The True Cost Of Cloud VoIP
How much a cloud-based unified communications VoIP solution cost? This is a question that we get asked all the time. Read on to learn how cloud VoIP services are sold and priced, how that compares to a legacy premise based phone system, and what other hidden costs and benefits you might find when looking at UCaaS solutions.
Pricing Models
Cloud Based VoIP
The pricing model for a cloud-based VoIP communications system consists of two main components:
a) Hardware required to connect to the cloud, and b) the monthly service costs.
Unlike the legacy premise-based PBX, the up-front hardware costs to deploy a cloud-based VoIP solution are significantly less. Modern VoIP telephone handsets are relatively inexpensive, and some users may not need a phone at all, opting instead for a headset attached to their existing computer or a mobile app. Your computer network may need updated LAN switches that feature Power over Ethernet (PoE), but even with PoE requirements, the initial investment in hardware is less than an on-premise PBX.
Monthly services on cloud-based VoIP systems are delivered over the internet from the cloud providers. Typically, there are different price tiers for different user needs and the majority of companies can get by with standard or basic plans for most users.
Legacy On Premise PBX
The Legacy on-premises PBX ownership model also consists of two main components:
a) The PBX hardware, and b) the monthly phone line service from your local telco carrier.
A legacy PBX requires a significant hardware investment up front making it less affordable initially when compared to cloud-based VoIP. Most users will need a physical handset. When deploying a VoIP PBX, you may also require updated LAN switches that feature Power over Ethernet (PoE). The PBX model typically also requires a more sizeable labor investment for the initial installation and it also carries additional maintenance costs for software updates and programming. Features and functionality are built into the base PBX platform software.
Monthly phone line service is required from your local carrier to connect your PBX to the public switched telephone network (PSTN). This line service can be in the form of analog lines, PRI, or SIP trunks depending on your needs, use case, and availability.
Cost of Ownership Comparison
For the cost of ownership comparison below, we will use the example of a small, professional office with 20 employees. The office has a primary receptionist/administrative position that answers incoming calls and transfers them to the appropriate destination. We will examine the costs over the typical 5 year ownership period common to an on-premise PBX.
Cloud Based VoIP
Hardware Cost:
20 VoIP Phones $ 2,700
Service Costs:
20 Standard User Seats @ $20.00 ea/month x 60 Months $24,000
Maintenance & Upkeep:
Software upgrades, programming, & service $ 0
Total Cost of Ownership Over 5 Years $26,700
Legacy On Premise PBX
Hardware Cost:
PBX Equipment, including VoIP phones & Install $10,000
Service Costs:
5 Phone lines @ $45.00 ea/month x 60 Months $13,500
Maintenance & Upkeep:
Software upgrades, programming, & service 4x year/ 5 years $ 2,900
Total Cost of Ownership Over 5 Years $26,400
Hidden (Intangible) Costs & Benefits
In the example above, going to the cloud only costs slightly more (less than $11/month). If your users decide to forgo the desk phone, and use their PCs or a mobile app, then switching to the cloud is less expensive. Any additional costs can easily be offset by additional productivity and functionality gains like the ones outlined below:
Cloud Based VoIP
Advantages of Cloud based VoIP are clear when compared to legacy PBX ownership. Moving to the cloud can have numerous intangible benefits that contribute to the bottom line.
- Productivity enhancements from having a single platform to manage all communications.
- Quickly deploy and easily manage remote workers, including contact center agents.
- Additional ways to communicate internally with your clients (text/SMS, chat video, etc.)
- Universal hardware works with any cloud provider, reducing switching costs in the future.
- Perpetual feature updates provide continuous enhancement over the lifecycle of the subscription period. As new features and capabilities are released, they are added to platform.
- Open APIs enable limitless integrations into other business software (CRM, ERP, etc.) adding productivity and intelligence.
Legacy On Premise PBX
The legacy On-Premise model is dated and has the potential to hold your business back. Staying in this model or deploying a new premise-based PBX could cost your business in a multitude of areas
- High cost of advanced productivity features like call recording, Text/SMS, mobile app and others.
- Remote workforce deployment is cumbersome and requires additional hardware and software for VPNs and other measures.
- Voice and voicemail are the only built-in communication methods pushing employees to use multiple platforms.
- Proprietary hardware works only with the chosen ecosystem requiring expensive forklift upgrades in the future.
- Scheduled feature releases usually occur 2x per year and capabilities are limited by the back-end hardware specifications such as processor speed and memory.
- Proprietary APIs can be more challenging to work with and provide less flexibility for integrations.
Network Upgrades
If you are running on a legacy digital PBX or haven't upgraded your network in a while, you may need to deploy new switching infrastructure to enable Power over Ehternet (PoE) to drive VoIP phones. This isn't a significant cost, but it will be needed in either case, whether you move to a cloud based UCaaS solution or deploy a premise based VoIP PBX. If it has been a while since you made any upgrades to your network, this switch upgrade may provide other benefits such as: faster data throughput, advanced traffic shaping and management capabilities, and PoE for security cameras and other IoT devices.
Why You Need Cloud VoIP
The industry trend has been moving towards the cloud for the last 10 years with a rapid acceleration in the last 5 years. On premise telephone system manufacturers have been leaving the market, moving to develop their own cloud products, partnering with existing cloud providers, or going out of business.
As your local technology expert, TCI has partnered with over 30 of the top cloud providers to help you find the best cloud-based solution for your business. Our consultative approach utilizes our decades of industry experience and ensures that your business gets the Best Features at the Best Price.
The cloud delivers better features, faster development, more advancements, and a significant ROI for most businesses. If you would like to find out why your next phone system should be Cloud Based VoIP, fill out the form and we'll show you.
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