on the offered plans, add-on packages, and special deals available.

8×8 Phone System Cost

The 8x8 phone system stands as a reputable option for businesses seeking versatile communication tools, including video conference calls, messaging, and voice calls. Despite being one of the older systems, it has evolved with modern features, including cloud-based VoIP, catering to remote work setups and internet-driven operations.

The 8x8 platform boasts a range of exciting features, such as APIs and apps, team chat platforms, local and global phone calling, HD video meetings for desktop and mobile devices, and an AI-powered contact center.

To determine the average cost of an 8x8 phone service, we analyzed the three available plans, each priced at $33 per user per month.

  • The 8x8 Express plan, priced at $12 per user per month, offers voice/video/messaging, unlimited calling in the US and Canada, voicemail, AI, and more.
  • For enhanced features, the X2 plan at $24 per user per month (annually billed) provides all-in-one voice, video, and chat functionalities, including small business and enterprise integrations and fax capabilities.
  • At the top tier, the X4 plan, priced at $44 per user per month (annually billed), offers analytics for administrators and supervisors, unlimited voice calling in over 40 countries, call quality reports, and additional perks.

PBX Phone System Cost

A PBX phone system serves as an internal phone network for businesses, facilitating both internal and external calls. Offering a range of features like voicemail, call forwarding, AI attendants, and call transfers, PBX systems can operate through VoIP, cloud-based, or analog connections, each with varying costs.

1. Analog PBX Systems

Costing approximately $900 per employee, analog PBX setups utilize PSTN and POTS connections. They lack internet-based features but can be discounted when purchased in bulk.

2. VoIP PBX Systems

Forward-thinking VoIP PBX systems come with an average cost of around $1,000 per setup. Leveraging internet connections, they offer video conferencing, messaging, AI receptionists, and voice calling.

3. Cloud PBX Systems

Known as hosted PBX systems, cloud PBX setups operate with VoIP providers through a broadband internet connection. With an average hardware cost of just over $2,000 and approximately $45 per line, these systems offer flexibility and scalability.

The choice of PBX system depends on a business's specific needs, budget, and desired features. While analog systems may suit traditional setups, VoIP and cloud-based systems provide advanced functionalities, enabling businesses to embrace modern communication and collaboration tools.

Cloud Phone System Cost

Cloud phone systems, operating via the cloud, offer robust phone capabilities similar to VoIP systems but with added advantages. They provide comprehensive VoIP services, making any Internet-connected device function as a phone.

Cloud systems offer collaboration features, integrating AI technology, instant messaging, video conferencing, call forwarding, auto attendants, voicemail-to-email, international calling, and more.

Cloud phone system costs closely resemble VoIP system costs, averaging around $30 per user per month. However, additional services like contact center functions can increase expenses to approximately $115 per month.

As businesses increasingly adopt cloud-based solutions, cloud phone systems emerge as a preferred choice due to their versatility and advanced features. By transitioning to a cloud phone system, companies can enhance communication, streamline workflows, and elevate overall productivity.

Business Phone System Equipment Cost

When selecting a business phone system, it's essential to take into account the type of system that requires equipment to operate. While virtual and cloud-based systems eliminate the need for hardware, analog systems and some VoIP setups rely on physical office phones and equipment.

To gauge the average cost of hardware, let's explore some typical pieces of equipment businesses may need. Note that the specific requirements may vary depending on the size and nature of the business.

Phone HardwareAverage Cost
Phone Handset$600 per user
Advanced Business Phones$195 per user
Low-End Business Phones$100 per user

Not every business requires top-of-the-line phone hardware. Smaller operations, such as online freelancing agencies or small businesses, may find simple phones sufficient for their office space.

However, rapidly-growing startups with both remote and in-person offices may benefit from advanced business phones and bulk purchases to cater to their expanding needs.

Business Phone System Installation and Setup Costs

Business phone system costs are influenced by various factors, with installation and setup fees being significant contributors. Depending on the complexity of your needs, you may require these services, making it crucial to understand the associated expenses.

In the United States, phone system installation costs typically hover just below $400, with some installations as low as $100 and others exceeding $1200.

However, these figures are general averages, and the costs can vary based on the type of phone system. Let's take a closer look at the installation and setup expenses for two popular systems - VoIP and PBX.

1. VoIP Phone System Installation and Setup Costs

For VoIP phone systems, the initial setup fee is usually a one-time expense. The advantage of VoIP is that its reliance on internet connectivity keeps the fees comparatively lower.

When implementing a VoIP system with analog elements like phones, power sources, and routers, the installation costs will average around $4,500. The setup, which includes cable running and virtual configuration, is more affordable, with an average cost of just above $600.

2. PBX Phone System Installation and Setup Costs

In contrast, PBX phone systems are more intricate, resulting in higher costs. These systems rely on interconnected phones within the office, requiring more equipment and analog components.

For PBX systems, you can anticipate an average setup cost of around $2,500 for the primary units. Additionally, the installation services, including wiring and other components, will amount to over $1,650 on average.

Top 3 Best Business Phone Systems Comparison

When it comes to selecting the ideal business phone system, the first crucial step is determining your expected budget. This helps you narrow down your options and find the most suitable solution for your company. Once you have your budget in mind, it's time to explore the top brands in the market that offer competitive pricing plans.

Currently, the three leading business phone systems are RingCentral, Nextiva, and Vonage, each with its own set of features and pricing structures.

1. RingCentral: A Versatile Choice

RingCentral stands out with its flexible pricing plans that cater to businesses of all sizes. The company offers both annual and monthly rates, and by opting for the annual payment, you can save up to 33% on the total cost.

The pricing is categorized based on the number of users, making it easy to find the most suitable package for your company's size. Whether you have a single user or a large enterprise with over a thousand employees, RingCentral has you covered.

The available packages are:

  • Essentials: Starting at $29.99/month for 1 user, with a reduced rate of $19.99/month for companies with 2-99 users.
  • Standard: Starting at $34.99/month for 1 user, with a reduced rate of $24.99/month for 2-99 users and $32.99/month for 100-999 users.
  • Premium: Starting at $44.99/month for 1 user, with reduced rates for 2-99 users ($34.99/month) and 100-999 users ($32.99/month).
  • Ultimate: Starting at $59.99/month for 1 user, with reduced rates for 2-99 users ($49.99/month) and 100-999 users ($42.99/month).

RingCentral's feature-rich packages offer unlimited calls within the US, a toll-free or local phone number, voicemail-to-text, and 100 toll-free minutes per month. Moreover, they provide excellent customer support and various add-ons, such as extra phone numbers and international calling options.

2. Nextiva: A Comprehensive Solution

Nextiva's pricing structure is based on packages, users, and contract duration, offering you different payment options to suit your needs. Prepaying for the contract brings the lowest rates, and longer agreements result in further cost reductions.

Nextiva caters to businesses of all sizes, dividing its services into four categories:

  • 1-4 users
  • 5-19 users
  • 20-99 users
  • 100+ users

As the number of users increases, the rates decrease, ensuring cost-efficiency for larger enterprises. The three main packages are Basic, Pro, and Enterprise, all of which include business phone services and a customer relationship suite.

The package details are as follows:

  • Basic: Starting at $20/month per user, with higher prices for 1-4 users, peaking at $35/month per user.
  • Pro: Starting at $25/month per user, with the most expensive rate being $38/month per user for 1-4 users.
  • Enterprise: Starting at $30/month per user, with the highest price at $55/month per user for 1-4 users.

Nextiva's feature set includes communication tools, prospect management, customer service features, and team collaboration options.

3. Vonage: Feature-Driven Solutions

Vonage is known for its extensive feature list, offering over 40 features with every package. Unlike the other providers, Vonage provides separate pricing for its mobile plan, making it a great choice for businesses with diverse communication needs.

The company organizes its plans based on lines and packages, and it caters to businesses with varying sizes:

  • 1-4 lines
  • 5-19 lines
  • 20-99 lines
  • 100+ lines

Vonage's tiered pricing includes:

  • Mobile: Ideal for remote teams and those who prefer mobile communication. Pricing starts at $19.99/month for 1-4 lines and decreases with more lines.
  • Premium: Suitable for traditional office environments, starting at $29.99/month for 1-4 lines and decreasing with additional lines.
  • Advanced: Geared towards businesses needing complex analytics and comprehensive communication. Pricing starts at $39.99/month for 1-4 lines and varies with more lines.

Vonage offers a free 14-day trial for all its plans, and each includes features such as service via high-speed internet, 24/7 US-based tech support, and a wide selection of hardware.

Factors Determining The Cost of Business Phone Systems

Optimizing a company's communication infrastructure is of utmost importance, and a reliable business phone system plays a pivotal role in achieving that goal. However, arriving at the appropriate cost for implementing such a system requires a comprehensive evaluation of several factors.

1. Number Of Users

The number of users within your organization is a crucial factor that directly impacts the overall cost of a business phone system. As your company expands and more employees require access to the system, the expenses associated with additional hardware, licensing, and support will inevitably increase.

The size of your organization and the number of employees who require access to the phone system significantly impact the cost. More users typically mean higher expenses, as you'll need to invest in additional phone lines and extensions to accommodate everyone.

2. Hardware Costs

The hardware components of a business phone system can vary in price based on their specifications and functionality.

Phones Model and Devices

Choosing the right phone model is essential, as more advanced features can come at a higher cost. However, opting for high-quality phones ensures better call quality and reliability, which can benefit your business in the long run.

Routers and Switches

Investing in robust routers and switches is crucial to maintain smooth communication. These devices are responsible for routing calls and managing data traffic, ensuring seamless connectivity for your entire organization.

3. Software Costs

Software is an integral part of any modern business phone system, and the pricing can vary depending on several factors.

Licensing Fees

To use certain business phone system software, you may need to pay licensing fees. These fees can be one-time or recurring, depending on the provider and the features you require.

Feature Add-ons

Some advanced features, such as call analytics, video conferencing, and integrations with other business tools, may come as add-ons. While these can enhance productivity, they can also contribute to the overall cost.

4. Installation and Setup Charges

Installing and setting up a business phone system often involves technical expertise and may require professional assistance. These services come with associated costs that should be considered while budgeting for the system.

5. Maintenance and Support Fees

Once your business phone system is up and running, you'll need to account for ongoing maintenance and support expenses. Technical issues and software updates may require prompt assistance, which often comes with additional fees.

6. Upgrading and Scaling Costs

As your business grows, you may need to expand your phone system to accommodate new users or add advanced features. Scaling up can incur costs, including upgrading hardware, purchasing additional licenses, and investing in more robust infrastructure.

Different Models of Business Phone Systems

Various types of business phone systems are available, each offering distinct advantages tailored to specific needs. When evaluating the options, consider factors such as the nature of your business, the scale of your operations, and the desired level of mobility.

Let's explore these options to help you make an informed decision for your organization.

1. Hard Phones: A Time-Tested Classic

Hard phones, resembling traditional desk phones, find a permanent place on your desk or within meeting rooms. These reliable devices serve multiple purposes, including hosting conference calls, accessing voicemail, and facilitating direct calls. To enhance communication, you can utilize handsets, headsets, Bluetooth, and speakerphones.

2. Softphones: The Versatile Virtual Solution

For businesses seeking flexibility and mobility, softphones offer a digital alternative. Operating within applications on devices like computers, tablets, or smartphones, softphones mimic the functionalities of hard phones. Their cost-effectiveness makes them popular among mobile professionals, road workers, and call centers.

3. Wireless IP Phones: Freedom of Movement

Wireless IP phones come equipped with integrated Wi-Fi or DECT transceivers, allowing seamless connectivity to network access points or base stations. Enjoy the freedom to move around your office or home while staying connected on the phone. You can even make and receive calls at Wi-Fi hotspots.

4. USB Phones: Plug and Communicate

Simplicity meets efficiency with USB phones that connect directly to your computer via the USB port. These phones work harmoniously with softphone programs like Skype, providing a hassle-free communication experience.

5. Desktop VoIP Phones: The Standard for Business

Embraced by many businesses, desktop VoIP phones connect to your VoIP phone system or service provider through Ethernet. These phones offer all the standard phone functions needed for smooth day-to-day communication.

6. Videophones: A Visual Communication Revolution

Bringing face-to-face interactions to the forefront, videophones come equipped with tiny cameras connected to the handset. This added capability offers a cost-effective alternative for virtual meetings and fosters real-time visual connections across the globe.

7. Conference Phones: Empowering Group Conversations

For larger offices and conference rooms, IP conference phones prove indispensable. These devices serve the same function as traditional analog conference phones, enabling efficient multi-party phone conversations during critical meetings.

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