Reducing costs is a frequent concern of entrepreneurs, particularly small and midsized business (SMB) owners. One of the critical areas SMBs explore when it comes to cost reduction is communication tech, such as a cost-efficient business phone service.

Success in business requires a competent phone system. After all, constant communication is necessary for seamless operations and stronger customer relations. How companies communicate with their clients and partners varies; some choose to stick with traditional methods, others go entirely digital.

Whether you choose traditional landlines or make the switch to a cloud-based business phone service, it pays to know how much you’re spending on your business communications.

Business Phone Service: Is It Financially Wise to Stick with Landlines?

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Despite the growth of digital alternatives for communications, many businesses still choose to stick with traditional phone systems or landlines. Understandably, it’s the most efficient tool in places where newer systems don’t work.

Cellular services, for example, aren’t always a guarantee. Businesses located in small towns or cities may still experience “dead zones” or have areas where cell service is unavailable. This isn’t a problem with a landline network. You can use phones to reach clients or partners in areas with no cellular reception.

Landlines also allow multiple people to share the same number, which means business owners don’t have to worry about updating or canceling an account in case an employee moves on.

Beyond reliability, analog phone systems also boast of the following key benefits:

  • 100 percent uptime
  • A secure and stable connection
  • Minimal maintenance required. After set-up, you can immediately use your phone and do so for years.
  • Voicemail, call forwarding, call conferencing, and other features are available (usually for an additional cost per function).

One issue concerning this handy business tool, however, is the rising cost.

Why Landline Costs are Rising

California is a prime example of a state with ballooning phone bill rates. Since 2011, the state’s Public Utilities Commission has been allowing phone companies to lower or raise phone rates whenever they choose. These companies need not seek approval from regulators. Since then, the cost of phone usage or subscription has gone up.

AT&T, one of the state’s biggest service providers, used to charge $10.69 per month for its most affordable phone service. The rates froze until 2008 when it rose to $10.94. The price continues to rise and has even surpassed the $20 charge rate. Verizon, which used to charge $16.85 in 1994, increased their rates to $23 in 2008.

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To understand the rising costs, let’s look at the components of a basic landline package.

The setup fee, which is the first step, is normally under $100. If you add the monthly payment (which may cost $100 per line), your expenses will immediately add up. Say your business needs ten lines. You might end up spending a thousand dollars (or more) monthly due to the uniqueness of each line.

In case you need a switching system and more features for your telephone (e.g., call quieting, intercom, and call transfer), your service provider will require you to install a Private Branch Exchange (PBX). This private network, which gives you control over your in-house connections, might cost a few thousand dollars. You’ll also need to pay an expert to install the system’s hardware.

It sounds pretty expensive, but that’s the price of good-quality calls.

If you want to reduce your bills and still maintain phone quality, dropping the extra features helps. But what if you need caller ID, call waiting, or call forwarding – things that could enhance client servicing for your business?

Switching to Voice over Internet Protocol (VoIP) phone systems is likely a smart move for you. You can find the same features found in traditional landlines or PBX systems minus the stress and money.

Understanding the VoIP Difference

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PBX systems can work in both traditional and VoIP setups. The only difference is the channel that transmits messages in the two systems.

Traditional landline PBX systems transmit voice calls through conventional fiber optic cables. In this system, in-house connections go through landline phones.

VoIP systems, on the other hand, send voice communication via Internet protocol (IP) or data packets. This digital alternative combines data and voice capabilities on a single platform; therefore, eliminating the need for multiple providers and separate phone lines. In an IP PBX system, in-house connections may be based on VoIP.

VoIP uses your Internet connection to make a phone call. If your small business’ phone lines run on a Private Automated Branch Exchange (PABX), your VoIP provider will integrate VoIP into the system using a technology called Session Initiation Protocol (SIP) trunking.

When you make the switch to VoIP, you’ll benefit from immediate access to communications, business flexibility, and improved collaboration. It is also the more affordable alternative than traditional landline phones.

Recommended Read: How Do VOIP Phone Services Work?

Breakdown of VoIP Costs

Common VoIP packages include two types of expense: cost of usage and monthly rental fee. You’ll only pay for your monthly access to the service and the additional costs incurred for outbound calls. Some providers may offer call packages, which give you unlimited calls for a monthly fee.

VoIP expenses can vary from one business to another. The following factors can set your phone bill apart from the rest:

1. Number of Users

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Most VoIP providers bill their subscribers based on the number of active users. Consider the breakdown of a VoIP system user below:

Service providers do not calculate users according to the number of employees who use the phone. Instead, the cost depends on the number of lines you open. If you have a maximum of 30 customers on the phone, you’ll need 20 lines.

In some cases, users may have lines on two different phones: one in the office and one at home. They still count as one user.

2. Features You Need

You’re free to customize your VoIP package for an additional cost. Some of the popular features included in these packages are:

  • Voicemail to email. If you missed a call, your VoIP system would immediately notify you of a voicemail in your email’s inbox.
  • Easy management. Manage your users efficiently on the system’s online portal.
  • Cloud PBX. Manage your phone systems easily by going online. You can redirect calls and set up new user accounts with just a few clicks.
  • Conference calls. Connect multiple callers into the same call for easier collaboration.
  • Call from any device. Benefit from the freedom to add users to a choice of soft or hard phones, as well as mobile apps.
  • Call recording. Save recordings of calls for better customer service, as well as retention of important information shared through calls.
  • Web integration. Simplify communications with your clients by adding a “call-me function” to your website and automatically generate outbound calls from your VoIP system.

Unlike traditional analog phone systems, you can easily change or upgrade your VoIP plan. No hardware ties you down to pricey upgrades. VoIP users can simply request for an upgrade and enjoy the features they need.

3. Hardware

If you are planning to switch to VoIP phones, you’ll need a budget for the costs involved in switching. You can either add an adapter to your current handset or buy a new SIP-enabled VoIP phone.

If you wish to save more, ask your provider if you can keep your current SIP-enabled handsets. Most providers can unlock handsets from other companies so that you don’t have to buy a new phone.

Now, the real question is, “Is it really worth the investment?”

When you invest in a VoIP phone, you invest in a lot of features, such as:

  • High-definition voice capability
  • Faster linking to VoIP providers
  • Easier call management with full-color LCD screens
  • Video conferencing capabilities
  • Ability to handle more than ten lines simultaneously
  • Built-in web applications

Your business might not need all these advanced features, but don’t settle for the basic phone package either. Identify the features that are most helpful for your operations and customer service.

After your evaluation, invest in high-quality equipment. The price might be a little higher, but it’s a better investment compared with “inexpensive” VoIP hardware.

4. Duration of the Contract

The length of the agreement is one of the biggest influences in cost. Providers might offer a low price for your package if you agree to a contract period of 12 to 36 months. The longer your contract is, the lower your bill will be.

Many VoIP providers recommend month-to-month contracts for businesses in need of flexibility. This contract, however, comes at a higher price. Monthly contracts are ideal for startups and small businesses since they’re just beginning in the market, but more extended contracts are often more cost-effective.

Two-Way Function: VoIP Cuts Costs and Simplifies Communications

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VoIP is the ideal form of business communication for small businesses looking to save and still maintain high-quality calls. Today’s services offer customizable solutions that will benefit even the smallest of SMBs.

Leveraging VoIP hits two birds with one stone: it increases financial efficiency and simplifies your communication system in several ways.

Reduce Expenses With a Single Provider

VoIP systems reduce costs by cutting your phone bill expenses. You need don’t need to pay multiple providers for mobile, office, and data services. A singular provider can handle all of these needs.

Less Burden on In-House IT Team

Hosted VoIP solutions take a burden off your IT team’s shoulders. The provider is in charge of managing and maintaining your software, hardware, and network. They give your team more time to excel in other areas of your business.

Less Need for Installation and Hardware

VoIP phone systems do not require extensive hardware installation. Your provider will send phones that you can plug into the Internet so that you can start making calls.

Increase ROI with Better Payment Methods

VoIP providers allow users to pay monthly. You can customize your payment method according to your package, financial capacity, and more.

Don’t Just Focus on the Price Tag

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Budget will always be a concern. Whether you’re considering switching to VoIP phones or looking for the most affordable VoIP phone solution, don’t let the cost alone influence your decision.

Consider the provider you’re working with: Are their services worth their price? Can you depend on them in case you need support? Are they capable of providing high-quality VoIP phone solutions?

Make your investment worth it by working with the right provider. To find a provider that suits your needs, consider the following:

Quality of Service

Before you settle on a potential provider, check the quality of their services. Apart from voice call quality, ask if their phones and services have other specifications or functions that will benefit you and your users. How is their current level of service?

Learn about their reputation in terms of reliability, latency, and more.

Keep in mind that your Internet connection plays a vital role in the success of your VoIP phone system. Upgrade your infrastructure first before you switch to VoIP.

Customer and Tech Support

One common mistake businesses make during their search is not asking about their support options. They’ll realize the need for support only when something goes wrong in the future.

Be sure to ask the following questions: How can you contact the provider in case an emergency happens? Can you rely on the company’s tech support? Are they available 24/7?

Reviews are one of the best ways to learn more about a potential company’s customer support. You look at testimonials from current and previous clients of the company to get their opinion of the service. Focus on reviews that specifically discuss customer support.

Terms and Conditions

If you are satisfied with the price, features, and plans of a potential provider, review their terms and conditions. Visit their website and look for “Terms of Use” or get in touch with a customer service provider to learn more.

Price and quality should always be important considerations when sorting out your business communication options. It’s OK to look for more affordable options, but never settle for low-quality phone systems. Look for solutions that provide quality service and don’t burn your bank account.

Lingo Communications takes the time to understand your needs and budget concerns. We provide modern, IP-based VoIP solutions and other communications technologies. Trust our expansive network to take your communications efforts up a notch higher. In terms of customer service, we are also the best in our industry.

Improve your business communications with a reliable name in the industry. Click here to learn more about our business solutions.