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Calculating the Costs of Call Center Systems
Calculating the true cost of a particular call center system isn't easy. Here's how to find the price you can afford and the system you need.
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Today’s call centers offer businesses a wealth of valuable features to help answer customers’ calls faster and provide efficient customer service. They route incoming callers to the right person quickly and easily and can help manage complex outbound marketing campaigns.
However, call center system costs and functions vary widely. Before hiring a call center, you must ensure it can provide all the features you need at a price you can afford. We’ll explain more about these services and break down call center system costs and pricing models to help you choose the right setup for your organization.
What is a call center system?
A call center system is a collection of software and telephony tools that can boost an organization’s efficiency by handling customer interactions. Setups and specific call center features vary. For example, they can be virtual, in-house or outsourced. However, most will provide inbound call routing, outbound calling, multiple lines, conference calling features, interactive voice response menus and hold music or messages.
Call center systems can also go far beyond telephone calls to provide:
- Sales team solutions: When a business connects one of the best call center software solutions to its enterprise resource planning software or customer relationship management (CRM) platform, it can create a streamlined internal calling process that boosts sales team effectiveness and the bottom line.
- Direct customer messaging: Many call center solutions allow companies to communicate directly with customers via messaging apps such as WhatsApp, standard short message service text messaging, email, social media private messaging and more — all from a central platform.
Types of call center setups
There are three main types of call center setups: virtual, in-house and outsourced. Each has unique advantages depending on your business goals, budget and resources:
- Virtual: Virtual call centers rely on remote agents who connect through the internet. This setup is ideal for businesses with distributed teams or those looking to scale quickly without investing in office space or hardware.
- In-house: In-house call centers are located on a company’s premises and run by internal staff. They offer greater control over processes and quality but often come with higher operating costs, including staffing, equipment and maintenance.
- Outsourced: Outsourced call centers involve hiring an external provider to handle some or all of your customer communications. This option can be cost-effective, especially for businesses that want to provide 24/7 support or expand into new markets without building their own infrastructure.
Call center technology types
Along with setup types, call centers are powered by different technology platforms. The two primary options are on-premises private branch exchange (PBX) systems and cloud-based voice-over-internet-protocol (VoIP) systems:
- On-premises call centers (PBX): Traditional in-house call centers often use a PBX — a large piece of hardware connected to standard telephone lines — to manage calls. While still found in some bigger enterprises, PBX systems are less common today due to their cost and complexity.
- Cloud-based (VoIP) systems: Also known as hosted PBXs, cloud PBXs or IP PBXs, these internet-based systems use VoIP technology. They don’t require physical phone lines or bulky hardware, making them a popular choice for businesses seeking flexibility, easy integration and lower upfront costs.
What are the costs of call center systems?
Your precise costs will depend on your technology, setup, staffing needs and features. Here’s an overview of what you might expect.
On-premises call centers
A self-managed, on-premises PBX system will incur the following costs:
- Hardware and software setup: An on-premises PBX system will run via your existing internet technology (IT) servers. According to information from RingCentral, a traditional, on-premises system typically incurs the following costs:
- Hardware: $6,500
- Setup: $1,000
- Handset costs: $3,000
- Software licenses: $4,000
This adds up to $14,500 — equivalent to $725 per person for a 20-person setup. That’s within the range of $700 to $1,000 per person quoted by most providers. You’ll pay even more if you need to upgrade to a more powerful server.
- Additional technology costs: Expect to add extra memory from time to time if you use functions such as call or workstation recording. You’ll also need to ensure either you or someone on your team can operate the system — otherwise, support costs for fixing PBX-related issues can add up quickly.
- Per-user charges: Depending on the agreement you strike with your PBX supplier, you’ll likely pay a fixed price for your call center system regardless of how many users your company has — unlike cloud-hosted systems (see below).
- Calling fees: Businesses using on-premises PBX systems can often secure excellent rates by signing up for an unlimited calling plan. These plans allow unlimited outbound calls, typically within certain areas or countries, for a low monthly fee per operator.
Cloud-hosted systems (VoIP)
A cloud-based call center system is a great choice for businesses seeking an affordable, low-maintenance solution:
- Hardware and software setup: Cloud-based systems require minimal equipment — often just headsets with microphones or VoIP handsets. You won’t need to pay for in-house technical support, as you’ll work with a vendor whose IT staff manages the system.
- Per-user charges: Most cloud-hosted call center systems charge on a per-user, per-month basis. Pricing can range widely. For example, Salesforce Service Cloud’s prices start at $25 per user, per month and go as high as $500 per user, per month, depending on features. (Read our review of Salesforce Service Cloud to learn more.)
- Service charges: Joseph Ansanelli, CEO and co-founder of Gladly, shared a breakdown of additional per-user, per-month fees that cloud-based call center systems may charge:
- A full-service agent help desk or ticket management system: $150 to $300
- Voice integration partner services: $50 to $100
- Channel-specific vendors, such as email or live chat: $30 to $50
- Customer platforms, such as CRM or order management: Around $150
- Outbound calling fees: With a cloud-hosted system, your cloud provider routes outbound calls. There are usually discounts for higher call volumes. While these plans are often cheaper than standard business landline rates per minute, you may still pay more if you purchase time you don’t end up using — and unused minutes typically don’t roll over. “Some call center subscriptions have monthly subscription plans, like $50 to $100 per month with a minute plan or pay-as-you-go plan,” said Ben Reynolds, CEO and founder of Sure Dividend. Others may offer unlimited calling plans, so be sure to explore your options.
What are call center system staffing costs?
Staffing costs will vary depending on whether your call center setup is virtual, in-house or outsourced. In most cases, there are no additional fees beyond typical employee wages and management expenses — but your chosen setup can significantly affect operational and overhead costs.
Virtual call center staffing costs
With a virtual call center setup, agents can work remotely, which helps businesses avoid costs associated with physical office space and in-person infrastructure.
Jeff Kahne, principal at Firefly Consulting, noted that VoIP has made virtual call centers much more practical:
“VoIP is fast, and you don’t have the same problems we used to have with running business phones to a home,” Kahne explained. “You have a little bit of reduction in the cost of the physical plant, but all the human costs, maintenance costs, software and equipment costs.”
In-house call center staffing costs
If you run an in-house call center, you’ll pay for all necessary office expenses in addition to employee salaries and related staffing costs.
“You’ve got all the standard costs that it takes to get a person in place, up to and including hardware, software, physical equipment, people, training, all the things that go with HR [human resources], salaries, benefits, hiring costs, firing costs, transition costs and everything in between,” Kahne explained.
According to Glassdoor, salaries for customer service representatives can range from $40,000 to nearly $60,000 per year, depending on skills, experience, location and other factors. You’ll also need to factor in training costs and hardware expenses, including business phone systems, computers and general office supplies.
Business.com extrapolated business process outsourcing company Cloudtask’s in-house call center staffing estimate and updated it with current salary figures. Our findings indicate that staffing a four-person in-house call center can cost approximately $300,000 per year, including salaries, benefits, hiring costs, office space and software and hardware expenses.
Outsourced call center staffing costs
If you outsource your call center staffing, you can choose between a shared service or a dedicated service. Approximate costs are as follows:
- Shared service: You’ll pay a per-minute rate, typically between 35 cents and $1.25, for agents who also handle calls for other clients. This model is best for small businesses with a low call volume.
- Dedicated service: In this setup, agents work exclusively for your business. It usually costs $25 or more per hour and is ideal if you handle a high volume of calls or require agents who are deeply familiar with your operations.
Other staffing costs to consider
In addition to base labor rates, you’ll also want to consider average handle time (AHT) and incremental billing, which can significantly affect your total costs.
Average handle time
According to Eng Tan, CEO of Simplr, AHT is one way to understand what you’re paying for. AHT is calculated by adding talk time (or online chat time), hold time and after-call tasks — often listed on your bill as “agent work time” — and dividing by the total number of calls:
(Talk time + Hold time + After-call tasks) ÷ Total number of calls = AHT
“Typically, call centers charge by the labor hour,” Tan added. “The problem with this is that companies must pay for both productive talk time as well as unproductive downtime.”
Not every call center charges for the time agents spend working on your account when they’re not actively on a call. When researching providers, be sure to ask if they charge for agent work time.
Incremental billing
Another factor that can significantly increase your costs is incremental billing. For example, if a provider rounds up to the nearest full minute for each call, you may end up paying far more than if you were billed by the second.
Billing in six- or 12-second increments is common, but for the most precise billing, look for a provider that offers second-by-second tracking.
What other factors impact call center costs?
In addition to technology, setup and staffing models, several other factors can affect your call center system costs, including geography and required specialized services.
Geography
Ansanelli noted that location can significantly impact both labor costs and telephony charges. “For labor, some companies choose to operate out of regions with lower wages and hourly costs can vary from $5 to $25 per hour,” Ansanelli explained. “Staffing in international locales may require additional training and coaching, but the cost difference can make it worthwhile.”
Geography can also affect call costs. Traditional phone systems may incur higher long-distance fees depending on your location. However, using VoIP technology with a secure, scalable carrier can reduce your monthly usage fees significantly.
“With cloud-based contact center solutions, location has become less relevant, as agents can work from anywhere — in [an] office or at home, onshore or abroad,” Ansanelli added.
Specialized services
When evaluating your outsourcing partner, consider any additional fees they charge based on the level of support and communication channels you need. Common specialized services that can increase costs include:
- Advanced reporting and analytics tools
- Dedicated customer care programs
- Social media account management
- Live chat monitoring and support
- Outbound lead generation and sales outreach
How can companies reduce call center charges?
There are several ways to reduce your call center costs without sacrificing service quality. Here are four effective strategies.
1. Reduce call volume and length.
One of the most impactful ways to lower costs is to reduce the number and duration of calls your agents handle. Kahne recommends encouraging customers to use self-service options such as your website, automated phone systems and artificial intelligence chatbots.
“For example, if you’re currently answering 80 percent of your calls in 30 seconds, one way to cut costs is to go to 80 percent in 40, 50 or 60 seconds,” Kahne said. “That lowers the number of seated agents required for a period of time.”
2. Leverage on-demand staffing.
Tan says on-demand staffing is one of the most effective ways to reduce call center costs. With this model, you pay only for work performed and issues resolved, rather than for idle time or fixed hourly coverage.
Tan explained that the most expensive periods to support customers are during low-volume hours and unexpected surges in call volume, which can trigger the need for overtime pay.
“When volume is higher than forecasted, the on-demand staffing model allows for an influx of volume to be handled without incurring additional overtime charges or penalties,” Tan added.
3. Properly train your agents.
Thorough training helps agents resolve issues more efficiently, reducing repeat calls and average handle time — two key factors in call center cost control.
According to Yaniv Masjedi of digital security company Aura, if call centers don’t invest in employee training, management would need to hire more people to handle the same tasks.
4. Eliminate duplicate tickets.
Ticket duplication is a common issue in many ticket-based customer service platforms, often leading to redundant agent work and higher labor costs.
“If a customer sends an email, then follows up with a call about the same issue, that creates two tickets that are fielded by two agents,” Ansanelli explained. “Implementing a customer-based platform eliminates this issue and can reduce inbound volume by 30 percent or more.”
Kimberlee Leonard contributed to this article.
