by Thomas Kinsinger
Director of Technology, E-N Computers
20+ years experience in enterprise IT and managed services.
How much does a VoIP business phone system cost in 2024 and what are some considerations when choosing a VoIP provider?
A reliable, cost-effective Voice-over-IP (VoIP) VoIP phone system can boost your company’s productivity while reducing telecom expenses and maintenance.
At E-N Computers, we use a cloud-based VoIP provider that gives our customers excellent phone service at a very reasonable cost. We’ve helped dozens of our clients in Virginia, West Virginia, Maryland and Washington, DC to save by replacing their legacy phones with a state-of-the-art VoIP phone system. And, despite inflation everywhere else, our VoIP service pricing has remained stable over the past three years or more.
But how much does it cost to migrate to a new VoIP phone system? What factors go into that cost? And what are the ongoing expenses associated with VoIP phones? By the end of this article, you’ll have a good idea of how much you can expect to spend on your next phone system upgrade.
The average VoIP phone system costs between $99 and $400 per extension. Ongoing costs, including maintenance, service fees, and other things typically run between $20 and $30 per extension per month.
Should you switch to VoIP?
Plenty of clients coming to us are still using an on-premise PBX phone system and are looking into VoIP. The main issue when considering VoIP is whether you have reliable internet access. If you live in an area without reliable internet, then VoIP is not a good choice. Stick with what you have.
Beyond that, PBX vs. VoIP is primarily a matter of cost and simplicity. VoIP is usually cheaper and is also much simpler to set up. Over the years, we’ve saved companies thousands of dollars by migrating their legacy phone systems to VoIP.
How to chose a business VoIP provider
One option is to go with a national VoIP provider. They will drop-ship you the phones and (mostly) you plug them in and they will work. The VoIP provider only takes care of VoIP, and someone else takes care of the rest of your IT.
Using a regional VoIP provider like ENC that is also a managed IT services provider offers several advantages.
- Our VoIP service is primarily to businesses in Virginia, Washtington, DC, West Virginia, and Maryland. The advantage to a local provider is that we plug the phone in, and if it doesn’t work, we have to fix it.
- An advantage of working with an IT MSP that you don’t have to pay twice for internet service. Some VoIP providers want you to buy a dedicated VoIP network for your environment. Since we understand both IT and VoIP, we can bring the best of both worlds together for a more cost effective approach.
- Your environment may include some gotchas that a national provider won’t address. For example, you may have a dedicated analog fax line or other hard-wired lines for elevators, alarm systems or other special cases. You may end up paying for both VoIP service and a legacy service. However, we can offer solutions to work around the analog line limitations. We also can help you set up a PA system, alarm system or door access that’s tied to your phones.
- And if you have your IT with us, it cuts down on finger pointing. If a VoIP issue turns up on a network supported by another IT company, sometimes the VoIP provider and the IT provider will blame each other for the problem and nothing gets done. We can offer a more comprehensive approach where you have only one number to call to everything fixed.
- A fifth advantage is that we also consider security. Our VoIP plans include an option for an affordable managed firewall. Some national VoIP providers require you to have a managed firewall before you can connect to their servers, so you’ll be paying for it anyway. Also, a managed firewall can protect your data if your VoIP phone network is ever compromised.
How VoIP phone service is priced
There are two major factors that affect the cost of a VoIP phone system. The first one is the number of extensions (phones) that you need. There is a cost to purchase, set up, and install each phone, plus a monthly charge for each extension.
If you are working with ENC as your VoIP provider, some of these costs are waived with our 36-month plan.
The second cost has to do with the number of outside lines (called “call paths”) that you need. For example, you may have 10 internal extensions, but only five people need to make outside phone calls at any given time. This means you only need to purchase five call paths. Additionally, there is a one-time fee associated with porting over your phone number(s) to the VoIP provider.
VoIP phone system setup and installation costs
Let’s dig into the initial hardware, setup, and installation costs of a new VoIP system. The main factors affecting setup costs are the number of extensions required, and what existing equipment and infrastructure you have in place.
Phone equipment costs
Most of our customers choose to use new VoIP phones to take advantage of all of the features that VoIP has to offer. We recommend Polycom VVX series for desk phones, and select Yealink models if you need a cordless options.
We now offer a phone leasing option of $5 to $20 a month per phone to offer an affordable option to get you started with VoIP. A $20-a-month phone would typically be a conference room phone with speakers.
Typical purchase prices for these models are $150 to $200 per phone, plus a $50 labor charge per phone. there are also more expensive models that offer additional features if needed.
If you already have VoIP desk phones from Polycom, Cisco, Yealink, or Snom, we may be able to program your existing phones on our system. There is an additional $50 per phone labor charge for this service.
As mentioned, the labor cost is waived with a 36-month contract.
Phone number migration costs
Another expense in migrating to a VoIP system is transferring (porting) your existing phone numbers to the VoIP provider. There is a one-time fee of $25 per number for this.
Infrastructure and cabling costs
In a VoIP phone system, each phone needs a connection to the Internet to work. In most cases, we can use existing Ethernet cabling to connect the phones. Even if a workstation only has a single Ethernet port, our VoIP phones have a gigabit pass-through port that can be used to daisy-chain without affecting network performance.
However, if a phone needs to be installed in a location that doesn’t already have an Ethernet connection, a new drop will need to be installed, which will involve some additional labor costs. Or you may wish to upgrade your network switches to support Power over Ethernet (PoE) in order to power the phones without needing to use a wall adapter. The costs for these infrastructure upgrades will vary depending on your current environment.
VoIP phone installation cost summary
- Hardware costs: $150 to $200 per phone (or $5 to $20 monthly lease)
- Labor costs: $50 per phone (waived with 36-month agreement)
- Phone number porting fee: $25 per number
Ongoing VoIP phone service costs
Because the “phone lines” in a VoIP phone system are virtual, VoIP phone service can be much less expensive than traditional landline service. The monthly cost for our cloud-based VoIP phone system is divided between the number of individual phones (extensions) and the number of outside lines (call paths). Additionally, there are a few options and upgrades that can be added to extensions for a small fee.
It’s worth noting that many VoIP providers combine the charges for extensions and call paths. But most companies do not need a call path (outside line) for every extension, so this practice can result in unnecessary expense. Keep this in mind when comparing prices between various VoIP providers.
VoIP phone costs per extension
Each VoIP phone extension costs $15 per month. An additional device for the same extension costs $3 per month, and the option for call recording is $3 per month. Virtual extensions and conference bridges can also be added for $3 per month.
VoIP phone costs per call path
Each call path (outside line) costs $10 per month. Additionally, there is a $2.99 per month 911 registration fee per account.
Monthly VoIP service cost summary
- $15 per extension per month
- Additional device: $3 per extension
- Call recording: $3 per extension
- $3 per virtual extension/conference bridge per month
- $10 per call path per month
- $2.99 per month 911 fee
The bottom line: VoIP phone system upgrade costs
Let’s use the example of a 50-person company upgrading their phone system. They would like all-new Polycom desk phones, plus a few more for the warehouse and conference rooms. They have five numbers to port over – sales, service, accounting, and two toll-free numbers.
Based on their call volume and business, 20 call paths should be sufficient. They’d like call recording for a few executives’ lines, and also two conference bridges.
Based on these numbers, this company could expect to pay around $14,000 in initial costs and just over $1,000 per month in service charges.
How does VoIP phone service compare to legacy systems?
The monthly costs of VoIP phones can be just a fraction of the cost of a legacy PBX with landline service. One quick case study: A Lexington, VA nonprofit organization with 18 employees was paying more than $2,500 per month for their old phone system. After moving to our cloud VoIP service, they are now paying just $750 per month – a savings of more than 70%.
Next Steps: VoIP phone system upgrades
If you’re ready to talk to us about upgrading your phone system, click here to contact us. We’ll put you in touch with one of our VoIP experts who will help you to choose the features that are right for you. Or, click here to read more about VoIP migration — including how long the process takes and what you can expect.