They are a seemingly endless number of business phone and unified communications systems available in 2020. Businesses have the choice of landline or Voice over Internet Protocol (VoIP) systems and cloud-hosted or on-premises solutions. And for those not needing a traditional business phone system, virtual systems are also option. With so many choices, finding the right one for your business can be a tough chore. To help ensure you choose the phone system that will work best for your business, we researched dozens of options. Based on our research, here are our recommendations of the business phone systems we think are best for different types of businesses.
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Business Phone System Costs
Multiline business phone systems have a variety of price points and structures. How the PBX system – and the equipment that is used to run the phone system is hosted – are the determining factors in how your costs will be structured.
The costs of an on-premises system are mostly one-time, upfront expenses, while cloud-hosted phone system costs revolve around monthly fees. The prices for each type of system vary based on the provider, how many users your small business has and how many features you want access to.
Since the hosted PBX equipment is stored in the cloud, there usually aren't any large installation or setup costs. Cloud-based VoIP phone systems typically cost between $10 and $75 per user, per month. Many office phone system and unified communications system providers have several service plans that vary based on price and included features. Many allow businesses to mix and match service plans, so each employee has access to the features they need.
For example, a service plan that includes the basic features, like unlimited calling, voicemail and caller ID, and call forwarding might be $25 per user, per month, with an upgraded plan that includes more advanced features such as automated attendants, call recording and ring groups costing $35 to $40 per user, per month.
To give you a better idea on pricing, here are some estimates of what it might cost for businesses of various sizes. These estimates do not include taxes or other surcharges that all providers tack on to the cost:
- Businesses with 10 employees: Service may cost between $100 and $500 per month.
- Businesses with 25 employees: Service may cost between $250 and $1,250 per month.
- Businesses with 50 employees: Service may cost between $500 and $2,500 per month.
- Businesses with 100 employees: Service may cost between $1,000 and $5,000 per month.
In addition to monthly fees, those using cloud-hosted systems will likely want new IP phones. Phones typically cost between $50 and $400 each. If you have a cloud system, some providers will rent you phones for as little as $5 each per month.
While cloud-hosted systems mostly revolve around monthly recurring fees, on-premises system costs comprise mostly one-time, upfront fees. On-premises systems cost anywhere from a few hundred to several thousand dollars per user. In addition, since all associated equipment is housed onsite at your business, there are large installation and setup charges. Some providers have a set installation fee, while others charge a percentage of your per-user equipment fees. At a minimum, you can expect to pay several thousand dollars.
The costs of on-premises systems are much more customized than they are for cloud-hosted systems. On-premises systems are typically used by larger organizations that can afford the upfront fees.
For a business with 50 employees, you should be prepared to spend $30,000 to $60,000 in one-time fees for all the equipment and installation needed for an on-premises system.
There are some smaller monthly fees with on-premises phone systems. To connect to a dial tone, on-premises VoIP phone service users have to pay for SIP trunking or PRI circuits. Depending on your call volume, this could be several hundred or several thousand dollars per month.
Another expense users of either type of system could incur are for toll-free numbers. While some systems include toll-free numbers, they usually only offer businesses a set number of minutes per month. Businesses that go over that set number of minutes pay a per-minute fee for their toll-free numbers.
When running a business, every penny counts. That's why you want to make sure you aren't overpaying for the services you use. Whether you go with an on-premises or cloud-hosted system, follow these steps to get the best deal possible:
- For cloud-hosted systems, there often isn't a lot of room for negotiation. Most cloud-services have set prices that vary based on the features you need and how many users you have. However, there are a few questions you can ask to see if there is any wiggle room in the price. Since these are monthly services, your best chance at getting a discount is committing to the company for a lengthy period of time. You should see if there are any discounts for signing long-term contracts or for paying for a year in advance, instead of in monthly installments. Another potential option for getting a lower price is to consider starting with a new service near the end of a quarter. Some representatives we spoke to indicated there was more wiggle room for discounts at the end of March, June, September and December.
- For a hosted system, there is often more room for negotiation. These are systems that are built for you, so there is more opportunity to ask for certain features to be included for free. Depending on how much you are spending, a vendor may add some features for free to ensure they land your business. In addition, you should always try to ask for the cost of installation to be lowered. Finally, ask if the vendor is willing to lower their user licensing fees if you commit to expanding your service in the future.
- Another area you can negotiate on with both types of systems is phones. Many providers have a lot of options and are willing to give you upgraded phones depending on the service you choose and the length of time you commit to. In addition, providers often run specials that include phones for free. Be sure to see what kind of phones they are offering and whether they would be willing to upgrade them if you commit to their service.
- Regardless of the type of system you choose, it is always important to shop around and get several quotes. Even if the first one you investigate is the one you definitely want, considering other service providers could help you get a lower price when you do commit. If the system you like best isn't the cheapest, ask whether the vendor is willing to match the lower price. If you tell them that another system you really like is giving you a better deal, a service provider may lower their prices to get you as a customer.
When you commit to a business phone system provider, they will likely require you to sign a contract. It is imperative that you read all the details carefully before signing it. Make sure the terms of the contract are what you negotiated and that there are no hidden fees.
You should also ask what taxes or surcharges will be added on top of your monthly service (as well as the estimated cost of those charges). It's important to know what your full bill will be before agreeing to the deal – not just what the service charges are. The last thing you want is to open up your first month's bill only to realize it is significantly more expensive than you anticipated. That not only negatively impacts your budget, you start off on the wrong foot with your vendor.
You should also know what you are in for should you cancel your service or change providers. Are there any cancellation fees? Do you have to provide advance notice? Are you able to take your local and toll-free phone numbers with you if you switch to a different service? These are questions you want answered before agreeing to a contract.
Types of Phone Systems
The process of choosing a business phone system requires you to answer a couple of questions. First, what type of phone connection do you want – landline, VoIP or virtual? Second, how you want to host the system – on premises or in the cloud?
With on-premises systems, your IT staff needs to install and maintain PBX equipment. Conversely, cloud-hosted solutions require very little IT resources since all of the PBX equipment is housed and maintained by the phone system provider. With the cloud-hosted option, IT teams focus more of their attention on managing the system's features rather than the infrastructure.
Here is a breakdown of each type of phone system.
Previously, businesses used traditional analog landline telephone systems. These systems were connected to the Public Switched Telephone Network (PSTN) and ran on the telephone company's copper wiring.
While these multiline phone systems were extremely reliable, they required equipment that was expensive to install and maintain. Besides the copper wiring that had to be run through the business, landline systems also required costly PBX equipment. The PBX is what is used to switch calls between the business and the telephone network. It's also what is needed to offer various calling features, such as voicemail, conference calling and automated attendants.
All of this PBX equipment (and the other hardware needed to run the phone system) are housed onsite in your businesses, typically in a server room or closet.
Today, analog multiline landline phone systems are becoming obsolete. Telephone companies aren't developing new analog systems and are no longer providing updates to the systems they used to offer. Finding IT professionals with the skills to keep these systems running is becoming increasingly difficult. Telephone companies have largely shifted their attention to VoIP technology.
Some landline systems now use a mix of landline and VoIP technology. There might a traditional landline connection to a business, but instead of having traditional wiring throughout the building, organizations use an internet connection to tap into that outside landline.
Very few new businesses are choosing landline phone service for their phone system needs. Knowing that support for these systems is diminishing, the organizations they are best served for are those with an in-house IT team that is skilled with these systems and can handle the maintenance and upgrades on their own.
In addition, landline systems are the only option for businesses in communities where there isn't high-speed internet access.
Nearly all new business phone systems use VoIP. Instead of running on copper wiring like landline systems do, VoIP systems run on a high-speed internet connection. It's the same connection most businesses already use to get online. When making a phone call, the user's voice is instantly converted into a data packet that is moved throughout the internet like other pieces of data, such as emails and images. Tapping into an existing data connection saves you the trouble and expense of installing and maintaining phone lines throughout your offices or stores.
In addition, VoIP systems work in conjunction with cheaper and less bulky PBX equipment. This allows small businesses to access calling features they previously couldn't afford, like an auto attendant, conference calling and call recording.
VoIP systems easily integrate with computers, which lets employees make calls from their devices and have voicemails sent directly to their email, among other things. It can also be beneficial for businesses using customer relationship management programs.
Similar to how a landline system works, the VoIP provider allows you to choose a phone number with a local area code, a toll-free number or both.
Ease of use and scalability are a big benefit to VoIP phone systems. Most VoIP systems can be totally managed from an online portal. By logging into the system, administrators can assign phone numbers and extensions, and turn various features on and off.
In addition, VoIP providers make it easy to add new users. Administrators can quickly log into the system to add new lines on their own within the system's online portal. This simplifies the process of setting up new employees with their own line.
When VoIP was first introduced, there was concern about call quality. Many felt calls sounded staticky; others had problems with calls dropping off. As technology has improved, so, too, has call quality. In fact, the difference between VoIP and landline is now so insignificant that most users have no idea when they are using VoIP and when they are on a landline connection.
VoIP is becoming a standard option for all businesses. Soon, nearly all U.S. phone users will use VoIP. Research shows that VoIP use among businesses has grown more than six times since 2010. Data from Statista revealed that there were 6.2 million VoIP business subscribers in 2010. In 2018, that number grew to more than 41 million.
Cost is a huge benefit of VoIP. Research has shown that moving to a VoIP system from a traditional landline system can save businesses up to 75% on their phone service costs.
The only businesses that can't take advantage of VoIP phone systems are those in communities without access to high-speed internet service or with unreliable internet service.
A huge factor when choosing a phone system for your business is deciding how you want the PBX equipment, which is what's needed to run the system, hosted. Some providers offer on-premises or cloud-based systems, while others offer both options.
VoIP On Premises
With on-premises systems, the PBX equipment is installed inside your business. Your IT team is responsible for securing it, keeping it up and running, and upgrading it when necessary. Hosting on-premises gives businesses the ability to keep a few traditional landlines working alongside SIP-trunked VoIP lines.
Similar to landline systems, on-premises VoIP systems have all the equipment installed and housed onsite inside each business. The hardware is typically stored in your company's server closet.
With this option, you are in total control of your system. You aren't relying on anyone else to make sure it is running, and you can configure it to your exact specifications. However, since it is located onsite, your IT staff handles all repairs and upgrades. On-premises systems need to be professionally installed.
If you have a VoIP on-premises system, you will need SIP trunking or PRI circuits to connect a dial tone to the system.
Another difference is security. On-premises systems don't have the same security concerns as cloud-hosted solutions, since all the data is stored within your business.
Experts say businesses concerned with privacy are best served by on-premises systems. This option allows businesses to configure their firewalls exactly as desired to protect the phone system from any type of intrusion.
Other businesses well suited for on-premises phone systems are large corporations that can afford the upfront costs and businesses that want a system they can customize.
Cloud-hosted phone systems are becoming popular among small businesses. With this system, the equipment is housed in the cloud by your service provider, which handles all maintenance and upgrades. The only equipment the business needs is the phones themselves.
Most cloud systems are essentially plug-and-play ready. Once you activate your service and receive your phones, they can be plugged into any Ethernet port, and calls are ready to be made and received.
The downside to cloud-based solutions is that businesses are at the mercy of the provider to keep their service up and running. To ensure this happens, most of the top vendors have several redundancies built into their systems. This includes having multiple data centers so that if one goes down, the data can be transferred seamlessly to another to ensure the continuation of the business's communications service.
One important factor to consider if you are considering a cloud-hosted system is bandwidth. Consult your business's internet service about obtaining the bandwidth required to support a new phone service. Most of the cloud-providers we considered required just short of 100Kbps per phone call for the best quality. You'll also want to estimate internet needs for other equipment, such as computers, servers and Wi-Fi-connected devices.
Cloud-based VoIP systems are ideal for small businesses ‒ they have few upfront costs, the consistent monthly charges fit easily into a budget, plus they don't require trained IT experts to keep them running.
Businesses using these systems are best served by installing backup equipment that can reroute calls during power or internet outages. With these systems, new users and features can be added via an online portal. Cloud-based options also easily support multiple locations.
Nearly all of the providers we examined had an uptime of at least 99.990%. That means their systems are down for just a handful of minutes each year.
Virtual Phone System
Virtual phone systems differ from regular office phone systems in that when phone calls are made to your business phone line, they aren't necessarily calling a dedicated number inside your business. Instead, they are calling a virtual phone number that routes calls to you (or your employees) wherever you are located.
Virtual phone systems are essentially extensive call-forwarding systems. Businesses have a main number, with each employee receiving their own extension. However, instead of transferring customers to an employee's office phone, the virtual system transfers calls to mobile devices and home phones. Employees control the numbers they want their business calls sent to and the order in which those numbers are rung.
In addition to automated attendants, virtual PBX systems offer other valuable features, including voicemail, voicemail-to-email, music on hold, call forwarding and online faxing.
Hosted/virtual systems are ideal for businesses that don't need a full-fledged phone system. This could include solopreneurs that work out of their home and don't want to give out their mobile or home numbers to clients, as well as small businesses with a large remote workforce. This type of service allows them to present a professional image at a fraction of the cost of more complete phone systems.
Once you decide on the type of phone system you want, then you need to choose a phone. This doesn't apply to virtual systems, though.
Most business phone services are compatible with a variety of IP phones and offer adapters so analog phones can connect to their systems. It's likely that you can continue using the phones your company already owns.
IP phones come in a variety of styles. There are traditional corded options as well as cordless phones and conference room phones. The phones can range anywhere from $50 to $1,000 each. In addition to buying the phones outright, some providers let you rent phones for a monthly fee.
The per-phone analog adaptor can cost as much as $60, and a traditional fax-machine adaptor can cost $100 to $150.
The benefit of buying IP phones from your phone system provider is that they come completely configured and are immediately ready to be used once they are plugged in. If you buy phones from an outside source, your IT team will need to configure the phones on their own to work with the system you are using.
If you can afford it, it makes sense to upgrade your phones. If you cannot afford new phones, carefully consider how much the workaround will cost the company in the long term.
Phone System Features
Today's business phone systems are filled with valuable features and tools. The number each VoIP provider offers varies. Some offer a couple dozen features; others offer more than a hundred.
Among some of the available calling features business phone systems offer are:
- Voicemail: Each user has access to their own individual voicemail. Most systems allow users to check their voicemail from anywhere.
- Voicemail-to-email: With this feature, users are sent an email with their message as an audio attachment.
- Caller ID: Instantly know the number of the person calling you.
- Speed dial: This lets you quickly dial the phone numbers of those you call most often. Instead of dialing the entire number, speed dial lets you push a couple of buttons to dial out.
- Personal directories: Personal directories are a way for you to easily manage your contacts. It gives you access to your contact's phone numbers whenever you need them.
- Do not disturb: When working on a big project or important task, you can put your phone in this mode to ensure you aren't interrupted. Your phone will not ring, and all callers are sent directly to voicemail.
- Auto attendant: Auto attendants automatically answer calls to your business. The automated attendant answers the call, plays a greeting and directs the caller to the person or department they are trying to reach.
- On-hold music: Choose the music callers hear while they wait on hold.
- Paging: Use your phone to send a message to everyone. This is similar to a traditional intercom system.
- Presence: This shows employees whether their peers are on a call or are available to chat.
- Call reports: This feature provides organizations with analytics on their company's phone usage. It provides statistics, and usage can often be broken down by user, department, etc.
- Online management: All VoIP systems can be managed via an online portal. From the portal, administrators can add users, set phone numbers, review call reports, create ring groups and see monthly statements. Users can also access the portal to check their voicemail, see a company directory and set call-forwarding routes.
- Call forwarding: Have your office phone forward calls to another number.
- Call recording: Most systems give users the ability to record their calls.
- Call queues: This tool is typically used in call center settings. It allows callers to be put in line so their call can be answered when operators become available.
- Extension dialing: Employees can use this to dial co-workers by their extension, instead of dialing their entire phone number.
- Ring groups: Businesses can create ring groups for employees who answer calls from the same set of customers. For example, the customer service team might have its own ring group. When a customer calls in and asks to speak to a customer service representative, the entire group is notified.
- Directory assistance: This allows callers to access a company directory to reach the employee they are looking for.
- Call transferring: Employees can quickly transfer calls to their peers.
- Speakerphone: Many IP phones include a speakerphone offering that allows users to speak without having to use the phone's handset.
Unified Communications System Features
In addition to all of the calling features today's phone systems offer, some providers offer unified communications systems. Besides phone service, unified communications systems include conference calling, video and web conferencing, online faxing, text messaging and instant messaging.
Here are some specifics on the added features unified communications systems provide businesses:
- Conference calling: Most phone systems include a conference bridge that allows each user to host their own conference call with anywhere from a handful to several dozen participants. If the system you choose doesn't have a conference bridge that supports as many callers as you need, you may need a separate conference call service.
- Video conferencing: Video conferencing allows users to host online meetings from their computers or from rooms with video conferencing equipment. These conferences allow you to share your screen with participants.
- Instant messaging: Many systems give employees the opportunity to instant message with each other. This provides an easy way for employees to communicate with one another without leaving their desk.
- Texting: Some systems include SMS messaging. This allows users to send text messages from their business phone number.
- Internet faxing: Instead of hooking up a traditional fax machine, this feature allows you to send faxes from your computer.
Mobility is another important aspect that today's business phone systems and unified communications systems allow for. Most offer an app for iOS and Android mobile devices that let employees tap into their business line wherever they are.
The biggest benefit of the mobile app is that it allows users to make and receive calls from their business line. This gives you the freedom to leave the office, even if you are expecting an important call. In addition, should you need to make a call when outside of the office, you can do so from your business phone number by using the app. This allows you to keep your mobile number private, without needing multiple cell phones.
The mobile apps also let users review call history, check and manage their voicemail, instant message with colleagues, start one-on-one video calls and view online faxes.
Frequently Asked Questions
Q: How much does a business landline cost?
A: The cost of just one business landline can run anywhere from $50 to $100 per line. However, businesses typically require more than just one line, and they want PBX equipment as well as the added features that business phone systems include.
In all, businesses can expect to pay between several hundred to several thousand dollars for a landline system. However, most landlines are becoming obsolete. Phone system providers are investing resources into the continued development of VoIP phone systems. This, in turn, has resulted in no new technology surrounding landline phone systems and a declining number of technicians who can maintain and service these systems,
Q: What is a unified communications system?
A: Rather than a simple phone system, many providers are offering complete unified communications systems that give businesses all the communication tools they want to use in one platform.
In addition to phone service, unified communications systems include conference calling, video and web conferencing, online faxing, instant messaging and text messaging.
Having these tools in one platform can not only give a boost to employee productivity, but it can save businesses hundreds, if not thousands of dollars a month.
For your workers, being able to access video conferencing or online faxes from the same platform makes things easier on employees. Instead of having to toggle back and forth between different services to access each tool, employees log into their unified communications portal and tap into them from the same place.
Q: What is a four-line phone system?
A: A four-line phone system is designed for very small businesses. Instead of having just one phone line, a four-line system provides phone service for up to four users at one time.
Four-line systems are typically not as robust as cloud-hosted VoIP systems as they don't include the wide range of features those business phone systems do.
Q: What qualities should your business phone system have?
A: There are a number of factors you should consider when choosing a business phone system. First and foremost, it should support all of your employees. Most systems today allow you to easily add lines and allow for hundreds, if not thousands, of users. However, if you are a very small business, some service providers require a minimum number of users. So, make sure it can support your needs.
The second factor to consider is whether it offers all of the tools your employees need. Besides the traditional calling features, does it offer things like video conferencing, conference calling and text messaging? You also may want to look for a solution that allows you to mix and match service plans. This gives you the flexibility of ensuring each employee has the tools they need without paying for upgraded plans for employees that don't need every feature.
Price should be another consideration. With so many options to choose from, you should be able to find a service that fits in your budget. In addition to the per-user cost, you should get a true sense of what your monthly bill will be once the added fees and taxes have been included.
The final quality you need to consider when choosing a business phone system provider is customer support. In an ideal world, the system will always work perfectly. But that is rarely the case with any piece of technology. Make sure the provider you choose offers the support options you are looking for. That may be 24/7 phone support, live chat operators or helpful online guides.
Q: What are the differences between phone systems for large businesses and phone systems for small businesses?
A: While there used to be big differences between phone systems for large and small businesses, today they both have access to the same types of solutions.
Before cloud-hosted PBX systems became an option, typically only larger business had the ability to use sophisticated phone systems that had tons of features and tools. That's because the on-premises PBX equipment required to power those features was so expensive to buy and maintain that only larger businesses could afford them. That left small businesses with simpler options that didn't have the bells and whistles that their larger counterparts could take advantage of.
Cloud-hosted business phone systems have leveled the playing field. Instead of having to pay thousands of dollars for PBX equipment, small businesses can now tap into the same features for a fraction of the cost. Cloud-hosted systems provide all the features and tools for a much smaller monthly fee. In addition, since the equipment is housed in the cloud, there is nothing to maintain or upgrade.
When it comes to phone service, the cloud has given small businesses the chance to use phone systems that they never would have been able to before. This allows them to access features like auto attendants, on-hold music, call recording, voicemail-to-email and video conferencing that previously only large businesses were using. Cloud-hosted VoIP phone systems give every business the meansto present a professional image, regardless of how large or small they are.
To determine the best business phone systems, we started with more than 70 providers. Next, we separated all the vendors that had a good online reputation, such as those services that were consistently ranked highly by other websites.
We also, at periodic intervals, queried business owners to see which services they use. If multiple business owners raved about a particular vendor, the service was added to the final list of contenders.
We then visited each company's website. If a company stood out to us, we added them to the list of contenders. We also eliminated most companies that only served businesses in their local region.
We ultimately narrowed down our pool to 8x8, Avaya, Cisco, Dialpad, Digium, ESI, EVoice, FreedomVoice, GoToConnect, Grasshopper, Mitel, Nextiva, OnSip, Ooma Office, Phone.com, RingByName, RingCentral and Vonage.
We researched each provider by investigating its services, watching tutorials and how-to videos, and reading user comments. We contacted each company posing as business owners to gauge the support it offers its users. In all, we analyzed each system based on the following factors:
- Deployment options
- Level of service
- Customer service
- Calling features
- Collaboration tools
- Mobility options
- Better Business Bureau accreditation, ratings and complaints
What to Expect in 2020
In 2020, the persistent growth of cloud-hosted VoIP systems will continue to take hold. While there has been a steady move to the cloud by businesses in recent years, research shows this march to hosted systems will increase in the years to come.
Projections from Statista reveal that for the second straight year, the money businesses spend on using hosted-VoIP systems in 2020 will surpass spending with on-premises systems. That trend is projected to continue over the next five years. The research found that in 2024, the cloud-hosted unified communications market is expected to top $13 billion, compared to just $9 billion for on-premises solutions.
Another trend expected to take more of a foothold in 2020 is the increased incorporation of customer relationship management (CRM) systems in business phone solutions. While many business phone systems have long offered integrations with Salesforce and other top CRM programs, many unified communications providers are building their own CRM software right into their platforms.
One example of this is Nextiva's business communication suite, which now includes a built-in CRM solution. For no additional cost, the phone system includes call pops; contact management tools; account history information; email, notes, and call logs; and sales pipeline management tools. We would expect more unified communications provided to join in on this and begin offering these services as a value add to businesses looking to consolidate the programs and services they use.
Common Business Phone System Questions & Answers
Farzad, There's a number of great solutions out there. As with all things, the answer is as complex as your needs are. The company I work with has a fantastic VoIP platform that is very cost-effective and delivers great value... for the right customer segment. Every technology provider has certain markets and/or verticals that they service better than others. It's important that the company you work with do a full needs-assessment. Sadly, many companies will represent themselves...
Hi Paul, your question raises more questions. The answer is really not about one provider over another, it is about why your call quality is not up to par and not stable. VoIP is only as good as the connection the calls flow over. You can have a the Ferrari of VoIP providers but if they are driving on a pot-hole filled road, your ride will stink. I would suggest that attention needs to be paid to your connection to the provider as well as your internal networking. VoIP is very sensitive...