How Much Does a Small Business Phone System Cost?

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The cost of a small business phone system varies widely, depending on the type you choose for your business.

Traditionally, businesses relied on landline phone systems. Though these phone systems are reliable and easy to use, they are generally more expensive due to installation and maintenance costs. Nowadays, most businesses have shifted towards virtual phone systems that use VoIP (Voice over Internet Protocol) technology to make and receive calls over the Internet. These phone systems are ideal for small businesses as they don’t require extensive on-site hardware, which reduces upfront investment and ongoing maintenance expenses.


Small Business Phone System Options

Businesses today can pick from a landline, VoIP, or virtual phone system, each with a distinct cost structure influenced by their unique functionalities. For a small business, a virtual phone system is a less costly option, with a monthly subscription fee of $10 to $50.

1. Landline

Landline systems often come with higher costs. The need for physical wiring and specialized hardware makes it a pretty expensive phone system for small businesses. The installation costs typically range from $100 to $300 per line, with monthly fees between $20 and $60. Moreover, the maintenance and additional services also add to your overall expenses.

2. Cloud-based VoIP Systems

Cloud-based phone systems reduce the need for physical infrastructure. As such, it significantly lowers your upfront costs. You can expect to pay around $20 to $30 per user monthly. This price often also includes access to advanced features like auto-attendant and integration capabilities, with the flexibility to adjust services as needed.

3. On-premises VoIP Systems

On-premises VoIP systems require significant initial costs for PBX hardware, setup, and installation. The cost for the hardware and installation often ranges from $6,000 to $7,000. Additionally, ongoing maintenance and upgrade costs can also add 15-20% to this figure annually. This means it can be an expensive office phone system for small businesses. On the brighter side, it allows your business complete control over your phone system housed on your premises.

4. Virtual Phone Systems

Virtual phone systems are generally the most affordable small business telephony systems. The plans typically cost $10 to $50 monthly for a basic package. The prices are minimal because it operates entirely over the internet, requiring minimal hardware. However, the price range can fluctuate depending on the features you use on this phone system.

Factors Influencing Cost of Phone Systems for Small Business

Factors like your business size, required features, and hardware/software maintenance needs can influence the cost of your small business phone system.

1. Scale of Operations

The number of users, call volume, and number of office locations affect the cost of phone systems. The bigger your business, the more it'll cost to keep everyone connected. When you have a big team and more office locations, you need a business phone system capable of managing a frequent high volume of calls. It demands a system that can manage and handle complex business communication operations, which can increase the price.

With VoIP, you will pay a small monthly price for each user, making it easy to scale your phone system as your business grows.

2. Features and Functionality

Different phone system providers offer a variety of plans, each with its unique set of features and functionalities. The specific features you select determine the plan's cost. Usually, more features mean a higher price. It's important to pick only useful features for your business so you're not paying for the things you don’t need.

3. Hardware

Depending on the new hardware you need to buy, like IP phones, handsets and servers, the cost of the business phone system fluctuates. If you choose VoIP systems, you will not need to purchase any equipment to begin communicating with customers, making it an affordable option. On the other hand, you will need to install new hardware and purchase desk phones with analog PBX and on-premise PBX systems.

4. Installation and Maintenance Requirements

The initial setup of your phone system and its ongoing maintenance also play a big role in your overall costs. This includes the price of the equipment you need, the charges for setting everything up, monthly fees, and any wiring work required to get you connected. Costs can vary, with more complex setups or high-end equipment pushing prices up.

Traditional analog PBX systems are the most expensive option for small businesses as they require complicated wiring setups from professionals. While an on-premise PBX system is a better option than an analog PBX system, you will still have to factor in monthly maintenance fees. With a small team, VoIP systems should be your go-to option as they are affordable and easy to set up. You will need an internet-enabled device to set up your VoIP account. Technical expertise is optional.

How Much Does a VoIP Phone System for Small Business Cost?

The on-premise VoIP phone system for small businesses costs $6,000 to $7,000 for initial setup with a monthly payment of $10 to $30 per user. In contrast, the cloud-based system, which eliminates installation fees, costs $20 to $30 per month in a subscription model. 


On-Premise VoIP Cost Breakdown

Expense

Cost

Initial Setup

$6,000 to $7,000 for hardware, software licenses, and installation

Hardware

$50 to $400 per handset for IP phones, plus additional networking equipment costs

Maintenance and Upgrades

15-20% of initial hardware cost annually

Internet Service

 $50 to $200 per month (with increased bandwidth)


Cloud-based VoIP Cost Breakdown

Expense

Cost

Installation

Minimal to none; some providers offer free initial setup

Monthly Subscription

$20 to $30 per user

Maintenance and Upgrades

Typically included in the monthly subscription fee; no additional cost for most services

Internet Service

 $50 to $200 per month (with increased bandwidth)

How to Manage Small Business Phone System Costs?

To manage small business phone system costs, review your business needs and then find a phone system that meets those needs at a reasonable cost.

1. Assess Business Needs

Evaluate your business's specific needs before subscribing to any small business phone plans. Identify the essential features that will support your operations and help your team communicate effectively. This strategic approach ensures you invest only in what you need, not the additional features that won’t add value to your business.

2. Choose the Right Phone System

Once you assess your need, compare different systems to see which aligns best with your business size, budget, and operational requirements. Whether it’s a traditional landline, a VoIP system, or a virtual phone service, the correct system offers scalability and efficiency without overextension.

3. Vendor Selection

After deciding on the right office phone system for your small business, the next step is finding the right vendor to deliver it. You’ll find many service providers in the market; gather quotes from as many providers as possible to compare the costs and offers. This ensures you get a competitive rate and puts you in a stronger position to negotiate terms and prices.

Conclusion

The business phone system cost depends on your chosen system, feature requirements, and business size. On-premises systems often come with higher costs due to installation, maintenance, and the need for physical infrastructure. In contrast, cloud-based VoIP phone systems for small businesses generally offer a lower-cost solution as these systems require minimal hardware requirements. Calilio is suitable for businesses of all size, with a wide range of features at a reasonable price. With basic plans starting from just $12, our cloud-based VoIP phone system aids your business communication needs without overwhelming your budget.

Frequently Asked Questions

How much is a landline for a business?

A business landline typically costs $100 to $300 per line for installation, with monthly fees between $20 and $60.

How many phone lines does a small business need?

A small business generally needs one phone line per 3-4 employees. However, this can vary based on call volume and whether employees are in-office or remote.

How much does a VoIP phone service cost for a small business?

On-premise VoIP phone service typically requires an initial investment of $6,000 to $7,000 for hardware and installation, with a monthly subscription fee of $10 to $30 per user. In contrast, cloud-based VoIP services require no hardware installment and the subscription fee typically costs about $20 to $30 per user per month.


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