Telephone System Costs: The Ultimate Guide for 2021

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By Julia Watts | Content Manager | Updated: 28 April 2021

A phone system is crucial if you want to communicate and collaborate effectively with clients, customers, and colleagues. But how much will you have to pay for one? Find out with our detailed breakdown of telephone system costs in 2021


We know that you’ve come to this page for the cold hard facts, so we’ll cut straight to the chase. Your business telephone system costs will, primarily, depend on three things: your business’ size, the type of phone system that you plump for, and the system provider that you choose (they’re the ones who set the prices, after all).

Your overall price tag will also be impacted by additional costs, including how much you pay for telephone handsets (AKA desk phones), and how much you pay for installation and maintenance.

Generally, though, low-end hosted VoIP phone systems cost $15 to $25 per user, per month, while mid-range systems cost $25 to $40 per user, per month. Meanwhile, high-end, enterprise-level systems cost $40 to $60 per user, per month. Basic desk phones start at $50, while very sophisticated models can cost as much as $500 each

But what informs these costs? And what will you pay if you don’t want hosted VoIP? Read on to find out.


Telephone System Costs by Business Size

We’ve already mentioned the fact that your business’ size will have a big bearing on the amount you pay for your telephone system. But what prices can you expect based on how big or small your team is?

Above anything else, we recommend hosted VoIP systems for businesses – they’re affordable, simple to set up, and easy to maintain and scale. They’re also flexible and mobile, with team members able to access the system from any device, in any location with an internet connection.

For that reason, the costs we summarize in this section are for hosted VoIP systems. But if you’d like to find out how much an on-premise VoIP or analog telephone system will cost your business, we’ve got that covered too – you can jump to those sections using the links to the left of this article. Similarly, you can jump to our section on hosted VoIP to learn about these prices in more detail.

Now, without further ado…


How Much Does a Small Business Telephone System Cost?

Typical costTotal for 10 users
Hosted VoIP system software$15 – $40 per user, per month$150 – $400 per month
IP desk phones$50 – $300 upfront, per phone$500 – $3,000 upfront

How Much Does a Medium-Sized Business Telephone System Cost?

Typical costTotal for 100 users
Hosted VoIP system software$25 – $40 per user, per month$2,500 – $4,000 per month
Call/contact center add-on$10+ per user, per month$1,000+ per month
IP desk phones$100 – $500 upfront, per phone$10,000 – $50,000 upfront

How Much Does a Large Business Telephone System Cost?

Typical costTotal for 250 users
Hosted VoIP system software$40 – $60 per user, per month$10,000 – $15,000 per month
Call/contact center add-on$10+ per user, per month$2,500+ per month
IP desk phones$100 – $500 upfront, per phone$25,000 – $125,000 upfront

If you'd like to compare free phone system quotes that are tailored to your business, our quote-finding service can help. Simply give us a little info about your operation by answering a few questions (it only takes a minute), and we'll match you up with the right phone system providers for your needs. They'll then be in touch with you directly to provide no-obligation quotes for you to compare, and answer all your burning questions. It's fast, easy, and doesn't cost a dime.


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How Much Does a VoIP Phone System Cost?

When it comes to business phone system technology, VoIP is very much the present and the future. If you’re forward-thinking, VoIP is the feature-rich, flexible phone system that you’ll want to invest in. There are two key kinds of VoIP: hosted VoIP, and on-premise VoIP.


Hosted VoIP System Costs

With a hosted VoIP system, your system provider will host the VoIP software on their own servers, keeping it maintained and updated for you.

You’ll be in good company if you opt for hosted VoIP: it’s the most popular kind of VoIP phone system.

If you choose a hosted VoIP system, you’ll be looking at very few (if any) setup fees or upfront costs, but you will have to pay ongoing monthly charges. You’ll have the following costs to consider:

  1. A monthly subscription fee
  2. The cost of any add-ons
  3. The cost of the phones you choose

Let's examine the numbers in more detail…

1. A monthly subscription fee

This is the fee you pay to use the VoIP system software. It’s normally charged on a per user, per month basis, so you’ll pay this sum for each employee that uses the system, for each month that your business uses the system.

Hosted VoIP providers tend to split their service into different packages. Cheaper packages tend to come with the core – or more basic – VoIP system features, while the more expensive packages usually introduce more sophisticated features, such as unified communications tools (like video conferencing) and integrations with CRM systems.

So, how much do these hosted VoIP software packages tend to cost?

Package typeSuitable for…Typical cost (per user, per month)
BasicSole traders and microbusinesses$15 – $25
PremiumSmall to medium businesses$25 – $40
AdvancedLarge businesses$40 – $60

It’s worth remembering that many hosted VoIP providers tweak their subscription fees depending on how many users you’ll have on the system. Smaller businesses get the raw deal here, with higher numbers of users usually getting discounted prices. That said, smaller businesses will have fewer users to pay for, so the injustice shouldn’t sting too much.

Did You Know?

VoIP providers prefer to bill customers on an annual basis – in other words, you’ll pre-pay for the whole year ahead in one lump. Most providers will give you the option to pay month-by-month instead if you’d like to, but you’ll be charged a higher subscription cost for the privilege.

2. The cost of any add-ons

With many VoIP software providers, you’ll need to pay extra for specialist features. This is most commonly the case with feature packages that are designed for use in contact centers and call centers. Such packages enable features such as call monitoring, agent performance analytics, advanced call queuing and on-hold options, omni-channel customer comms, and other call/contact center essentials.  

Call/contact center packages tend to start at around $10 per user, per month on top of your regular subscription fee.

3. The cost of the phones you choose

IP phones (desk phones that can be used with VoIP systems) can be as cheap as $50 or as expensive as $500 each, depending on how sophisticated and feature-rich they are. Scroll down for our section on the cost of IP phones for more detail on this.


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On-Premise VoIP System Costs

Having an on-premise VoIP system – more specifically known as on-premise PBX (private branch exchange) – means building, hosting, and maintaining the telephone system yourself, on your business’s own servers.

It’s a more difficult – and in many cases, more expensive – way of doing things. But it does give you and your team total control over your own phone system.

If you opt for an on-premise phone system, you’ll face some pretty hefty upfront costs and setup fees, and your ongoing costs will mostly be concerned with maintenance and configuration. These are the key costs you’ll be contending with: 

  1. The cost of on-premise PBX hardware
  2. PBX software licenses
  3. Setup, installation, and ongoing maintenance costs
  4. The cost of the phones you choose

So how much do these things cost? Let's examine…

1. The cost of on-premise PBX hardware

First up, you’ll need all the PBX hardware necessary for hosting a VoIP telephone system, and for having your calls routed and directed properly. This includes a server, cards, routers, switches, and a battery backup. The cost of such hardware can add up to thousands of dollars – for a team of around 20, you can expect to pay between $6,000 and $7,000 upfront.

Now, the exception here is if you go for an open-source PBX system like Asterisk. Asterisk provides its software for free, and once downloaded, it turns your existing office desktop into a dedicated, on-premise VoIP system host. We’d advise doing something like this over buying and setting up your own server from scratch.

2. PBX software licenses

Traditionally, you’d expect to pay around $4,000 upfront for software licenses to cover a team of 20 phone system users. Of course, if you plumped for a system like Asterisk instead, you’d get the software for free.

We know what you’re thinking – but alas, even Asterisk will cost you something in the end. That’s because you’ll also have to consider… 

3. Setup, installation, and ongoing maintenance costs

If you went the traditional route and bought your own server hardware and software licenses, you’d likely be charged around $1,000 by an outsourced technician to get everything set up and configured for you (unless you’re a trained telecom technician, you won’t be able to do it yourself).

If you decided to use Asterisk, you’d still need to pay for a professional to set up and configure the system for you. Because – and here’s the rub – Asterisk has been built for communication system developers, not the everyman, to use.

And, either way, you’ll need to either hire a team of professionals to keep your system running smoothly, the software updated, and the infrastructure scaling alongside your business – or else outsource the job every time you need to make a change to the phone system. No matter how you spin it, that will prove expensive. 

4. The cost of the phones you choose

As we mentioned in our deep dive into hosted VoIP costs, VoIP phones can cost between $50 and $500 apiece. In the next section, we’ll explore those prices in more detail…  


The Cost of IP Phones

An IP phone, also known as a VoIP phone, is a type of desk phone that’s compatible with VoIP. Like VoIP software packages, IP phones get more expensive the more sophisticated they are. High-spec IP phones may come with features including bluetooth connectivity, large color touchscreens, and built-in cameras for video conferencing.

Unlike with VoIP software, though, most suppliers will enable you to buy the phones outright – so you’ll pay for them once, upfront, then they’re yours.

But how much do IP phones tend to cost? Let’s take a look:

IP phone typeTypical cost (per phone)
Low-spec IP phones$50 – $100
Medium-spec IP phones$100 – $300
High-spec IP phones$300 – $500
Did You Know?

Physical desk phones aren’t a necessity when you have a VoIP system. Most VoIP software comes with a dedicated app that your team can download onto their smartphones, tablets, laptops, or desktops. This is known as a softphone. These devices can then be used to make and take business phone calls, and access the other features that come with the VoIP system. This is especially helpful when you have employees who are working remotely.

So, if you want to save a bit of cash, you could choose to eschew dedicated IP phones and have your team work from the devices they already use instead.

Check out our reviews of the best softphone apps to compare some of our top picks.


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How Much Does an Analog Phone System Cost?

Also called landline phones, analog phones tap into the traditional phone network and make and take calls the old-fashioned way (it’s known as the Plain Old Telephone Service, or POTS, for a reason). It’s a means of communication that those of us who grew up pre-2000 are especially familiar with.

While analog is very much on its way out in favor of VoIP systems, an analog system for your business could still be a worthy short-term solution. But it’s not the same as setting up a landline phone in your home: instead, you’ll need to invest in a multi-line phone system, which will enable your business to take multiple calls at once. 

With this, you’ll need to consider the following costs:

  1. Line rental costs
  2. The cost of your hardware and analog phones
  3. Installation and configuration costs

But how much do these things cost? Let's take a look…

1. Line rental costs

Your phone system supplier will charge you, on a monthly basis, for the use of the phone lines. These costs tend to start at around $50 per month, but can reach upwards of $100.

As an example, Verizon’s Preferred Voice service, a traditional analog system for businesses, charges $59 per month for its initial package. If you need to add more lines, you can rent them at an additional $20 per month, per line. AT&T also provides a traditional multi-line service for businesses, but only gives tailored quotes on the basis of your business’s location.

2. The cost of your hardware and analog phones

For your multi-line phone system to work, you’ll need to buy some telecom equipment: either a PBX or a KSU (key system unit). These can then be configured to direct calls to the right phones (and thus the right people) in your team.

Unlike VoIP, traditional phone systems can only work via dedicated phones, and can’t be accessed remotely using an app – so you’ll also need to buy desk phones for your team to use. Let’s take a look at how much these tend to cost:

Type of analog phoneTypical price
Two-line desk phone$50 – $100
Four-line desk phone$150+
Six-line desk phone$250+

3. Installation and configuration costs

If they’re not already in place at your business’s premises, you’ll need your phone system supplier to install every phone line that you need. This’ll usually cost around $150 to $250, but could be more expensive depending on how many lines you have installed.

You’ll also need to pay a technician to configure your PBX or KSU properly, so the system works as you need it to. Unfortunately, this is something you can’t do yourself (unless you’re trained in telecoms tech!).

Did You Know?

When it comes to contracts, VoIP companies are usually more flexible than analog system providers. Analog systems tend to come with hefty contracts that tie you in for a long time, and more often than not, you’ll be charged a considerable early termination fee if you choose to cancel the service before your contract is up.

So, if you’re looking to invest in an analog system, it’s best to read your contract thoroughly and make sure you’re 100% happy before signing on the dotted line.


How Much Does a Telephone Line Cost?

The term ‘telephone line’ is a hangover from the days when analog phone systems were the predominant technology. Put simply, a telephone line is a means by which a desk phone connects to and uses the landline network.

These days, the term ‘phone line rental’ is sometimes used in the context of VoIP, too, to refer to the cost of paying for each employee to use a hosted VoIP system – even though there are no literal phone lines involved.

So, for our purposes, your phone line costs are what’s left behind after you’ve already paid for any hardware and setup, and bought your desk phones. They’re the ongoing monthly costs that you’ll have to budget for as long as you use your phone system.

We’ve already examined these figures separately (scroll back up if you’d like more detail!), but for ease, let’s take a look at them again, side-by-side:

Phone system typeTypical phone line cost
Hosted VoIP$15 – $60 per user, per month
Analog$50+ per month (plus maintenance costs)

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How Much Does it Cost to Install a Telephone System?

That depends on the type of telephone system you choose. Let’s take a look at the typical figures:

Type of phone systemTypical installation costA note on the process
Hosted VoIPFreeHosted VoIP systems are simple to install, and system providers are normally happy to help with the process remotely (either by talking through it over the phone, or sharing tutorial guides) at no extra cost.
On-premise VoIPAround $1,000On-premise VoIP must be installed and maintained by experienced technicians, making it a pricey endeavor.
Analog$150 – $250 (plus configuration costs)You’ll need a professional to install your analog phone lines. The amount they charge will depend on the size of your business, and thus the number of lines that need to be installed. As with on-premise VoIP, you’ll also need to pay a technician to configure your PBX or KSU.

Next Steps

On this page, we’ve covered all of the typical costs associated with hosted VoIP, on-premise VoIP, and analog telephone systems. But if you’d like to find out exactly how much a phone system is going to cost for your business, our quotes comparison service can help you out.

Just answer a handful of questions about your business and what you’re looking for in a telephone system. Behind the scenes, we’ll use your answers to match you up with the phone system providers that can best cater to your needs. They’ll then be in touch with you directly to provide you with personalized, no-obligation quotes that have been tailored to your business’s needs, as well as answers to any burning questions you may have. It’s the quickest, easiest way to compare the right options for you, and it doesn’t cost a dime – why not give it a try today?

Julia Watts Content Manager

Specializing in the complex realms of telephone systems, business energy, vehicle tracking, asset tracking, and fuel cards, Julia writes content that cuts through the noise to help you find the right solutions and technologies for your business. Having spent five years working across the dynamic world of entrepreneurship, she loves helping exciting ventures – big or small – to flourish.

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