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Updated Apr 10, 2024

What Is a Virtual Phone Number?

Mark Fairlie
Mark Fairlie, Senior Analyst & Expert on Business Ownership

Table of Contents

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Every organization needs a secure, reliable business phone system to communicate with customers, employees, prospects and vendors. But for small businesses, fully featured types of business phone systems can be expensive and challenging to install and run. 

A virtual phone number is a cost-effective and feature-rich solution that will expand your business’s communication capabilities. If you’ve ever used FaceTime or called a corporate contact center for product support, the chances are that you were connected through a virtual phone number. 

Below, we explain what a virtual number is, set out eight of its main benefits and show you how you can obtain one for your business.

What is a virtual phone number?

A virtual phone number is a telephone number that isn’t tied to a specific device or location. Using voice-over-internet-protocol (VoIP) technology, virtual phone numbers let people make secure phone calls from anywhere with a solid internet connection.

>> Learn More: What Are VoIP Business Numbers?

Virtual numbers offer businesses a remarkable level of flexibility. Administrators can assign a virtual phone number to almost any area code, a process called direct inward dialing. Administrators can even assign toll-free numbers, which means customers aren’t charged when calling you.

You can choose a virtual local number to help you build trust since you’ll appear to be part of the community. Meanwhile, virtual toll-free numbers are ideal for companies that want to project a national presence. Not charging customers to call you also helps you present your business as a client-centered company.

Many virtual numbers offer free or reduced-cost long-distance calling that can substantially reduce your telephone costs. You and your customers will also benefit from the clean, clear audio virtual phone connections offer.

Unlike traditional phones, you don’t need a copper wire connection to the local exchange or a separate handset. This leads to significant cost-saving opportunities with VoIP-based virtual phone numbers. Each virtual line you connect doesn’t need physical hardware either, a significant cost saver over how telephone companies previously allocated and charged for lines. 

How do virtual phone numbers work?

Anyone with a desktop computer, laptop or mobile device can use a virtual phone number. A virtual line sends a call to another device over a fixed or mobile broadband internet connection by converting the audio from a phone line into a digital signal. These virtual lines are created and used in the cloud, rerouting calls to existing lines or team members’ devices. 

>> Learn More: Cloud-Based Business Phone Systems

You can bundle multiple virtual lines together to form a virtual switchboard. You only need one broadband connection for multiple lines, eliminating the need for separate physical lines that a traditional phone system requires. You don’t need a complex and expensive local private branch exchange (PBX) either.

Instead, you control your group of virtual phone numbers and how they interact with each other via an intuitive cloud PBX that’s easy to operate. From a desktop or mobile app, you can route calls, switch on call forwarding, activate voicemail, set up auto-attendants and more.

For example, an administrator in your company could log onto the cloud PBX and create a new virtual toll-free number (or an international toll-free service number for a global presence) that forward calls to individual team members’ devices in a contact center. For added flexibility, the representatives receiving the calls can choose the equipment they want to use, whether it’s a VoIP handset or an application like Zoom or RingCentral on their cellphone, tablet, desktop or laptop. 

TipBottom line

Read our reviews of the best business phone systems to understand better the services that might be right for your business.

Virtual phone systems rarely become overwhelmed because virtual phone numbers use the cloud, not your local computers or devices. Since virtual phone calls don’t drain too much data, bandwidth concerns aren’t an issue.

Think of a virtual phone number as an intermediary for voice communication between two devices.

Traditional phone line

Virtual phone line

Requires a dedicated device

Works with smartphones and computers

Tied to a specific location

Can be used anywhere

Requires a SIM card

Easy connections over the internet

Requires a physical connection to the local exchange

Multiple lines can be created and run from the same broadband connection

>> Learn More: VoIP vs. Landline

8 benefits of virtual phone numbers

Virtual phone numbers offer eight primary benefits that might appeal to your business. We’ll take an in-depth look at each. 

1. Virtual phone numbers incur lower costs.

One of the most significant benefits of virtual phone numbers is that they offer a much lower total cost of ownership than traditional landlines. When choosing a business phone system, you’ll find that traditional system costs add up quickly and become prohibitive, especially if your business is growing.

Because a virtual line doesn’t require specialized or dedicated devices, your hardware costs are virtually nothing. When you’re moving a business into new communities or regions, you can create a local number to avoid the added costs of long-distance calls. It’s essential to keep operating expenses as low as possible when opening your business to new opportunities and clients. Virtual phone numbers can help you do this.

Did You Know?Did you know

Another helpful virtual small business tool is a virtual answering service, which provides an automated response or directs calls to a third party that can forward calls and take messages.

2. Virtual phone numbers serve multiple markets.

Because anyone can get a virtual number for any location, you can create local numbers to serve any region. This decreases costs because you’ll avoid premium charges from long-distance calls as you find new neighborhoods and clients to serve. 

3. Virtual phone numbers are easy to scale.

Without the need for dedicated hardware and with no line limitations, creating more virtual phone numbers to scale with your business is easy. When you’re building a sales team and hiring more employees, you can call your administrator and add all the virtual phone lines you need.

4. Virtual phone lines allow for custom numbers.

When you have a memorable or toll-free customer support phone number, your customers gain a sense of security and recognition. Virtual phone numbers make it easy to create specific numbers to help your business look more professional. 

Whether it’s a toll-free number or a vanity number like 1-800-CONTACTS or 916-CALL-TUR, a virtual number can help create a brand identity. 

5. Virtual phone numbers allow for optimized call data and tracking.

It’s not easy to record, digitize and analyze a traditional call. But because a virtual call is already digital, it’s easy to record with the push of a button. You can seamlessly transcribe a virtual call, appraise it for relevant content and archive it. 

With all the information a virtual number provides, a business can track key internal performance indicators, such as average call length and customer satisfaction, to improve its services.

Bottom LineBottom line

Within many customer relationship management (CRM) and virtual phone systems are data analytics tools. You can check how well individual teams and staff members are performing to their key performance indicators to find areas of improvement in your business.

6. Virtual phone numbers enrich your customer information knowledge. 

With an easy way to archive phone calls, a business that uses virtual phone services can quickly compile critical know-your-customer information, such as customer preferences and overall business trends. This kind of data helps an organization prevent fraud and comply with multiple government rules and regulations. 

Compliance is a particularly important factor for businesses in the banking, healthcare, financial services and insurance industries that rely on verifying a customer’s identity. [Related article: How  Health Insurance Portability and Accountability Act (HIPAA) Laws Impact Employers]

7. Virtual phone numbers improve security.

Creating a safe, secure phone line to conduct business is easier than ever with a virtual phone number. Because it uses VoIP, a virtual number can be encrypted and protected behind layers of firewalls and other security methods. These protections keep out prying ears, so you can keep your business running smoothly without interference. To ensure security, reach out to your internet service provider to ensure your virtual number is encrypted.

>> Learn More: Looking for a Business Phone Number, but Not a Business Phone?

8. Virtual phone numbers improve flexibility. 

Because you can tie a virtual number to any PC or mobile device, you can receive calls from anywhere in the world. This allows your workforce to redirect calls to their preferred device. When traveling or working remotely, any employee can still answer a support call or call back sales prospects. [Related article: Creating a Remote Help Desk for Your Business]

FYIDid you know

A secure communications system helps keep remote employees engaged, motivated and productive.

How to get a virtual phone number

It’s remarkably easy to set up a new virtual phone number; some service providers, such as Google Voice, even offer it for free. To get started, select a provider like RingCentral, Ooma or GoTo Connect. Then create an account, select a plan, choose your area code and the service will generate a new number for you.

Best business phone systems for virtual phone numbers

Below, find links to reviews of eight of the best business phone system providers in the United States, each of which offers virtual phone numbers.

Vonage

Pricing:

  • Monthly per-user costs fall on higher subscriber numbers ― prices shown are sale prices
  • Mobile tier (1-4 subscribers, $13.99)
  • Premium tier (1-4 subscribers, $20.99)
  • Advanced tier (1-4 subscribers, $27.99)

Features on all plans:

  • Desktop and mobile apps
  • Short message service (SMS) and multimedia messaging service (MMS) messaging
  • Unlimited domestic calls

Premium tier-only features:

  • Unlimited video meetings
  • Team messaging
  • App integrations

Advanced tier-only features:

  • Voicemail transcription 
  • Call groups 
  • Up to 15 hours a month of on-demand call recording

Read our comprehensive review of Vonage.

Dialpad

Pricing:

  • Standard ($15 per user, per month)
  • Pro ($25 per user per month)
  • Enterprise (negotiable)

Features on all plans:

  • Analytics and reporting
  • Artificial intelligence (AI)-power call and voicemail transcriptions and AI meetings
  • HIPAA/business associate agreement compliance
  • SMS, MMS and team messaging
  • Unlimited calling
  • Integrations with Google Workspace and Microsoft 365

Pro tier-only features:

  • Integrations with popular CRMs and Microsoft Teams
  • 24/7 customer support 
  • Up to 10 office locations

Enterprise tier-only features:

  • Unlimited ring groups
  • Unlimited office locations 
  • 100 percent uptime 
  • Priority agent support

Read our in-depth review of Dialpad.

GoTo Connect

Pricing:

  • Basic ($29 per user, per month)
  • Standard ($39 per user, per month)

Features on all plans:

  • Ring groups
  • Call forwarding
  • Call queues
  • Call routing
  • Local, toll-free and vanity numbers
  • Auto-attendant
  • Audio conferencing
  • Team messaging

Standard tier-only features:

  • Unlimited users
  • Integrations like Salesforce
  • Video meetings with up to 250 participants
  • Unlimited auto attendants, call routing and queues

Read our latest review of GoTo Connect.

8×8

Pricing:

  • Unified Communications X2 ($28 per user, per month)
  • Unified Communications X4 ($57 per user, per month)
  • Contact Center X6 ($85 per user, per month)
  • Contact Center X7 ($110 per user, per month)
  • Contact Center X8 ($140 per user, per month)

Features on all plans:

  • Unmetered phone calls to the U.S. and Canada (plus 12 other countries on X2 and 48 on X4)
  • Voicemail with transcription
  • Hot desking
  • Unlimited fax
  • Time-limited media storage
  • 24/7 customer support
  • High-definition (HD) video conferencing
  • Call queues
  • HD voice
  • Auto-attendant

X4 tier-only features:

  • 8×8 Frontdesk for operators
  • Call barging, monitoring and whispering
  • Unlimited calling to 48 countries

X6/7/8 tier-only features:

  • Contact center analytics and reporting
  • Post-call surveys
  • Skills-based routing
  • Omnichannel routing
  • Agent workspace

Read our updated review of 8×8.

Nextiva

Pricing:

  • Per-user costs fall on higher subscriber numbers:
  • Essential tier (1-4 subscribers, $23.95 annually)
  • Professional tier (1-4 subscribers, $27.95 annually)
  • Enterprise tier (1-4 subscribers, $37.95 annually)

Features on all plans:

  • Toll-free minutes
  • Video meetings
  • Video calling
  • Unlimited U.S. and Canadian calling
  • Free local and toll-free numbers
  • Unlimited internet fax
  • 24/7 customer support
  • Microsoft Outlook and Google contract integration

Professional tier-only features:

  • Unlimited conference calls
  • Mobile and Desktop SMS/MMS
  • Salesforce/HubSpot Integrations

Enterprise tier-only features:

  • Unlimited participants on conference calls
  • Voicemail transcription
  • Call recording

Read our comprehensive NextivaONE review.

RingCentral

Pricing:

  • Core ($20 per user, per month, annually)
  • Advanced ($25 per user, per month, annually)
  • Ultra ($35 per user, per month, annually)

Features on all plans:

  • HD calls
  • Voicemail including transcriptions and emails
  • End-to-end encryption
  • Toll-free minute and business SMS allocation (higher on Advanced and Ultra)
  • Toll-free numbers
  • Auto-attendant service
  • Quality of service (QOS) analytics
  • Call log reports

Advanced tier-only features:

  • Adoption analytics
  • Hot desking
  • Call monitoring, whispering and barging
  • 8-digit site code extensions

Ultra tier-only features:

  • Device analytics
  • Unlimited file storage space

Read our in-depth RingCentral review.

Ooma

Pricing:

  • Essentials ($19.95 per user, per month)
  • Pro ($24.95 per user, per month)
  • Pro Plus ($29.95 per user, per month)

Features on all plans:

  • Call forwarding, parking and transfer
  • Auto-attendant
  • Company directory
  • Toll-free number with 500 inbound minutes
  • Unlimited calling to the U.S., Canada, Mexico and Puerto Rico
  • Music on hold and transfer
  • Virtual faxing
  • Call logs

Pro tier-only features:

  • Videoconferencing (up to 25 participants)
  • Call recording
  • Text messaging

Pro Plus tier-only features:

  • Advanced call management
  • Team chats
  • CRM integration
  • Call queuing

Read our latest Ooma review.

Zoom

Pricing:

  • US & Canada Metered ($10 per user, per month)
  • US & Canada Unlimited ($15 per user, per month, with unlimited U.S. and Canada calls)
  • Global Select ($20 per user, per month, with unlimited calls to 48 countries including the U.S. and Canada)

Features on all plans:

  • Voicemail with transcription
  • Windows, Mac, Linux, iOS and Android apps
  • Auto-attendant
  • 24/7 support
  • HD call quality
  • Toll-free numbers
  • CRM integrations
  • Call recording
  • Timed routing
  • Call monitoring, whispering, barging and takeover

Features on all plans are essentially identical. Read our updated Zoom review.

Virtual phone number FAQs

Here are some of the most common questions on virtual phone numbers and how they work.

Absolutely. A virtual phone number works perfectly with regular phone lines. The only difference is how those calls are transferred. A virtual phone line is digital, while traditional phone numbers use a private branch exchange architecture with limited functionality.

>> Learn More: What’s an Interactive Voice Response?

Yes. You can assign multiple virtual phone numbers to an individual user or assign multiple users to a single virtual phone number. This allows additional flexibility for a company to automatically reroute numbers, which comes in handy when multiple simultaneous calls overwhelm a contact center.

Many service providers offer free virtual phone numbers. For paid services, costs range from $19.99 to $59.99 per month, depending on how many phone lines you need.

To create a virtual phone number for your business, you first need to sign up with a VoIP provider. During the registration process, they will offer you a choice of virtual phone numbers. Some also offer local and toll-free numbers, although this may be for an additional charge.

Most VoIP providers will allow you to create virtual landline numbers with an area code of your choice. The benefit of doing this is that it will make your business seem more local to your target audience if you’re launching or doing business in a particular geographical area.

Eduardo Vasconcellos contributed to this article.

Mark Fairlie
Mark Fairlie, Senior Analyst & Expert on Business Ownership
Mark Fairlie has written extensively on business finance, business development, M&A, accounting, tax, cybersecurity, sales and marketing, SEO, investments, and more for clients across the world for the past five years. Prior to that, Mark owned one of the largest independent managed B2B email and telephone outsourcing companies in the UK prior to selling up in 2015.
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