We will explain how much an on premised-based VoIP phone costs a business. When it comes acquiring technology for your business, I always hear customers want something reliable, easy to use, future proofed, and cost effective.
In the last decade years meeting with New Jersey business owners and managers, everyone rightfully wants to know as quickly as possible “how much will a premised based VoIP phone system cost my business?”
My first answer is that a phone system is an investment for your business, but we will get more into that later in the blog. Remember, a phone system should make or save you money through communication tools. If used properly, a phone system is a great tool to help keep the customers you have and get more new customers too.
So how much does a premise-based VoIP phone system cost a small business? To give you the most practical answer, I’m going to break out the top 6 variables that impact the cost of a premised-based VoIP phone system for a business.
Here’s the quick answer: it depends!
A premise based VoIP phone system will cost between $400 and $1,000 per phone station, inclusive of software enhancements and professional installation and end user training services. So, that means if your business has 50 phones, your budget will be between $20,000 and $50,000.
Due to phone server technology, renting the phone hardware and software on a monthly agreement as an operating rental is very popular and will usually cost between $20 to $40 per phone per month. So, that means if your business has 50 phones, your budget will be between $1,000/month to $2,000/month to rent the phone hardware and software.
The reason renting the phone server with hardware and software is popular is because of the nature of server based technology. Every 3-5 years’ major updates are needed to keep the server current with IT requirements like Microsoft and the manufacturer of the phone hardware and software. By enrolling in a phone rental agreement, it is easier on operating cash flow to simply extend out the agreement and acquiring all the software and server updates necessary to stay supported.
In my experience, a business will invest in premised technology over cloud for the following reasons:
So if that sounds like you, then a premised based VoIP phone system might be right for you.
But what about the cost? Why such a range? And what impacts it? I believe there are 7 key variables which will impact the total investment or cost for your premised based VoIP phone system.
The easiest way to do this is go get a hard count of how many existing phones you already have. If you are a very small business (i.e. under 15 employees) I don’t recommend buying or renting a premised based phone system. Your business size fits cloud based VoIP technology instead. This a very important decision and this is one area customers get very confused and even sometimes frustrated.
I stress that it’s a big decision because you’ll be stuck for a long time with this product (usually 3-5 years at the minimum) and it is not easy to undo a wrong decision here. It is understandable to assume that most phone manufacturers are very similar in functionality, software capabilities and price, but this is NOT the case. Just like in your business, when you get under the hood of the car, there is a lot more to it.
My company represents Vertical Communications because the end user software is very attractive and easy to use. Additionally, the price point is very affordable to customers with organization that have between 30 and 350 employees. Vertical includes desktop software and mobile software for every user which is a big advantage when compared to other products.
There are other reputable products in the New Jersey market like Mitel, Avaya, Shoretel and Cisco. However, they are products that scale upstream (up to 10,000 endpoints) and this reflected in the pricing and software licensing model.
Other products that are quality but very basic that cater to small businesses are Panasonic, ESI, Toshiba and NEC. It is too detailed in this blog to break down every product out there but these are reliable phone systems, but lack software capabilities and the architecture is limited. These products don’t do well for more sophisticated needs for multi-site businesses, call recording, CRM integration or mobility applications.
In telecom, the big 5 applications to consider are Desktop User Software, Mobility Apps, Contact Center, Automatic call recording and CRM Integration.
As a customer base grows, so do the businesses servicing them, in number of employees, managers, and departments. You’ll need to invest in more sophisticated technology to manage all the moving parts. If you have 100 employees and 30 of them are in the service department, it becomes paramount to invest in the right phone system applications to run the departments effectively.
The most popular and useful software applications are the following:
A critical aspect for a premised based VoIP phone system to perform properly is to provide a dedicated cat5 or cat6 cable for the IP phones. It is possible to “share” the computer cable with the IP Phones; this means the cable plugs into your IP phone than from the back of the IP phone into your computer. However, this is a big NO-NO.
Sharing the computer cabling with your IP Phones can cause IT related headaches and cause a lot of finger pointing between the telecom and IT vendor when technical issues inevitably occur.
So, if you do not have a cabling environment ready for IP Phones that leaves you with 1 or 2 options.
The first option is to run new cabling for the IP Phones. This is a pricey and labor intensive project and can cost many thousands of dollars depending on the size of the project.
The more practical option is to have your telecom vendor install a phybridge appliance. The sole purpose of a phybridge appliance is to convert your existing phone cabling to an IP signal so that updated IP Phones can work on an older cabling environment.
This picture is an example of what a closet should look like. It's clean, organized and VoIP Ready.
The local VoIP phone dealer is the company that you call for service and support and that manages your premised based VoIP phone system. Again, not all companies are created equal and this will be reflected in the overall price of your VoIP phone system.
Some differentiators that may make one service provider “better” are the following:
Your best bet is to get some local references and choose a company that you, and other business in your area can trust.
Make sure when you are evaluating the proposal and recommendation that on-going maintenance and software licensing is included and not billed separately. This is a clever way for VoIP phone dealers to misrepresent the true cost to invest in the phone system technology. Also, this will put a bitter taste in your mouth if you have to pay for every phone call or email for support requests.
Some tips to ask the phone dealer:
In addition to the price for the premised based phone system, don’t ignore the total cost for the carrier dial tone. In simple terms, who provides your company with local and long distance phone lines?
Premised systems are designed to connect to analog lines, T1 lines or VoIP SIP Lines, this means you the customer can have very cost effective phone lines coming in and out, while also having back up phone lines in place. The most common time a business upgrades their premised based system is also when their T1 phone agreement comes due. Check out our article on the best time to upgrade to a VoIP phone system at my business.
However, if you are under contract with your T1 provider and your old phone system is failing or unsupported, then there is little choice but to upgrade your premised based system before you can change out the carrier dial tone. This does happen from time to time.
Simply put, a premise based phone system isn’t right for everyone. You’ll need a strong IT component to your company, and the financial backbone to either purchase a system upfront, or pay for it on a monthly basis.
For those that are ready to learn more about a premise based VoIP phone system, you can click here to contact us online, give me a shout directly at vin@tele-datasolutions.com, or touch base with me at 908-378-1218.
Vice-President, Tele-Data Solutions
E-mail: vin@tele-datasolutions.com | Direct Line: (908) 378-1218
What brings me satisfaction is meeting with New Jersey–based businesses and genuinely helping them solve communication and business problems. As someone who has lived in New Jersey my entire life, I love working and playing here. I live in Morristown with my wife, Lisa, and root for the New York Giants.