How much should a VoIP system cost per user?

By Pha Lo
Updated: September 26, 2011

The best argument for switching from traditional phone service to VoIP is the long-term cost savings of calls made through broadband internet. Instead of paying three or four different bills for local and long-distance calling and internet, VoIP lets businesses combine telecommunications costs. This kind of streamlining saves time and money, but depending on the telecommunications needs of a given business, VoIP costs can vary widely.

According to 2007 research from AMI reported by, hosted VoIP spending in 2005 for small businesses with one to 99 employees was $80 million, with individual spending highly specific to each individual business’ needs. That number was projected to increase to $1.12 billion by 2010. Businesses with 100 to 999 employees spent as much as $66.7 million in 2005 with 2010 spending projected to reach $310.8 million.

Spending will vary from one business to the next. Here are some variables that will affect the costs of traditional VoIP systems:

Owning versus Hosted:
Purchasing a system outright and managing it in-house versus going with a hosted solution will impact costs. The decision is personal and highly variable depending on a small business's specific needs.

The most basic advantage of VoIP is the ability to conduct a traditional voice call over the internet, which provides a predictable hard-cost for all local and long-distance calling. However, because each business has different needs, the costs will vary depending on specific features. Features that affect cost include voicemail, 3-way calling, caller ID, online dashboards and call forwarding--which are often, but not always provided as standard. Additionally, businesses may need integration to desktops, emails and mobile devices and these all impact costs.

The number of lines, employees and remote locations linking into the VoIP system also can influence costs. Scale is one of the main predictors of cost and is always included in customized price quotes. Often, VoIP vendors provide cost estimates based on a range of users, for example 0-5, 6-10 or 11-15 employees. Service can start at around $200 for certain number of lines, such as four users, with fees for additional users.

A business’s current hardware and potential equipment upgrades have bearing on cost as well. Items to assess for equipment cost include telephones, headsets and the current data connection--whether it’s DSL, fiber or cable. Look for vendors who bundle in free equipment or who can integrate services with your existing equipment. As a point of reference, equipment can cost around $250 per phone.

Installation and Maintenance:
The timeline for implementation effects costs, with less time generally being more expensive. Installation fees are often charged by the hour and can vary from one vendor to the next. The complexity of day-to-day operations impacts costs with call management services costing in the low thousands. Services and long-term maintenance can also add to costs. Seek vendors with inclusive packages for these aspects of the process.

Since businesses vary in size, specialties and needs, customized quotes are the best choice when it comes to looking for a VoIP vendor. Service providers often have questionnaires that will generate relatively accurate free cost estimates.

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