Hosted VoIP

This article highlights why a small business should consider switching to a hosted VoIP phone service solution using a real life example cost comparison between a regular telephone line set up and a VoIP solution.

Hosted VoIP

Why does every Business need it?

Before we dive in and start explaining hosted VoIP and how great it is, let's take a look at some broadband statistics in the U.S.A., since a high speed Internet connection is a primary requirement to use a hosted VoIP solution. A recent 2012 report by the Leichtman Research Group estimated that almost 90% of households in the United States had access to a high speed Internet connection. As such, access to high speed broadband is rarely an issue for the majority of consumers and businesses.

Actually getting connected to the internet can cost anywhere from $20 per month upwards depending on the level of service that you need. So any individual or small business can get some internet connectivity for a very low monthly fee. For larger businesses this cost will obviously increase as they need to move away from a DSL or Cable connection to a T1, T3, Fiber or Ethernet connection to the internet. For the purpose of this discussion, let's assume that a small business can get really good internet connection for $25 per month.

Now let's assume that your business has some form of interaction with customers and they need to wait while you perform a service. This could be anything from a small doctor's office to an oil change facility. Because there is regular customer interaction, there is likely a very frequent need to make and receive phone calls. If we assume that you currently use a regular old telephone line that does not send voice over the internet, then some prices that we have found (AT&T Bellsouth - Oct. 2012) are as follows:

  • $21.00 - Unlimited local calling (with no additional calling features)
  • $24.00 - Unlimited local calling (with 2 additional calling features)
  • $28.00 - Unlimited local calling (with 13 additional calling features)
  • $42.00 - Unlimited nationwide calling (with 13 additional calling features)

Note: Additional features include caller-id, call waiting, etc.

Now let's assume that your small business has 2 phone lines and you need to make calls to any area code nationwide, as this is highly likely in this digital age where people in any location can choose any area code for their phone number.

So to summarize, here is the best case monthly cost and features:

  • 2 phone lines
  • Unlimited nationwide calling
  • Only 13 features included
  • Cost is $42.00 per month per phone line before taxes and other fees.
  • Total Cost is $84.00 per month before taxes and other fees.

Now let's compare what can be had with a hosted VoIP service and explain why every business needs it. We will of course add the additional cost of the internet connection as it is a requirement for a hosted service to function as this is after all, voice over the internet.

  • 2 phone lines
  • Unlimited Nationwide calling
  • Almost every feature you can imagine included
  • Internet access fee of $25 per month (Additional cost if no existing internet)
  • Cost is $19.95 per month per phone line if selecting Nextiva as a provider
  • Total Phone Cost is $39.98 per month before taxes and other fees.

So with a hosted VoIP phone service, a small business can actually save money every month even with the additional cost of the internet service. Even if the business owner does not think the business will ever need an internet connection for any other reason, it could be a nice free service to offer customers a free wireless internet connection while they are waiting. You want your customers to keep coming back after all and a lot of people actually go to Starbucks just for the wireless internet. Even bigger savings can be had by using a residential phone service for your business such as Phonepower with rates starting at $4.99 per month. You will not get quite as many features as a business level service but it could suffice nonetheless.

In summary, every business needs hosted phone service because:

  • It is incredibly cheap and it can save a lot of money on phone bills.
  • It comes with a wealth of calling features included.
  • It is almost always unlimited calling and nationwide.
  • An auto-attendant can be easily setup to manage incoming calls.

Why does every consumer need it?

There are many alternatives for consumers when it comes to choosing a phone service. The obvious alternative to a home service is to simply only use a cell phone and dump the home service altogether. This can be an expensive option though as both calling and data charges can mount up very quickly. If we take the cell phone out of the picture and assume that most people have internet access at home, then it is a fairly easy decision when trying to decide between a legacy phone solution and a hosted phone solution. The benefits are mostly the same as described above for businesses with the cost per month being the biggest reason to change, as a hosted VoIP service will ultimately save most consumers hundreds of dollars per year.

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** Most providers include an upper limit on minutes for their unlimited plans as part of a reasonable usage policy in their T&Cs.


Author: Tony Campbell

Published: by WhichVoIP

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WhichVoIP Visitor Comments

#1 : Posted by Al on April 30th, 2013:

Good comparison. Seems like a no brainer to move my business over to this type of service.


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