Are you looking to estimate the cost of a phone system for your small business?
We researched over 20 of the leading business phone system providers serving UK small businesses. Here’s what our research concluded:
The cost of a small business phone system depends largely on five contributing factors:
- hosted or self-hosted i.e. built on your hosts servers, or own servers
- number of users i.e. extensions you need
- call management & reporting features i.e. interactive voice response, voicemail to text
- hardware i.e. deskphone, tablet and smart phone docking station
- call tariffs (inc. APIs) i.e. inclusive minutes per month
Once you’ve addressed the points above, then you can accurately estimate the cost of your phone system and make the right decision.
In today’s competitive phone market, there are packages to match all size of budget.
- For small micro-business budgets: sign-up to a free business VOIP phone like the one offered by 3CX (with lite features), or begin a free trial including full features with RingCentral.
- For bigger, business budgets: if you have, say, 20 – 50 users and want an all-inclusive, mid-range, hosted solution, set a budget between £600 – £1,600 per annum (*less call charges, but with mid-range features).
(Note: free trials, like the one with RingCentral, offer a zero-risk entry. But if you continue, you lock in at the corresponding rate for your package selection.)
In this article, we’ll digest our research findings, answering the question “How much does a business phone system cost?” giving you lots of practical pricing examples and buying tips based on the leading providers.
Contents
Average cost of a small business phone system
An easy way to grasp business phone system pricing is to consider it in light of users and features.
To buy a modern, voice over internet business phone system in today’s market, be prepared to pay on average per year:
- For a solo operative needing only lite features (1-4 users): FREE – £190
- For managers of a small team needing professional features (up to 10 users): £180 (without minutes) – £2,400 (including unlimited voice & video call minutes)
- For corporate departments needing enterprise-level features (up to 50 users): £930 (without minutes) – £14,000 (including unlimited voice & video call minutes)
Business phone system cost by phone type
Let’s also take a look at the cost of business phone systems according to the technology used:
VOIP business phone system costs
VOIP business phone systems use internet-based voice call technology – hosted in the ‘cloud’. These virtual phone connections makes VOIP cheaper than an analogue system with physical line, plus VOIP is more expandable and feature rich. However, you must have a fast enough broadband connection to run it effectively for your business.
VOIP Options
VOIP providers charge by monthly subscription. This is standard practice for SaaS (software as a service providers).
For your budget planning, this means that there are recurring baseline costs besides your call tariff fees. If paid upfront yearly i.e. 12 months fees paid in bulk, providers offer discounts on your subscription fees.
Their pricing packages are almost universally aimed at 4 types of customer:
- solo operative: under *£20 per user, per month
- managers of small teams: *£20 – £30 per user, per month
- corporate departments: *£30 – £40 per, user per month
- large call centres: £bespoke pricing via sales team
*The pricing above typically applies to 1 – 5 users, with sliding scale of discounts applied (to reflect economies of scale) when more users are added.
VOIP phone system discounts based on number of users
NUMBER OF USERS | VOIP PRICE DISCOUNTS |
1 - 10 | minus £5 per user, per month |
11 - 20 | minus £1 per user, per month |
21 - 50 | minus £1 per user, per month |
51 - 99+ | minus £1 per user, per month |
Paying annually upfront, rather than monthly, you save considerably. As much as 28% – 38% on the total cost of fees in some cases.
Breakdown of VOIP features
Solo operative’s get:
- iOS or Android app
- call logging
- team meetings
- 24/7 support
- basic CRM contact integrations and
- inclusive minutes
Managers of small teams get:
- larger video meetings
- better/smarter software integrations
- standard call management features
- simple reporting
Corporate departments get:
- call recording
- more user-friendly time and hassle saving features
- collaborative features
- ‘the breaks’ taken off limits
Average VOIP costs
On average you’re paying about £25 per user, per month for a VOIP business phone system.
Growing Your VOIP network
Growing your phone network with VOIP is easy. The connections are all virtual and require no hardware upgrades. You simply bolt on more users at the flick of a switch and by plugging in an IP phone into your local area network.
VOIP benefits
VOIP features are there to support your phone users work effectively, efficiently, productively and collaboratively.
Multiple devices, integration to other software, mobility are all benefits.
VOIP is suitable for:
All businesses can make profitable use of VOIP business phone. Even the most traditional business phone users shouldn’t feel a culture shock when migrating to VOIP from ISDN/POTS (analogues systems). Switching to VOIP is relatively seamless.
Is VOIP future-proof?:
Yes. As BT is switching off the UK’s analogue phone network in 2025, it’s most definitely a future-proof investment to switch over to VOIP sooner rather than later.
IP-PBX business phone system costs
IP-PBX phone systems are private branch exchanges, or internal phone systems, that run on your broadband internet, rather than on analogue lines.
IP-PBX functioning is controlled by a server, that operates a bit like a proxy server in a local area network. Phone lines and telephone endpoints (known as clients) each have a unique SIP address which is registered with the server.
This way each line and phone is able to make both internal and external phone calls.
IP-PBX is equivalent pricing to VOIP phone, as providers have merged the offerings. This also makes IP-PBX cheaper than analogue PBX phone systems.
IP-PBX Options
You can install two types of IP-PBX for use in your business.
On premises IP-PBX
This is where all the hardware to run the system is installed on your business premises. The server, the networking all those big boxes with flashing lights literally sit within your building.
Pros:
- greater technical control
- perhaps cheaper than hosted if you configure a solution to piggyback no existing broadband networking
- internal maintenance and monitoring supervision needed (if you have the IT resource)
Cons:
- single point of failure (if your server goes down, there is no back-up or redundancy)
- very technical job to manage
Cloud / Hosted IP-PBX
No hardware to handle, entirely up in the cloud. A virtual network, if you will.
It does the same job as the self-hosted IP-PBX, but the cloud system is delivered remotely over the internet connection, from the providers’ end. There’s no maintenance involved for the client business.
Pros:
- disaster recovery contingency (usually run over multiple servers)
- no on-site technical team needed
Cons:
- more ‘cookie cutter’ than a tailored self-hosted solution
Breakdown of IP-PBX features
IP-PBX providers like Nextiva, RingCetnral (and the likes) offer a well rounded line-up of technical features including (but not limited to):
- voice and video calling
- video conferencing
- call recording
- screen sharing
- auto-attendant
- iOS and Android app
- voicemail transcription
- management recording
These work with your team to increase productivity – saving time and money.
Average IP-PBX costs
IP-PBX and VOIP are often packaged up and offered by the same providers on an interchangeable basis.
So, the same costs as VOIP applies.
On average, you’ll paying about £25 per user per month for a IP-PBX business phone system.
Growing Your IP-PBX Network
Being virtual, IP-PBX networks are expanded with relative ease, just as in the same fashion as our VOIP description above.
However, you must always account for taking the administrative hit if you self-host your own IP-PBX.
IP-PBX benefits
IP-PBX brings greater communicative ease and capability in an age of remote correspondence. Your team can actually work they way you want them to work and even be assisted technically to deliver greater returns on the investment.
IP-PBX is suitable for:
Ideally, small to medium sized teams who would benefit from some of their complexity in communicating ironed-out by smart network tools and features.
Is IP-PBX Future-proof?:
Because IP-PBX is built on voice over internet, it is on trend for all the changes occurring within the telecommunications landscape.
Analogue PBX business phone system costs
Analogue PBX is the ‘old-money’ of the business phone systems market. It runs off traditional physical lines (copper wires) and is controlled by physical switch boxes hosted on premises. PBX phones are specially adapted deskphones with multiple lines and some in-built features like switching and voicemail etc.
Analogue PBX carries the material cost of installing and maintaining physical lines, rather than virtual lines. Therefore, the cost of an analogue PBX business phone system is much higher than IP-PBX or VOIP.
Analogue PBX Options
Generally, analogue PBX phone systems fall into one of two categories:
Analogue only
This is analogue through and through. Physical lines from start to finish. No internet connections.
Hybrid
This is a combination of both physical lines and IP (internet) phone connections. Usually installed for failsafe, so if one system falls down, the other takes over – maintaining business continuity.
Breakdown of Analogue PBX Features
Here are some of what you can expect an analogue PBX business phone system to do:
- extension lines
- call transfers
- speed dial
- call forwarding
In short, the traditional office phone features.
Average cost of an analogue PBX phone system
To buy an analogue PBX business phone system for self-installation, you pay:
- Starter pack for small business (2 phone lines, 7 extensions with 4 deskphones, caller ID + more): £235.00 (outright)
- Pro pack ideal for hotels (8 phone lines, 16 extensions, expandable to 16 lines and 128 extensions, with 8 deskphones + more): £610.00 (outright)
Growing Your Analogue PBX
Analogue PBX business phone systems can only be expanded two ways:
- activating underutilised capacity for lines and extensions in your current system (you buy only cable and client deskphones)
- upgrading your current system which has reached capacity (you must buy an entirely new analogue PBX system)
Analogue PBX Benefits
On a temporary construction site, should the host business want the builders to run their cordless phones separate to the business’s network, then a hybrid system could benefit, for example.
Analogue PBX Is Suitable for:
Small businesses like hotels which have multiple extensions and lines will benefit from PBX phones systems. Their business can run smoothly without experiencing any call congestion or missed in-bound opportunities.
Is Analogue PBX Future-proof?:
No. It’s currently being phased out and BT has scheduled a complete switch off of it’s nationwide analogue phone network by 2025. It’s time to migrate to IP-PBX/VOIP, if you haven’t already to avoid incompatibility.
Evaluating value for money, not just cost
It’s not always beneficial to go for the cheapest deal with the cheapest provider. You want to take a well rounded view and take into account all considerations.
Are you getting the necessary features?
Make sure you don’t undercut your ROI (return on investment). If you are attracted to cheaper price packages, you will forego features. Make sure that your compromise doesn’t leave your phone system without mission critical or profitable capabilities. Weigh up the decision thoroughly.
Have you calculated call charges?
Voice and video minutes charges are sometimes bundled inclusively into packages. But other times not. Make sure when you are deciding which package to buy that you are accurately comparing like-for-like.
Will you need software integration?
Integrating your business phone system with other business software like CRM, for example, can be very advantageous to how your operation runs. However, integrations are often only available to the more premium package subscribers. Scope out all the integrations you’ll need and make sure you account for this in budgeting, before making your decision.
Accounting for expansion or change
Your business is likely to grow. And so will your team. Think though the expansion profile of your plans and incorporate a little slack in your business phone system budget to pay for more users.
Save time and money comparing quotes
The business phone system market is flooded with providers and options. It can be a full time job just staying on top of the latest facts and figures.
And then, of course, there is the procurement exercise of requesting quotes and calculating estimated costs.
To save you the time and money of doing this all yourself, we took the time to publish our research in this price guide to answer the question, “How much does a business phone system cost?”
If you would like some professional assistance in gathering comparative quotes from the leading business phone providers, simply click the button below: