How much will it cost my business to migrate to a hosted VoIP phone system?
We'll explain how much it costs to migrate to a hosted VoIP phone system. Migrating to a new hosted VoIP phone system is generally something companies don’t have too much experience with because systems are typically replaced every 7-10 years. It’s a one-and-done event for many, and most don’t know the new VoIP technology really costs.
When it comes to migrating to a new system, many customers just want to know what it’s going to cost them. Not on a month by month basis, but how much to get from the old system to the new system. It’s a great question, so let’s answer it as quickly and easily as possible.
How much will it cost my business to migrate to a hosted VoIP phone system?
Simply, it depends. There are so many variables that giving you an accurate number is difficult.
However, for an extreme ballpark price, you can roughly figure on $40 per user per month as an all-inclusive fee. This would include things such as your ongoing monthly phones lines, rental of the VoIP services, IP Phones, and VoIP hardware, as well as installation, training and ongoing support. This is a safe estimate, but it does exclude any left-over analog phone lines and any internet circuits you already have and need.
So, for a very informal estimate, if you have 20 employees you can expect a VoIP Phone System WITH professional installation services to cost ~ $800/mo. Again, it can be a little lower or higher depending on variables.
Additionally, if you’re in contract with a carrier, your early termination fees can be extreme, to the point of them being cost prohibitive to switching to a VoIP provider. However, these fees are negotiable with your existing carrier if you only have a verbal commitment and they can’t pull an original signed agreement. Additionally, these fees may be negotiable with your new VoIP provider to absorb all or some of the fees if they really want your business on a “long term” agreement over 3 years.
Where does that $40 come from? Well, when it comes to migrating to a hosted VoIP phone system, we’ve found these 8 factors play the biggest role in estimating how much it will cost.
New Monthly Costs
You have to remember that a hosted phone system is an ongoing monthly investment for your phone system service. For example, you’ll be paying for phone lines and phone extensions & software applications, as well as potentially new or upgraded internet service.
However, I can safely give you a range for these costs. Realistically, you’ll be spending anywhere between $25 and $75 per line. The higher monthly number typically applies to very call center based environments that have advanced needs. Of course, that number is going to depend on the particulars of your system, but generally you can budget within that range for monthly costs per line. For further reading on the subject, check out our article How much does a VoIP phone system cost a small business?
Hardware & Professional Fees
On every VoIP implementation there’s going to be hardware and professional installation fees for getting your new system setup and running. If you’re purchasing your phone hardware outright, you’re going to be on the hook for these costs right up front. Conversely, you may be able to choose to rent or lease the equipment. Depending on the provider, you would be offered either the one-time fee for everything up front versus a long-term lease or rental. Most clients acquire the technology on a monthly model as its very popular with VoIP Phone technology.
Another hardware related item customers don’t think of is the need for wiring. Your office might already have cat5e or cat6 meaning you are VoIP ready but you might need new wiring or install an appliance to convert cat3 wiring to VoIP. Again, you’re looking at hardware and professional fees. This may be included in the hardware & setup fees, or it may not, it all depends on who you’re hiring. It’s crucial to understand that wiring components can impact total costs.
One a related note, who’s doing your IT Network support? Do you have insourced or outsourced IT services? If you need to hire an outside professional, expect more fees and upfront costs. If you have someone within your organization, your costs are already in payroll but regardless, there will be some IT time needed when you upgrade to a VoIP phone system. You’re going to need an IT provider capable in understanding the technical design and the moving parts that need to be carefully laid out when it comes to a hosted VoIP phone system.
So, you can either hire an outside IT vendor, use your own internal IT resources, or hire a VoIP provider who’s going to handle much of the IT work. Most local VoIP providers will handle IT work, but there still may be some additional requirements that you’ll need to pay for. Conversely, if you’re hiring a national level provider, your IT costs will be even higher since you're in charge of getting things up and running and the national provider is remote.
So, your IT costs here will depend on if you have insourced or outsourced IT, and if you’re going with a national or local VoIP provider.
Analog Phone Lines
When companies decide to go with VoIP, they think it’s the end all be all and everything is now over the internet. Sounds simple, right?
Well not really. When you upgrade, there may be some necessary phone lines that may remain on traditional (analogy) lines. Lines such as fax, alarm systems, postage, payroll, or credit card merchant services may be dependent on analog phone lines.
Meaning, you may have some costs from your old phone provider that don’t go away. So just be aware that when you look at your proposal there may still be left over analog lines that you’ll be paying for separately with a different provider.
End User Training
When you get a new VoIP phone system, you’re going to need training on it. And, training will differ for the average user, versus a receptionist, versus the system’s administrator. Companies may nickel and dime you for this, wrap it up into the one-time upfront costs, or average it out over the long term and include it within your rental or lease. Just be aware that training is necessary, or else you won’t know how to use your system to its fullest potential.
Realistically, estimate 15-30 minutes per person for training or 1 hour for over achievers. The system administrator or receptionist may receive more time as well, something more along the lines of an hour or two.
Avoid Communication Downtime
Simply put, you want to avoid downtime during the installation and switch over process at all costs. Keeping your communication channels up and running is key. If everything is planned in advance and you hire a good VoIP provider, with a solid project management team, you should not have problems with incoming calls.
When your number is ported out to a VoIP provider, calls should properly be routed to cell phones, an auto attendant, or voicemail, avoiding any downtime.
However, it’s possible to have some down time on outbound calls as phones are being switched over. Of course, this depends on the installation and your specific wiring situation, but a fair estimate is to assume 5 minutes per phone for downtime on outgoing calls. Yes, it’s a short time, but still it’s time you can’t get in touch with your customers.
Here’s a bit of warning though - if you hire a company that is remote or detached, you could have much more downtime if this isn't handled properly. This goes double if there’s a lapse in communication between you and your VoIP provider. For instance, if you’re communicating over email or your provider is on the other side of the country, this could become an issue quickly.
Additional Internet Costs
You’re probably thinking I already pay for the internet, what else do I need? Again, depending on your depending on size & needs, you could have additional internet costs, or you may be able to keep your service as it.
Sometimes when you buy a new VoIP phone system you need to upgrade your existing internet package if your speed isn’t high enough. Additionally, some companies might consider a fail-over internet line for backup & redundancy. Others may consider a MPLS T1 circuit for dedicated connection for VoIP to ensure quality or a more robust fiber internet circuit.
Point is, if your new VoIP system taxes your current internet subscription too much, you may have to buy either upgraded service, or another internet line. Obviously, this will raise costs, and something you’re going to want to consider ahead of time.
Why not wait for current phone system to fail?
If you aren’t planning of time, and wait for disaster to strike, you’ll end up paying much more. When your current phone system fails, you won’t have the luxury of shopping around, or understanding what's truly right for you. When your system dies, you’re going to need a new phone system, fast. To be direct, your current phone dealer may take this opportunity to charge you a maximum rate because you failed to plan.
Unfortunately, many people take the mindset of “if it ain’t broke, don’t fix it”, which is completely understandable, but when things break, it’s expensive to fix and you will pay.
The costs of migrating to a hosted VoIP phone system depends on your situation.
The reality is there is no simple answer, and everyone’s going to have different costs during the process. The best way to figure out what you’ll end up spending is to talk to a local or remote VoIP provider and have them assess your company, needs, and current system. They’ll be able to give you a ballpark idea of what it will cost to migrate to a hosted VoIP phone system.
By Vincent Finaldi
Vice-President, Tele-Data Solutions
E-mail: email@example.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.