What is VoIP
Voice over Internet Protocol (VoIP) uses the Internet to facilitate all types of business communication. This cloud-based solution enables voice calls on any device as long as you have an internet connection. It works by converting the audio signals from one end to digital signals. These digital signals then travel through the VoIP provider’s network. They are finally transformed into digital packets (IP packets), which are then sent to the receiver’s end.
A VoIP system can either be on-premise or hosted. The main difference between the both lies in who has the major control – the VoIP provider or the business. As the name suggests, a hosted VoIP system relies on the servers of a VoIP provider, giving them complete ownership. Small to medium businesses in the UK prefer this system because it is easy to install, use, and maintain. On the other hand, an on-premise VoIP system requires the business to install a PBX server on-site, to be managed by the business independently.
To set up a basic VoIP system for your business, you will need the following components:
- A VoIP software subscription
- A stable internet connection with bandwidth enough to support VoIP calls (average 100 kbps to 180kbps per call)
- A digital device with internet connectivity such as a softphone, an IP phone, smartphone, laptop, or tablet- we’ll get into the cost breakdown of each in detail later.
What is a Landline Phone System?
A landline phone system is a conventional wired telephone system. It consists of analog phones connected through physical infrastructure, such as copper wires. Unlike VoIP, it operates independently of the internet. Landline systems have been the traditional method of communication for businesses for decades.
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VoIP vs Landline: Why cost comparison is essential?
The UK government has announced to shift from the analogue communication system to a digital one, with the change anticipated to be completed by January 2027. This has resulted in more businesses considering upgrading their communication setup for all the right reasons. The internet-based VoIP system offers more secure calls with less clutter while also utilising existing infrastructure. However, the important question pops up here, is VoIP equally affordable for all types of businesses? To answer this, we need to compare the prices of landline phone systems with VoIP to give our readers a complete understanding of the cost differences.
So let’s break down the costs of VoIP and landline phone systems to see which option offers more affordability to its users.
Cost Breakdown for VoIP
We’ll consider the key cost components of setting up and maintaining a hosted VoIP system.
1. Monthly Charges:
VoIP providers offer packages with different price ranges depending on the variety of features offered. Overall you can expect to pay a subscription fee of £7 – £50 per user. To explain it more clearly, we have divided the list of features into three categories:
- Basic features- include voice calls, call holding, forwarding, and basic customer support.
- Advanced features- include international calls, call analytics, and CRM services.
- Premium features- include video conferencing and virtual phone numbers.
2. Hardware for Service:
A VoIP system doesn’t necessarily require you to purchase new hardware. As mentioned earlier, you only need a device with internet access to make VoIP calls. However, if you wish to purchase new equipment, you have multiple different options to choose from.
- Softphones: These virtual phones are already included in the VoIP package offered by most providers. Softphones will cost you to be £0 since these are software-based solutions.
- IP Phones: These are the physical phones that connect to the internet to provide VoIP service. A VoIP phone can cost you £40 – £160 per device.
- Phone Adapters: Don’t worry if you already have hardware from your previous landline system, you can still use it for your VoIP system with a small addition. By using VoIP adapters you can convert your existing landline phones to VoIP. These ATAS can cost you anywhere from £55 – £180.
- Headsets (Optional for hands-free calls): You can simply use inbuilt microphones and speakers of the device you’re using, but if you want to upgrade to a more secure call option, each headset can cost you £20 – £80.
3. Installation Costs:
If your business uses IP phones then installation is generally free since it only requires you to install and set up VoIP software by yourself. In most cases, a VoIP system does not require major physical infrastructure changes. However, if your setup includes additional hardware with multiple users, installation may cost you around £200- £400.
4. Maintenance Costs:
Maintenance of a hosted VoIP system is generally included in the monthly subscription or offered as part of the service. That’s one of the reasons why hosted VoIP is the first choice of SMEs in the UK.
5. Internet Bandwidth:
A smooth VoIP call experience requires a high-speed and stable internet connection. There’s a high possibility that your business space already has an internet connection for its daily operations. However, if you think you might need to upgrade your existing system then the average cost of internet services can cost you £22 – £45 per month.
| Features | Monthly Charges |
|---|---|
|
Basic features |
£7 - £10
|
|
Advanced features |
£15 – £30 |
|
Premium features |
£40 - £50 |
| Hardware | Costs |
|---|---|
|
Softphones or utilising existing devices |
£0
|
|
IP Phones |
£40 – £160 |
|
Phone Adapters |
£55 – £180 |
|
Headsets |
£20 – £80 |
| Installation Type | Costs |
|---|---|
|
Hosted VoIP |
Minimum costs - £0
|
|
Complicated setup |
£200 - £400 |
|
Maintenance |
Maintained by the VoIP provider |
| Internet Bandwidth | Costs |
|---|---|
|
Using your existing internet connection |
£0
|
|
Setting up a new connection |
£22 – £45 |
Cost Breakdown for Landline Phone System
Now, let’s look at the cost breakdown of a traditional landline phone system and see how it compares with that of VoIP.
1. Hardware for Service:
- Landline phones: Landline phone systems use traditional desk phones. These phones need to be connected to a specific port, which reduces mobility for employees. Recent models of landline phones also offer internet connectivity. Generally, these landline phones can cost you £60 – £180 per device.
- Headsets: Landline phone systems use headsets with speakers to make and receive calls. You can expect to pay £20 – £80 per device.
2. Installation Costs:
Landline phone systems need a comprehensive setup of physical copper wires. Each line for a user needs to be physically installed and different ports also need to be setup. Hence, it reduces the flexibility to add or remove users. If you add a new user to your landline phone system, you’ll need to install a new line for them, install a new port and set up a dedicated phone set.
- If infrastructure already exists, installation costs will be reduced to £150 – £350.
- However, if new infrastructure is required you can expect to pay £500 – £1,200 for the installation expenses.
3. Maintenance Costs:
The physical wire framework for landline phone systems is laid out above ground, as compared to the underground VoIP lines. Naturally, it makes the wires to be more susceptible to weather changes and damage over time. So maintenance is more often required for landline phone systems, unlike VoIP. Maintenance costs vary largely with the type of provider, your contract duration, the size of your landline system, and the extent of damage.
4. Call Charges:
Calls made from a landline phone system are typically charged per minute. Depending on the digits of the dialed number and the rates offered by your provider, per-minute charges usually range from 10p to 65p with emergency calls being completely free. International calls, adding extra users, or advanced features incur additional costs. Oftentimes, providers offer affordable call packages for their users. For example, providing the first 3000 minutes for £15/user, then applying standard charges after.
| Hardware for Service | Costs |
|---|---|
|
Landline Phones |
£60 – £180 per device |
|
Headsets |
£20 – £80 per unit |
| Installation Costs | Cost Range |
|---|---|
|
Minimum infrastructure costs |
£150 – £350 |
|
High-end installation expenses |
£500 – £1,200 |
|
Maintenance Costs |
Depends on the provider |
|
Call Charges |
10p to 65p per call |
Factors Affecting the Cost of VoIP
Different factors affect the pricing of a VoIP system. The most basic one is, of course, the provider. You’ll get different pricing packages depending on the provider you work with. Other than that, the following features also play a role in deciding the cost of a VoIP system:
- Length of your agreement: Long-term contracts offer discounted prices as compared to short-term contracts.
- Additional hardware: If you decide to use your existing hardware for the VoIP system, it will obviously reduce your hardware costs. But if you want to replace your old devices with a new setup, this will require you to purchase IP phones or adapters which will ultimately add to the overall cost.
- On-premises vs hosted systems: On-premises solutions require you to purchase the hardware and VoIP software in addition to the IP phones and headsets. Since the business owns the system, it is responsible for all types of maintenance. On the other hand, a hosted VoIP system is managed by a VoIP provider. It means lower installation, maintenance and software costs for the business.
Factors Affecting the Cost of Landline Phone System
- Number of Users: More users means higher installation costs and increased hardware setup for individual users along with recurring maintenance costs.
- Advanced Features: Purchasing additional features like voicemail, call forwarding, etc., incur extra costs which also vary with the provider.
- Infrastructural Challenges: Installing physical lines in remote locations increases installation costs.
Which option is more affordable?
Considering all factors, we conclude that VoIP is equally affordable for small to large businesses because of lower installation costs, minimal need for maintenance, limited hardware requirement and bundled features. Take your communication setup to the next level, and make the switch from your traditional landline system to VoIP with ComparedBusiness and stay updated with the latest technology.
Update your system to VoIP today with ComparedBusiness
We help businesses choose the most cost-effective VoIP solution unique to their needs. At ComparedBusiness, we streamline the process of linking businesses with VoIP service providers. Simply provide your business details in under 2 minutes, and we’ll promptly supply you with quotes from reputable VoIP providers across the UK.
