Saving Money With Business Voip
Content
Saving
Money
with
Business
VoIP
Adding
up
the
costs
Saving
Money
with
Business
VoIP
|
Page
2
Saving
Money
with
Business
VoIP
Systems
Introduction
Businesses
need
phone
systems.
Even
in
today’s
world
of
web
sites,
online
chat,
email,
and
instant
messaging,
there
is
still
no
substitute
for
being
able
to
talk
directly
with
your
clients,
suppliers,
and
employees.
Phone
systems
provide
for
this
direct
interaction,
from
routing
inbound
callers
to
the
correct
individual
or
department,
to
providing
dial
tone
for
outbound
calls,
and
everything
in
between.
This
has
been
true
ever
since
the
first
companies
used
Mr.
Bell’s
invention
to
handle
business
issues.
The
big
change
in
our
era
is
the
addition
of
a
new
type
of
virtual
phone
system,
business
VoIP,
which
combines
traditional
telephony
with
the
Internet
“cloud”
to
provide
more
capabilities,
greater
flexibility,
and
significant
costs
savings.
In
our
challenging
environment,
the
idea
that
most
companies
can
save
40%
to
80%
on
monthly
phone
costs
is
motivating.
Getting
more
features
and
greater
freedom
of
implementation
is
“icing
on
the
cake.”
This
paper
will
examine
the
numbers
behind
these
savings
and
provide
information
about
how
to
get
them
for
your
company.
Terminology
• • PBX:
Private
Branch
Exchange
–
a
switching
device
that
connects
business
telephones
into
a
cohesive
system
and
routes
calls
to
individual
phones
or
employees.
Hardware
PBX
–
the
traditional,
premise-‐based
switch
to
which
office
phones
are
connected,
typically
through
standard
phone
wires.
Call
routing
is
done
by
connecting
individual
calls
with
the
appropriate
desk
phones.
Hosted
PBX
–
A
PBX
service
that
moves
the
PBX
functions
off-‐site,
eliminating
the
capital
and
maintenance
expenses
of
a
hardware
switch.
Call
routing
can
be
done
over
traditional
analog
phone
lines
to
existing
phones
or
over
the
Internet
using
VoIP.
VoIP:
Voice
over
Internet
Protocol
–
the
technology
that
sends
phone
calls
(voice)
over
the
Internet.
This
often
replaces
traditional
telephony
that
sends
calls
over
traditional
analog
phone
lines.
Traditional
Phone
System
–
the
combination
of
analog
phones,
lines,
and
hardware
PBX
that
has
been
in
use
for
many
years.
Virtual
Phone
System
–
See
Hosted
PBX.
Business
VoIP
System
–
a
hosted
PBX
that
is
connected
mainly
via
VoIP
technology.
While
calls
can
go
to
standard
phones
and
mobile
devices,
costs
are
reduced
by
using
VoIP
connections
instead
of
traditional
analog
phone
lines.
•
•
• • •
VirtualPBX.Com
|
111 N. Market St., Suite 1000, San Jose, CA 95113
|
(888) 825-0800
Virtual PBX is a registered trademark of VirtualPBX.com, Inc.
Saving
Money
with
Business
VoIP
|
Page
3
Parts
of
a
Phone
System
The
list
included
here
will
be
the
minimum
needed
to
understand
the
topic
rather
than
an
exhaustive
study
of
everything
that
goes
into
a
phone
system.
Throughout
this
paper,
we’ll
be
discussing
business
phone
implementations,
not
residential
service.
Dial-‐tone
and
“lines”
Phone
calls
are
sent
over
transmission
mechanisms
like
copper
wires
or
Internet
connections.
Most
of
us
understand
that
a
single
phone
line
can
carry
a
single
conversation.
You
can
take
an
incoming
call
on
your
line,
or
you
can
pick
up
your
phone
and
get
a
dial
tone
to
make
an
outbound
call.
This
one-‐to-‐one
line
definition
is
not
quite
the
same
in
VoIP
telephony.
Most
companies
will
have
a
single
broadband
(or
better)
Internet
connection
that
can
carry
all
their
calls
and
if
they
implement
a
business
VoIP
phone
system,
the
traditional
concept
of
a
phone
line
goes
away.
Instead,
most
hosted
PBX
providers
talk
about
“users”
or
“extensions”.
In
analog
systems
a
user
extension
is
usually
the
desk
phone
employed
by
a
specific
worker.
In
a
business
VoIP
system,
an
extension
typically
connects
to
a
specific
person,
who
can
take
calls
on
a
VoIP
phone,
a
cell
phone,
an
analog
phone,
or
any
combination
of
these.
Call
routing
One
of
the
most
important
functions
of
a
phone
system
is
the
connection
of
callers
to
the
right
employee
in
your
business.
This
is
one
of
the
functions
of
the
PBX
–
whether
you
have
a
premise-‐based
hardware
PBX
or
cloud-‐based
hosted
PBX.
Sometimes
all
calls
go
to
a
human
receptionist,
who
then
connects
callers
to
the
person
of
their
choice
by
transferring
the
calls
using
the
PBX
switch,
and
sometimes
calls
go
to
a
“virtual
receptionist”
or
auto-‐ attendant
that
plays
a
recorded
greeting
and
gives
callers
a
menu
of
key-‐presses
that
will
get
them
to
the
appropriate
employees.
Companies
who
use
traditional
phone
systems
will
need
to
purchase
a
hardware
PBX.
This
can
be
a
substantial
up-‐front
capital
expense,
though
it
can
usually
be
amortized
over
the
life
of
the
system
into
a
monthly
fee.
In
smaller
systems
the
PBX
is
often
built
into
the
cost
of
the
phone
system
itself,
and
users
buy
the
function
as
they
purchase
the
entire
phone
package.
Traditional
phone
systems
also
have
ongoing
monthly
maintenance
costs,
while
in
virtual
systems,
maintenance
and
upgrades
are
usually
covered
by
the
service
provider.
Custom
features
Simply
providing
lines
and
connecting
callers
to
your
employees
is
only
the
beginning
of
what
most
of
us
want
a
phone
system
to
do.
Most
systems
today
offer
added
features
like
voicemail,
holding
queues
(ACD
queues),
call
recording,
and
more.
In
general,
more
features
are
available
at
a
lower
cost
using
business
VoIP
than
with
traditional
PBX
systems,
partially
because
a
virtual
system
shares
the
costs
of
such
features
across
all
of
the
system’s
users,
while
users
of
a
premise-‐based
system
have
to
pay
for
all
of
it
themselves.
For
the
purposes
of
this
paper,
we
will
assume
a
mid-‐range
feature
set
and
try
to
compare
apples
to
apples,
not
oranges
or
kumquats.
VirtualPBX.Com
|
111 N. Market St., Suite 1000, San Jose, CA 95113
|
(888) 825-0800
Virtual PBX is a registered trademark of VirtualPBX.com, Inc.
Saving
Money
with
Business
VoIP
|
Page
4
Phone
System
Costs
Lines
and
Service
Fees
Traditional
phone
system:
Business
phone
lines
typically
cost
$40
to
$60
per
month.
If
you
pay
the
upfront
costs
of
a
hardware
PBX,
you
may
not
need
a
line
for
every
phone
–
but
you
would
want
a
minimum
of
one
line
for
every
concurrent
phone
call.
In
this
paper,
we’ll
assume
2
extensions
per
analog
line
when
a
hardware
PBX
is
included,
and
a
middle-‐level
$50
per
month
per
line.
Business
VoIP
system:
Cost
per
user
extension
can
be
as
low
as
$20
per
month,
but
some
providers
charge
$40,
$100,
or
even
$200
per
month.
In
this
paper,
we’ll
use
$25
per
user
per
month,
which
leans
toward
a
lower-‐cost
provider.
Call
Routing
(PBX)
Hardware
Traditional
phone
system:
PBX
switches
are
fairly
expensive.
Accepted
figures
for
the
capital
expense
for
such
systems
range
from
$500
per
user
to
$2,000
per
user.
This
is
a
one-‐time
cost,
and
includes
the
costs
of
the
wiring.
To
be
fair,
this
paper
will
use
a
figure
toward
the
lower
end
of
this
range
at
$1,000
per
user.
So
a
10-‐user
PBX,
installed
and
wired
would
cost
about
$10,000.
This
capital
expense
can
usually
be
amortized
over
the
useful
life
of
the
system,
turning
the
up-‐front
cost
into
a
monthly
expense.
We’ll
include
this
cost
as
a
monthly
expense
in
this
paper,
but
we’ll
identify
it
so
you
can
back
it
out
if
you
already
own
your
PBX
system.
Amortization
will
be
over
4
years,
with
no
interest.
Business
VoIP
system:
Since
the
business
VoIP
service
provider
owns
and
operates
the
PBX
hardware,
there
is
no
expense,
capital
or
monthly,
for
users.
Support
and
maintenance
fees
Traditional
phone
system:
PBX
hardware
must
be
maintained
and
upgraded
from
time
to
time.
The
cost
of
this
maintenance
may
be
paid
as
it
happens,
or
it
may
be
part
of
a
monthly
service
fee
from
the
company
that
provides
the
maintenance.
In
this
document,
we’ll
include
a
monthly
cost
equaling
1%
of
the
initial
system
cost.
Again,
we’ll
identify
this
cost
specifically
in
case
you
want
to
back
it
out
from
your
calculations.
Business
VoIP
system:
This
cost
is
borne
by
the
service
provider.
Phones
Costs
for
business
phones
are
similar
between
analog
systems,
so
we’ll
leave
them
out
of
the
comparisons.
A
good
phone
can
run
from
well
under
$100
to
$1,000
or
more.
Usage
Fees
Both
traditional
and
VoIP
systems
have
costs
for
inbound
calls
to
a
toll
free
number
and
for
dialing
out
to
international
destinations.
Business
VoIP
systems
are
usually
less
expensive
in
both
these
areas.
However,
many
businesses
don’t
have
toll
free
numbers
or
dial
out
to
international
numbers,
so
these
costs
will
be
left
out
of
our
comparisons.
If
your
VirtualPBX.Com
|
111 N. Market St., Suite 1000, San Jose, CA 95113
|
(888) 825-0800
Virtual PBX is a registered trademark of VirtualPBX.com, Inc.
Saving
Money
with
Business
VoIP
|
Page
5
company
has
needs
for
either
of
these
capabilities,
you’ll
probably
save
a
little
more
with
business
VoIP.
Traditional
phone
system:
The
main
“usage”
fee
for
traditional
systems
comes
from
making
long
distance
phone
calls.
Rates
vary
widely.
Lower
rates
usually
come
with
higher
monthly
costs
for
lines.
In
this
document,
we’ll
assume
a
cost
of
6
cents
per
long-‐distance
minute,
and
further
estimate
that
80%
of
outbound
calls
will
be
long-‐distance.
Business
VoIP
system:
Most
business
VoIP
providers
include
free
long
distance
within
their
own
country.
US
clients
can
often
find
providers
that
will
include
free
long
distance
for
calls
anywhere
in
the
continental
US
and
Canada.
VoIP
providers
often
talk
about
“unlimited”
minutes,
which
covers
both
inbound
and
outbound
(both
local
and
long
distance)
calls
at
no
charge.
One
caution,
however,
is
that
the
term
unlimited
applies
only
to
“typical
business
traffic.”
There
really
is
a
cap
on
the
number
of
minutes
allowed,
but
it’s
high
enough
that
most
clients
won’t
hit
it.
You
should
always
check
the
“fair
use
policy”
of
any
VoIP
provider
and
make
sure
your
usage
will
fall
within
their
definition
of
typical
business
traffic.
If
the
company
you’re
working
with
isn’t
upfront
about
their
fair
use
policy,
be
especially
careful.
Taxes
and
Governmental
Fees
Bureaucracy
is
alive
and
well
in
our
markets.
Death
and
taxes
are
our
constants,
and
taxes
happen
a
lot
more
often.
From
federal
universal
service
fees
to
e911
recovery
fees,
you’ll
always
see
governmental
overrides.
These
costs
are
similar
for
both
types
of
systems
–
a
little
higher
in
traditional
systems
for
telecommunications
fees
and
a
little
higher
in
VoIP
business
systems
for
special
things
like
e911
service
–
and
so
will
be
left
out
of
this
analysis.
VirtualPBX.Com
|
111 N. Market St., Suite 1000, San Jose, CA 95113
|
(888) 825-0800
Virtual PBX is a registered trademark of VirtualPBX.com, Inc.
Saving
Money
with
Business
VoIP
|
Page
6
Conclusions:
The
Numbers
–
How
Much
Can
You
Save?
Phone
system
costs
scale
up
as
you
add
users
and
traffic.
In
this
analysis,
we
assume
a
company
size
of
20
employees,
and
the
average
number
of
minutes
per
user
is
1,000
combined
inbound
and
outbound
minutes.
For
a
10-‐user
company
divide
the
monthly
costs
by
2;
for
a
100-‐user
company
multiply
the
monthly
costs
by
5.
Typical
Monthly
Costs
for
a
Traditional
Phone
System
Number
of
users
20
Cost
of
a
land
line
Users
per
land
line
Number
of
land
lines
needed
Monthly
cost
of
lines
Average
minutes
per
user
Total
minutes
per
month
Long
distance
rate
Outbound
%
of
total
minutes
Outbound
long-‐distance
%
Long-‐distance
minutes
Monthly
cost
of
long
distance
Total
monthly
costs
-‐
excluding
PBX
Original
cost
of
PBX
Monthly
cost
of
PBX
-‐
over
4
years
Monthly
PBX
maintenance/support
Monthly
PBX
cost
incl.
maintenance
Total
Monthly
Cost
–
including
PBX
Number
of
users
Cost
per
user
per
month
Total
monthly
cost
of
service
Monthly
cost
of
long
distance
Monthly
PBX
cost
incl.
maintenance
Total
Monthly
Cost
–
Hosted
PBX
$50.00
2
10
$500.00
1,000
20,000
$0.06
50%
80%
8,000
$480.00
$980.00
$20,000.00
$416.67
$200.00
$616.67
$1,596.67
Typical
Monthly
Costs
for
a
Business
VoIP
System
20
$25.00
$500.00
0
0
$500.00
VirtualPBX.Com
|
111 N. Market St., Suite 1000, San Jose, CA 95113
|
(888) 825-0800
Virtual PBX is a registered trademark of VirtualPBX.com, Inc.
Saving
Money
with
Business
VoIP
|
Page
7
Comparison
As
can
be
seen
by
the
numbers
above,
the
savings
potential
is
very
high
by
moving
away
from
traditional
telephony
and
to
business
VoIP.
Based
on
this
analysis,
the
specific
savings
are
found
in
the
following
table:
Monthly
VoIP
Savings
without
hardware
PBX
Costs
$480.00
Savings
percent
49%
Monthly
VoIP
Savings
including
hardware
PBX
Costs
$1,096.67
Savings
percent
69%
How
to
get
Business
VoIP
As
the
inventors
of
the
first
hosted
PBX,
we
at
Virtual
PBX®
hope
you’ll
come
to
us.
We
started
the
virtual
phone
system
revolution
in
1996
and
have
the
deepest
feature
set
in
the
industry.
For
more
details
about
our
company
and
our
services,
please
visit
our
website
at
www.virtualpbx.com,
or
call
us
at
888-‐825-‐0800.
We’ll
help
you
get
started,
or
just
answer
questions.
The
sooner
you
call,
the
sooner
the
savings
can
start.
VirtualPBX.Com
|
111 N. Market St., Suite 1000, San Jose, CA 95113
|
(888) 825-0800
Virtual PBX is a registered trademark of VirtualPBX.com, Inc.
