The Best Business Phone Systems of 2023

Modern phone services combine PBX (private branch exchange) functionality with internet-based calling, aka VoIP (Voice over Internet Protocol). Unlike a traditional office phone system, cloud platforms unify voice, video and messaging in a single app. However, the best business phone systems provide advanced features, like AI-enabled analytics. These tools improve experiences while informing decisions. We tested dozens of VoIP phone services and evaluated them based on usability, pricing and features.

What is a Business Phone System?

A business phone system is more than just a tool that lets you make and receive phone calls. Today’s business phone systems are complete unified communications systems that allow you to communicate with customers and clients in a variety of ways. Today’s top systems provide phone service, video conferencing, text messaging, internal messaging, online faxing and much more. Most of the leading business phone systems utilize VoIP technology, which provides the functionality needed to offer dozens of useful tools and features, like unlimited calling, visual voicemail, call recording and automated attendants. In addition, most of the best phone systems don’t require a standard office phone. Many have desktop and mobile apps that let users operate the entire system from the desktop computer or mobile device.

Multiline business phone systems have various price points and structures. The hosting method of the PBX service and equipment determines your cost structure. The expenses of an on-premises system are mostly one-time, upfront fees, while cloud-hosted phone systems revolve around monthly fees. The prices for each type of phone system vary by provider, the size of your team and the features you want.

Cloud-Hosted Pricing

Since the hosted PBX equipment is stored in the cloud, there usually aren’t any large installation or setup costs for these phone systems. Cloud-based phone systems typically cost $10 to $75 per user per month. Many office phone and unified communications system providers have several service plans that vary in price and features. Some allow businesses to mix and match service plans, ensuring each employee has access to the tools they need.

For example, a service plan that includes the basic features – unlimited calling, voicemail, caller ID and call forwarding – might be $25 per user per month. An upgraded plan with more advanced features – such as automated attendants, call recording and ring groups – might cost $35 to $40 per user per month.

To give you a better idea of pricing, here are some cost estimates for businesses of various sizes. (These estimates do not include taxes or other surcharges that all providers add.)

• 10 employees: $100 to $500 per month
• 25 employees: $250 to $1,250 per month
• 50 employees: $500 to $2,500 per month
• 100 employees: $1,000 to $5,000 per month

A company using a cloud-hosted system will likely want new IP phones as well. Phones typically cost between $50 and $400 each. If you have a cloud system, some providers rent phones for as little as $5 each per month.

On-Premises Pricing

While cloud-hosted systems mostly revolve around monthly recurring fees, on-premises system costs comprise mostly one-time, upfront fees. On-premises services cost anywhere from a few hundred to several thousand dollars per user. Since all associated equipment is housed on-site at your business, there are also large installation and setup charges. Some providers have a set installation fee, while others charge a percentage of your per-user equipment fees.

The costs of on-premises systems are much more customized than those for cloud-hosted systems. Large organizations that can afford the upfront expenses typically use on-premises services. A business with 50 employees should be prepared to spend $30,000 to $60,000 in one-time fees for all the equipment and installation of an on-premises system.

There are also some smaller monthly fees with on-premises phone systems. On-premises VoIP phone service users must pay for SIP trunking or PRI circuits to connect to a dial tone. Depending on your call volume, this could be several hundred or several thousand dollars per month.

Negotiation

When you’re running a business, every penny counts. You want to make sure you aren’t overpaying for the services you use. Whether you go with an on-premises or cloud-based phone system, follow these tips to get the best deal possible:

• With cloud-hosted systems, there often isn’t a lot of room for negotiation. Most cloud services have set prices based on the plan tier and your number of employees. However, you can ask a few questions to see if there is any wiggle room in the price. Since these are monthly services, your best chance at getting a discount is by committing to the company for a long period. You should see if there are discounts for signing a long-term contract or paying for a year in advance instead of monthly installments.
• Another money-saving option for a cloud-hosted system is to start with a new service near the end of a quarter. Some representatives we spoke to indicated that there is more room for discounts at the end of March, June, September and December.
• There is often more room for negotiation with an on-premises system. These systems are built for you, so depending on how much you are spending, vendors may be willing to add some features for free to land your business. You should also always ask if they can lower the installation cost for you and if they’ll reduce the user-licensing fees if you commit to expanding your service in the future.
• An area you can negotiate with both types of systems is the phones. Many providers offer a lot of phone options and are willing to give you upgraded equipment depending on the service and contract length. Also, they often run specials that include free phones. See what kind of phones they offer and whether they would be willing to upgrade them if you commit to the service.
• Regardless of the type of system you choose, shopping around and getting several quotes is always important. Even if the first one you investigate is the one you want, researching other service providers could help you get a lower price when you commit. If the system you like best isn’t the cheapest, ask the vendor if they’re willing to match the lower price. If you tell them that another system you really like is giving you a better deal, they may lower their fees to get you as a customer.

Many providers require a contract for phone service. It is imperative that you read all the details carefully before signing it. Make sure the agreement terms 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 (and for an estimated cost of those charges). The last thing you want is to open up your first month’s bill and find it is significantly higher than you anticipated. Not only does that negatively impact your budget, but you also start off on the wrong foot with your vendor.

When choosing a business phone system, you should answer a few questions. First, what type of phone connection do you want: landline, VoIP or virtual? Second, how do you want to host the system: on your business premises or in the cloud?

All VoIP business phone systems today, regardless of type, are PBX systems. The PBX equipment allows these systems to provide most features and tools, such as multiple extensions, voicemail and call recording. However, the type of system you choose affects where that PBX equipment is physically located.

>> Learn more: What Is an Auto-Dialer?

Your IT staff needs to install and maintain PBX equipment with on-premises systems. Conversely, cloud-hosted solutions require minimal IT resources since all PBX equipment is housed and maintained by the phone system provider. With the cloud-hosted option, your IT team can focus more on managing the system’s features than the infrastructure.

Traditional Landline

Traditionally, businesses used analog landline telephone systems. These systems were connected to the public switched telephone network and ran on the company’s copper wiring.

While these multiline phone systems were extremely reliable, they required expensive equipment to install and maintain. Besides the copper wiring that had to run through the business facilities, landline systems required costly PBX equipment. The PBX switches calls between the business and the telephone network. It’s also necessary for various calling features, such as voicemail, conference calling and automated attendants. This PBX equipment (and the other hardware required to run the phone system) would be housed on-site at the business, typically in a server room or closet.

>> Learn more: What Is Interactive Voice Response (IVR)?

Today, analog multiline landline phone systems are becoming obsolete. Telephone companies no longer develop new analog systems or provide updates. It is increasingly difficult to find IT professionals with the skills to keep these systems running. Telephone companies have largely shifted their attention to VoIP technology.

Some landline systems now use a mix of landline and VoIP technology. A company might have a traditional landline connection. Instead of wiring throughout the building, the business uses an internet connection to tap into that outside landline.

Very few new companies are choosing landline phone service. Because support for these systems is diminishing, they are best suited for a business with an in-house IT team that is skilled in this technology and can handle all the maintenance and upgrades. However, landline systems are the only option for businesses in communities with no high-speed internet access.

VoIP

Nearly all new business phone systems use VoIP. Instead of running on copper wiring as 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 you make a phone call with VoIP, your voice is instantly converted to a data packet that moves through the internet like an email or shared image. Tapping into an existing data connection saves you the trouble and expense of installing and maintaining phone lines throughout your offices or stores.

>> Learn more: What Is Non-Fixed VoIP?

VoIP business phone systems also work in conjunction with cheaper and less bulky PBX equipment. This allows small businesses to access phone features they previously couldn’t afford, like auto attendants, conference calling and call recording. Like a landline system, the VoIP provider allows you to choose a phone number with a local area code, a toll-free number or both.

VoIP platforms easily integrate with computers, which lets employees make calls from their own devices and have voicemails sent directly to their email, among other things. It can also benefit companies using CRM programs because you can use the systems in tandem.

Ease of use and scalability are big benefits of VoIP phone systems. Most internet-based services can be managed from an online portal. By logging in to the system, administrators can assign phone numbers or extensions and turn various features on and off.

VoIP providers make it easy to add new users. Administrators can quickly log in to the portal to add new lines. This simplifies the process of setting up new employees with their own phone lines.

When VoIP was first introduced, call quality was a concern. Many people felt calls sounded staticky; others had problems with calls dropping. As the technology has improved, so has the call quality. In fact, the difference between VoIP and landline call quality is now so insignificant that most landline callers have no idea when they are speaking to someone using VoIP.

Soon, nearly all U.S. phone users will use VoIP. 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.

On-Premises VoIP

With an on-premises system, 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 your phone system on your business premises lets you keep several traditional landlines working alongside SIP-trunked VoIP lines.

Like landline systems, on-premises VoIP systems have all the equipment installed and housed onsite at the client business. The hardware is typically stored in the business’s server closet.

With this option, you have total control of your system. You aren’t relying on anyone else to ensure it’s running, and you can configure it to your exact specifications. However, this also means your IT staff must handle all repairs and upgrades.

One benefit of this hosting method is tighter security. On-premises systems don’t have the same security concerns as cloud-hosted solutions since all your data is stored within your business. You can configure your firewalls exactly how you want to protect your phone system from any intrusion. This makes on-premises hosting the best option for companies with highly sensitive phone data that can’t entrust it to cloud-based providers.

Other businesses well suited for on-premises phone systems are large corporations that can afford the upfront costs and businesses that want a service they can customize extensively.

Cloud-Hosted VoIP

Cloud-hosted phone systems are increasingly popular among small businesses. The equipment is housed in the cloud by your service provider, which handles all maintenance and upgrades. The only hardware you need is the phones themselves.

Most cloud systems are essentially plug-and-play. Once you activate your service and receive your phones, you can plug them into any Ethernet port, then make and receive calls with them.

The downside to cloud-based solutions is that you’re at the provider’s mercy to keep your service running. Most top vendors build several redundancies into their systems to ensure this. For instance, they have multiple data centers so that if one goes down, the data can be transferred seamlessly to another center to ensure the continuation of your business’s communications service.

A critical consideration in a cloud-hosted system is bandwidth. Consult your business’s internet service provider about the bandwidth required to support a new phone service. Most cloud providers we considered require just short of 100 Kbps per phone call for the best quality. You’ll also want to estimate your internet needs for other equipment, such as computers, servers and Wi-Fi-connected devices.

>> Learn more: How to Optimize Your Network for VoIP

Cloud-based VoIP systems are ideal for small businesses. They have few upfront costs, the consistent monthly charges fit easily into a budget, and they don’t require trained IT experts to keep them running.

Nearly all providers we examined have an uptime of at least 99.99%. That means their systems are down for just a few minutes each year. Still, power or internet outages can disrupt your connection. Fortunately, many VoIP business phone systems provide failover options, which forward incoming calls to an analog or cell phone. This feature supports business continuity during an emergency.

Virtual Phone System

Virtual phone systems differ from regular office phone systems. When someone calls your business phone line, they aren’t necessarily calling a dedicated number to a phone inside your office. Instead, they call a virtual phone number that routes calls to you (or your employees) wherever you are.

Virtual phone systems are essentially extensive call-forwarding systems. Your business has a central number, with each employee receiving their own extension. Instead of transferring customers to an employee’s office phone, the virtual system transfers calls to their mobile and home phones. Employees control the numbers their business calls go to and the order in which those numbers ring. Virtual PBX systems also offer other valuable features, including automated attendants, voicemail, voicemail-to-email, music on hold, call forwarding and online faxing.

These systems are ideal for businesses that don’t need a full-fledged phone system. This could include solopreneurs who work from home and don’t want to give out their personal phone number to clients as well as small businesses with a remote workforce. This service allows them to present a professional image at a fraction of the cost of complete phone systems.

Desktop Phones

Once you decide which type of phone system you want, you need to choose the actual phones. (This doesn’t apply to virtual systems, of course.)

Most VoIP business phone services are compatible with various IP phones and offer adapters so analog phones can connect to their systems. You can likely continue using any phones your company already owns.

IP phones come in various styles. There are cordless phones, conference phones and traditional corded options. The phones can cost anywhere from $50 to $1,000 each. The per-phone analog adapter can cost up to $60, and a traditional fax-machine adapter costs $100 to $150. If you don’t want to buy the phones outright, some providers let you rent phones for a monthly fee.

The benefit of buying IP phones from your phone system provider is that they come completely configured and ready to use once you plug them in. If you buy phones from a third party, your IT team will need to configure them to work with the system you use.

If you can afford it, it makes sense to upgrade your phones. If you can’t afford new phones, carefully consider how much the workaround will cost your company in the long term.

Business phone systems are full of valuable features and tools. Some VoIP providers have a few dozen features; others offer over 100.

Unlimited Calling

Most of today’s VoIP phone systems allow unlimited incoming and outgoing calls. However, this usually only applies to domestic calls and calls using local phone numbers. Many providers impose extra charges and restrictions for toll-free calling.

Voicemail Options

Each employee has access to their own voicemail. Most systems allow you to check your voicemail from anywhere. VoIP providers also offer visual voicemail and voicemail-to-email. The former lets you see a list of your voicemails and listen to them in any order, whereas the latter sends an email with your message as an audio attachment.

Caller ID

You can see the number of the person calling you. The caller ID appears on desk phones or through a softphone on your computer or mobile device.

Speed Dial

Instead of dialing a seven-digit number, you can push one button to connect to the numbers you call most. This feature applies to desk phones, but many softphone applications provide a favorites list for your most-used contacts.

Personal and Company Directories

A personal directory is an easy way to manage your contacts. It gives you access to your contacts’ phone numbers whenever needed. A company directory displays every employee (and their contact information).

Do Not Disturb

When working on a big project or important task, you can put your phone in this mode to prevent interruptions. Your phone will not ring, and all callers are sent directly to voicemail.

Single and Multilevel Automated Attendants

An auto attendant automatically answers calls to your business, plays a greeting, and directs the caller to the person or department they are trying to reach. Advanced systems may offer multilevel auto attendants, which offer more extensive options, including transferring the caller to another auto attendant or IVR system. [Read related article: 5 Reasons You Should Consider Using a Virtual Receptionist]

On-hold Music

You can choose the music callers hear while they wait on hold. Most vendors offer prerecorded tracks; others let you upload a custom music playlist, which may include messages for callers.

Paging

You can use your phone to send a message to everyone. This is similar to a traditional intercom system. Also, certain services can connect your VoIP system to a physical paging system.

Presence

This shows employees whether their colleagues are on a call or available to chat. Some solutions let users choose a status like out-of-the-office, away from my desk or in a meeting.

Call Reports

This feature provides analytics on your company’s phone usage. You can often break down usage statistics by filters such as employee or department.

Online Management

All VoIP systems can be managed in an online portal. From the dashboard, you and the other administrators can add users, set phone numbers, review call reports, create ring groups and see monthly statements. Employees can also access the portal to check their voicemail, view a company directory and set call-forwarding routes.

Call Forwarding

Your office phone can automatically forward calls to another number. This could be a mobile phone, another employee’s line, or an external VoIP or analog phone.

Call Recording

Many cloud-based phone systems give you the ability to record your calls. Depending on the phone provider and administrator settings, this feature may be on-demand or automatic.

Call Queues

This tool is typically used in call center settings or companies with high call volumes. It puts callers “in line” so their call can be answered when operators become available.

Extension Dialing

Employees can dial a co-worker by a three-, four- or five-digit extension instead of their entire phone number.

Ring Groups

You can create ring groups for employees who answer calls from the same group of customers. For example, your customer service team might have its own ring group. The entire group is notified when a caller asks to speak to a customer service representative.

Call Transfer

Employees can quickly transfer calls to their colleagues. Some solutions offer warm transfers, which let you speak with your co-worker before passing the call.

Speakerphone

Many IP phones include a speakerphone option that allows you to speak to a caller without using the phone’s handset.

The best business tools and technology fit into existing workflows and improve communications. However, what works for a solopreneur or small team may not satisfy the needs of a small to midsize business. Since your phone service is a vital business technology, comparing your options carefully and considering several factors before deciding on a solution is crucial.

1. Develop your use cases.

Decide who will use your business phone service, what they will use it for and where. List employees and their locations (on-site, remote or hybrid). Identify specific communications requirements, such as the ability to host video conferences or share files. Also, determine which team members need hardware, such as desk phones or headsets.

2. Evaluate your options.

Think about the differences between phone systems and determine whether you want an on-premise or cloud-based service. Estimating short- and long-term costs for each approach is a good idea. Remember to factor in phone equipment and international calling expenses.

Next, go through user reviews on third-party sites and the Better Business Bureau. Look for guides that break down differences among services. Also, request recommendations from professional groups. After researching solutions, develop a list of potential vendors.

3. Review pricing and features.

Use a spreadsheet to compare providers. Enter features, prices and any capabilities that stand out. Also, make a note of customer support options and see if the vendor offers additional integrated projects, such as webinar tools or helpdesk software.

4. Set up demonstrations and trials.

Several business phone services provide on-demand demos in exchange for your contact details. Others will set up a meeting where company representatives answer your questions and walk through various functions based on your specific use cases. Also, take advantage of free trials. This allows your team to test the mobile and desktop applications, different features, and admin panel. Remember to interact with customer support to assess response times and agents’ familiarity with the system.

5. Request input from your team.

Once you’ve documented each company’s details and tested the software, ask your team to weigh in. Encourage them to share their experiences and concerns. With their input, decide what training your employees will require and how this impacts your decision. Look for a VoIP service that fits your budget while serving the needs of your staff.

A professional phone number gives your company credibility in the eyes of consumers. Cloud-hosted services also reduce costs and help businesses scale operations while enhancing customer and employee experiences.

Lower Costs

Many companies switch to VoIP to save money. Unlike an on-premises system, your business isn’t responsible for server maintenance or upgrades. A cloud service’s flexibility means you don’t necessarily need hardware. Employees can use their existing computers or cell phones for free or add an analog telephone adapter to connect analog desk phones.

Better Customer Experiences

Advanced features like auto attendants and customer relationship management (CRM) integrations translate into satisfying customer experiences. Clients can reach the correct department or select an employee by name through the company directory. Likewise, employees see ring group details (the line your caller chose) and customer information, such as when they last called or their survey results. This enables your staff to personalize their greeting and meet customer expectations.

Scalability

With a VoIP phone service, you can add or remove lines, features, and user permissions from the admin dashboard. Call reports provide insights about call volumes and missed calls, which informs scheduling and hiring decisions. These capabilities help small businesses scale operations to meet demand.

Increased Productivity

The best business phone systems of 2023 unify business communications, resulting in less application switching. They also provide virtual receptionists and IVR menus, reducing call transfers. AI-powered tools can generate voice and video summaries, highlight action items, and track assigned task progress. Moreover, admins can schedule recurring reports to keep leaders abreast of call volumes without performing the same steps weekly or monthly.

Although some employees returned to the office in 2023, the desire for flexible communications isn’t going away. In addition, businesses increasingly factor interoperability, big data, third-party vendor contract consolidation, security and automation features into their purchasing decisions. In short, VoIP adoption continues to dominate the market, and industry leaders are rolling out new capabilities to retain their market share.

VoIP Market Growth

Internet-based phone services continue to experience high growth and adoption rates. MarketWatch estimates that the global VoIP market size will grow at a compound annual growth rate (CAGR) of 14.66 percent between 2022 and 2028. Likewise, ResearchAndMarkets.com expects the global mobile VoIP market to reach $165.3 billion by 2028, an increase of 19.5 percent CAGR during the forecast time frame.

The video conferencing segment of mobile VoIP realized the most growth in 2021. While conventional internet-based systems focused on voice calls, most modern services include video tools in their software packages.

Indeed, Verizon’s Small and Midsize Business Outlook and Technology Adoption Study found that 73 percent of respondents added or upgraded communications networking hardware as of March 2022. In addition, “77 percent either added or upgraded technologies that support connectivity since the start of the pandemic, including web conferencing tools, bandwidth, and high-speed internet.”

Mergers, Acquisitions and Strategic Partnerships

In 2023, RingCentral announced that it is continuing its strategic partnership with Avaya, a business communications technology company. The purpose of their relationship is to move Avaya’s on-premises customers to Avaya Cloud Office by RingCentral.

The largest acquisition in 2022 involved the information and communication technology provider Ericsson and Vonage Business Communications. This $6.2 billion investment enables Ericsson to leverage Vonage’s vast developer community and drive the creation of communication APIs.

Ooma acquired Junction Networks Inc., known as OnSIP, in 2022. Both companies are well known for their ease of use and customer support services. The acquisition allows Ooma to expand its business services and continue to “make cloud communications approachable for small businesses.”

Also, in 2022, GoTo purchased Miradore, a mobile device management product. GoTo integrated Miradore capabilities into GoTo Resolve, allowing for “flexible end-to-end support and management of all devices for small and midsize businesses.”

Additionally, Verizon expanded its strategic partnership with Microsoft by launching Verizon Mobile for Microsoft Teams. In a press release, CEO of Verizon Business Sampath Sowmyanarayan said, “What we’re hearing from customers is a need for the true mobilization of unified communications and collaboration to support their hybrid work environments.”

Emerging Technologies Driving VoIP Feature-Sets

Several of the best business phone systems in 2023 updated their feature sets. These include Vonage’s low-code and no-code developer platform (Vonage AI studio) and RingCentral’s offering single sign-on with its entry-tier package. Many providers also enhanced their AI capabilities, improving real-time transcriptions and automating repetitive activities.

Here are ways cloud-based phone systems will evolve to support small businesses better:

• Interoperability: Strategic partnerships improve the quality of integrations. Corporate phone customers look for solutions that let employees use their existing tech stack to make internet-based phone calls and record communications data. You can expect more low-code or no-code tools for incorporating business phone features into other applications.
• Big data: Small companies embrace big data thanks to built-in business intelligence and analytics tools. Voice, video and messaging provide a wealth of information about a company’s customers and processes. We expect to see more cloud services using AI tools to generate insights from communications data.
• Security: Cybersecurity plans address vulnerabilities and create standards for technology decisions. Look for more phone providers to include end-to-end encryption and zero-trust architecture for video, voice and messaging services. Also, we believe more providers will share a software bill of materials to support companies that work with federal agencies.
• Vendor consolidation: The sheer number of cloud services brings complexity to work environments. All-in-one platforms allow companies to shrink the number of third-party vendors they work with. We predict that businesses will choose unified communications platforms over voice-only services.
• Automation: With a tight labor market and rising costs, small businesses need all the help they can get. Automation features let them streamline processes and eliminate repetitive tasks. We anticipate that VoIP services will promote AI-powered tools that increase productivity.