Multiline business phone systems have various price points and structures. The hosting method of the PBX system and equipment determines your cost structure. The costs of an on-premises system are mostly one-time, upfront expenses, while cloud-hosted phone systems revolve around monthly fees. The prices for each type of system vary by provider, the size of your team, and the features you want.
Since the hosted PBX equipment is stored in the cloud, there usually aren't any large installation or setup costs for these phone systems. Cloud-based VoIP phone systems typically cost $10 to $75 per user per month. Many office phone and unified communications system providers have several service plans that vary in price and features. Many allow businesses to mix and match service plans, ensuring each employee has access to the features they need.
For example, a service plan that includes the basic features – unlimited calling, voicemail and caller ID, and call forwarding – might be $25 per user per month. An upgraded plan with more advanced features – such as automated attendants, call recording and ring groups – might cost $35 to $40 per user per month.
To give you a better idea of pricing, here are some cost estimates for businesses of various sizes. (These estimates do not include taxes or other surcharges that all providers add.)
10 employees: $100 to $500 per month
25 employees: $250 to $1,250 per month
50 employees: $500 to $2,500 per month
100 employees: $1,000 to $5,000 per month
A company using a cloud-hosted system will likely want new IP phones as well. Phones typically cost between $50 and $400 each. If you have a cloud system, some providers will rent you phones for as little as $5 each per month.
While cloud-hosted systems mostly revolve around monthly recurring fees, on-premises system costs comprise mostly one-time, upfront fees. On-premises systems cost anywhere from a few hundred to several thousand dollars per user. Since all associated equipment is housed onsite at your business, there are also large installation and setup charges. Some providers have a set installation fee, while others charge a percentage of your per-user equipment fees.
The costs of on-premises systems are much more customized than they are for cloud-hosted systems. On-premises systems are typically used by larger organizations that can afford the upfront fees. For a business with 50 employees, you should be prepared to spend $30,000 to $60,000 in one-time fees for all the equipment and installation of an on-premises system.
There are also some smaller monthly fees with on-premises phone systems. To connect to a dial tone, on-premises VoIP phone service users have to pay for SIP trunking or PRI circuits. Depending on your call volume, this could be several hundred or several thousand dollars per month.
Did you know? Another expense that users of either type of system could incur is toll-free numbers. While some systems include toll-free numbers in the standard cost, they usually only offer a set number of minutes per month. Businesses that go over that number pay a per-minute fee for their toll-free numbers.
When you're running a business, every penny counts. You want to make sure you aren't overpaying for the services you use. Whether you go with an on-premises or cloud-hosted system, follow these tips to get the best deal possible:
- With cloud-hosted systems, there often isn't a lot of room for negotiation. Most cloud services have set prices that depend on the features you need and how many employees you have. However, you can ask a few questions to see if there is any wiggle room in the price. Since these are monthly services, your best chance at getting a discount is committing to the company for a long period. You should see if there are any discounts for signing long-term contracts or paying for a year in advance, instead of in monthly installments.
- Another potentially money-saving option for a cloud-hosted system is to start with a new service near the end of a quarter. Some representatives we spoke to indicated that there is more room for discounts at the end of March, June, September and December.
- There is often more room for negotiation with an on-premises system. These systems are built for you, so, depending on how much you are spending, vendors may be willing to add some features for free to land your business. You should also always ask if they can lower the cost of installation for you, and if they'll lower the user-licensing fees if you commit to expanding your service in the future.
- An area you can negotiate with both types of systems is the phones. Many providers offer a lot of phone options and are willing to give you upgraded phones depending on the system you choose and how long you commit to the service. Also, they often run specials that include free phones. See what kind of phones they are offering and whether they would be willing to upgrade them if you commit to the service.
- Regardless of the type of system you choose, it is always important to shop around and get several quotes. Even if the first one you investigate is the one you definitely want, researching other service providers could help you get a lower price when you do commit. If the system you like best isn't the cheapest, ask the vendor if they're willing to match the lower price. If you tell them that another system you really like is giving you a better deal, they may lower their prices to get you as a customer.
When you commit to a business phone system provider, it will likely require you to sign a contract. It is imperative that you read all the details carefully before signing it. Make sure the terms of the contract are what you negotiated and that there are no hidden fees.
You should also ask what taxes or surcharges will be added on top of your monthly service (and for an estimated cost of those charges). It's important to know what your full bill will be before agreeing to the deal – not just what the service charges are. The last thing you want is to open up your first month's bill and find it is significantly higher than you anticipated. Not only does that negatively impact your budget, but you also start off on the wrong foot with your vendor.
Tip: You should also know what you are in for should you cancel your service or change providers. Are there cancellation fees? Do you have to provide advance notice? Can you take your local and toll-free phone numbers with you if you switch to a different service? These are questions you want answered before you agree to a contract.