Calculating the Costs of Call Center Systems

What are the costs of call center systems?

When choosing a system, it is important to understand how to calculate costs. Here are the different factors that determine pricing.

Capital expenses

These are the upfront costs of getting a new call center system. What you’ll pay depends primarily on the type of system you have.

On-premises (self-managed)

With an on-premises system, you’ll need to run it from your existing IT servers. Assuming they’re powerful enough, you’ll then pay the following for a 20-user system, according to RingCentral:

• Hardware: $6,500
• Setup: $1,000
• Handset costs: $3,000
• Software licenses: $4,000

The $14,500 quoted is equivalent to $725 per person. That’s within the range of the $700 to $1,000 per person quoted by most providers. [Read related article: RingCentral Omnichannel CX Review]

There’ll be more to pay on top if you need to get a more powerful server. Expect to add extra memory every so often if you use functions such as call or workstation recording. You’ll need to make sure that you or someone else in the company can operate the system, or charges you’ll pay to fix everyday issues with private branch exchanges (PBXs) will mount over time.

Cloud-hosted systems

Choosing a system that runs in the cloud will cut down on your capital expenses, as there will be no need to buy or lease servers or hard drives. Generally, cloud-based phone systems are managed and maintained by the vendor’s own IT staff, reducing your need for in-house technical support. 

There is no equipment to purchase or install other than headsets with microphones and/or VoIP handsets, so upfront costs are minimal.

Cloud hosting is an optimal choice for a small business on a budget, typically costing a fraction of the upfront costs an on-premises solution requires. 

Subscription fees

This is where it gets complicated. There are four fee types to factor in: per-desk charges, service charges, outbound calling fees and inbound calling fees.

Per-desk charges

Depending on the agreement you strike up with an on-premises PBX supplier, you can pay a fixed price for your call center system regardless of how many people in your company use it.

Per-desk charges apply mainly to cloud-hosted systems. In our review of the best business call center system software, the monthly charge per employee can be as little as $25 per month.

Service charges

But that’s only the beginning. Joseph Ansanelli, CEO and co-founder of Gladly, shared a rundown of some of the extra fees per user per month for cloud-based call center systems. 

Depending on the services you subscribe to, you might be looking at the following costs in addition to per-desk charges:

• A full-service agent help desk or ticketing system often costs about $150 to $300 per seat per month.
• Voice integration partner services typically cost $50 to $100 per seat per month.
• Channel-specific vendors, such as email and live chat solutions, typically cost $30 to $50 per seat per month.
• Customer platforms, such as customer relationship management (CRM) and order management systems, tend to cost about $150 per seat per month.

Features like these are normally controlled by the onboard software within an on-premises PBX, so you don’t have to pay extra for them.

Outbound calling fees

With a cloud-hosted system, you have no choice over who routes your outbound calls; it’s your cloud host. There are generally discounts for higher call volumes.

While it is true that outbound calling plans are often cheaper than regular business landline rates when measured by the minute, you might end up paying more because you’re buying time you don’t use that doesn’t roll over to the following month.

“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.

Businesses with on-premises PBX can probably secure better deals by signing up for an unlimited calling plan. These plans allow unlimited outbound calls, usually within certain areas or countries, for a low monthly fee per operator. A handful of cloud-based call center systems now offer this as well, so be sure to compare plans.

Inbound calling fees

While there are no provider charges for inbound calling, there are some costs to consider, according to Ansanelli.

He said that phone calls and emails can cost two to three times more than modern digital channels like live chat, social platforms and self-service. “That’s because modern digital channels are asynchronous. Customers don’t expect you to respond right away, and that allows agents to serve multiple customers concurrently.”

What are the costs of virtual, in-house and outsourced call center services?

Next, you need to consider the costs like staffing in addition to your call center system and its software.

Virtual call center

Jeff Kahne, principal at Firefly Consulting, told us that “Voice over IP (VoIP) is fast, and you don’t have the same problems we used to have with running business phones to a home. 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.”

When using a virtual call center, your employees don’t need to work in a designated building. Agents can work remotely or answer calls from their homes. This became a much more prevalent trend since the COVID-19 pandemic. The national experiment of working from home has had an effect in that many businesses now offer home or hybrid working, which offers the potential for a drastic reduction in their office-related costs. [Read related article: Does Working From Home Save Companies Money?]

In-house call center

This is the exact opposite of virtual – everyone shows up to the office.

“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, salaries, benefits, hiring costs, firing costs, transition costs and everything in between,” said Kahne.

According to Glassdoor, a customer service representative can be paid up to $37,900 a year. A manager receives about $49,000, reported Indeed.com. You also need to factor in the costs of training and the tools you’ll need – the phone system itself, office supplies and anything else your team will need to complete their call center activities.

It costs about $264,212 to run an average four-person in-house call center. Business.com extrapolated Cloudtask’s estimate and updated it with current salary figures. You’ll pay $174,491 in wages and benefits for the call center staff; $56,807 in customer service manager wages and benefits; $29,314 in hiring costs; and $3,600 in software and hardware costs. These costs vary by region.

Outsourced call center

There are two basic types of outsourced call center services if you’d prefer not to bring everything in-house just yet:

• Shared service: Pay a per-minute cost, ranging from about $0.70 to $1, for agents you hire out with other clients. This is best for small businesses with a low call volume.
• Dedicated service: You have specified staff working only for your company. This can cost $25 or more per hour and is a better option if you have a consistently high flow of calls or special considerations that require agents to be intimately familiar with your business.

According to Eng Tan, CEO of Simplr, the average handle time (AHT) of a call center’s work for you is calculated by adding the total talk time (or online chat time) to the total hold time and after-call work (often listed on your bill as “agent work time”). This sum is then divided by the total number of calls.

(Total talk time + total hold time + total 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 you for the time agents spend working on your account when they’re off the phone. When researching providers, see if they charge for agent work time.

Another factor that can significantly inflate the cost is incremental billing. For example, with a call center that rounds up to the nearest minute for every call, you’ll pay a lot more in the long run than if you’d paid for the exact time the agents spent on the phone. Billing in six- or 12-second increments is standard. To pay for the exact time agents spend on calls, look for a service with second-to-second billing. 

What other factors impact call center costs?

Geography

“Location plays a role in contact center costs in two main ways: across labor wages and telephony,” Ansanelli said. “For labor, some companies choose to operate out of regions with lower wages, and hourly costs can vary from $5 to $25 per hour. Staffing in international locales may require additional training and coaching, but the cost difference can make it worthwhile.” 

>> Learn More: Top Countries for Business Process Outsourcing

Location can also impact long-distance fees on traditional carriers. Using VoIP technology on a tested, secure and scalable carrier can significantly drive down your monthly usage fees.

“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 said.

Special services

Other factors that affect the cost of outsourced call center services include:

• Reporting options
• Customer care
• Social media representation
• Live chat handling
• Outbound lead generation

What is a call center system?

Most business phone systems offer, at a minimum, inbound calling routing, outbound calling, multiple lines, conference calling features, interactive voice response (IVR) menus, and hold music or messages. 

But loaded up with the best call center software integrated with your enterprise resource planning (ERP) system or CRM, a call center can streamline your entire internal calling process and make your sales team more efficient at connecting with prospects. 

In recent years, call center systems have gone beyond just telephone calls. Today many allow companies to communicate directly with customers via messaging apps such as WhatsApp, standard SMS text messaging, email, social media private messaging and more from just the one platform.

There are two major types of call centers:

• On-premises call centers: Traditionally, a company wanting its own internal companywide telephone network would need a PBX. A PBX is a bulky item of hardware that’s connected to standard telephone lines. 
• Cloud-based (VoIP) call centers: These are internet-based call center systems. You might hear them referred to as hosted PBXs or IP PBXs.

How do companies reduce call center charges?

These are four main ways to save money with a call center:

1. Reduce call volume and length.

Kahne suggests moving customers to self-service options like your website, automated systems and chatbots to lower call volume and length. However, he added, you should weigh this against customer satisfaction metrics like your Net Promoter Score. You’ll also need to determine how many of your calls you want answered at what speed.

“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 said that on-demand staffing is the best way to reduce call center costs, because then you’ll pay only for the work performed and issues resolved. The most expensive time intervals to support customers are low-volume hours and when unexpected call volume occurs, according to Tan, because this might make overtime pay necessary.

“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.

Thoroughly trained agents are likely to resolve issues more quickly and have fewer repeat calls. If call centers don’t invest in employee training, management would need to hire more people to handle the same tasks, according to Yaniv Masjedi of digital security company Aura.

4. Eliminate duplicate tickets.

Ansanelli said that ticket duplication is a big issue with most ticket-based customer service platforms.

“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,” he said. “Implementing a customer-based platform eliminates this issue and can reduce inbound volume by 30 percent or more.”

Simone Johnson and Jennifer Post contributed to this article.