VoIP Cost Savings: How Small Businesses Cut Phone Costs

Changing your old office phones to a completely new system can feel daunting, especially when you are evaluating costs, reliability, and disruption. That’s often when business owners start asking a simple question: why switch to VoIP?

To help you evaluate the cost benefits of VoIP for small businesses, we analyzed data from over 1,000 companies and created this infographic with real VoIP usage and savings statistics. In this graphic, you'll learn about VoIP use, VoIP savings, and cost effective VoIP solutions.

Further down the article, we break down the cost benefits of switching to a VoIP service and share three practical tips to help you maximize savings when you decide to make the upgrade.

Key Takeaways

Here are highlights based on the data we gathered from small businesses using VoIP.

On Cost Savings

• Companies can reduce monthly telecom costs by over 50% by switching from traditional phone systems to VoIP.
• Setup costs for an on-premise phone system typically start at $20,000, while VoIP setup costs can be close to zero with a cloud-based phone system.
• The average employee uses 400 minutes per month. This means companies significantly reduce costs by bundling their users into a pay-as-you-go VoIP plan based on minutes, rather than paying per user.

On Business VoIP Features

• 47% of SMBs are using SMS to communicate with customers.
• 74% of employees use a mobile app for making work calls.
• 22% of SMBs have a toll free number.
• Phone menus offer callers an average of three options.
• 89% of phone menus enable callers to enter an extension.
• Phone menu greetings last an average of 15 seconds.

On Call Activity

• The averate time a caller holds before hanging up is 90 seconds.
• The average time a caller holds until an agent answers is 36 seconds.

What are the typical VoIP savings?

The average savings businesses see after switching to a VoIP phone system typically range from 30% to 50%. While the amount of savings can vary from case to case, almost all companies see a meaningful reduction in their telecommunication expenses.

The most significant cost savings are realized by companies switching from an on-premise phone system to a cloud based phone system like Telzio.

How does VoIP save money?

• There’s no equipment.
• Making changes is easy and free.
• There are minimal long distance charges.

Related: 5 FAQs about VoIP Phone Systems for Newbies

What are the Benefits of VoIP?

While telephone costs for a small business will vary, the advantages of VoIP for business consistently translate into meaningful cost savings. Even through growth and operational changes, the convenience and flexibility of a VoIP phone system keep costs and service issues at a minimum.

VoIP enables employees to use their mobile devices

Telzio provides an integrated mobile app that enables users to make and receive calls and texts using their business phone number on their mobile device. Calls on the mobile app are separate from their personal line, and it’s easy to see when there’s a work call coming in versus a personal call.

The mobile app enables you to add phone users to your system without purchasing new desk phones. This also means you don’t have to worry about replacing aging phones in the future.

In addition to the mobile app, you can use the Telzio Webphone for calling and texting.

VoIP eliminates hardware and setup costs

Switching to a hosted VoIP service means eliminating all on-premise server equipment. By moving communications to the cloud, businesses share the burden of hardware and maintenance with other subscribers to lower overall costs. Instead of housing equipment at every office location, businesses can access a virtual phone system for all operations without purchasing any new equipment.

Switching to a hosted phone system means that you never have to worry about system updates or maintenance issues ever again. All costs related to server issues and hardware malfunctions fall on the shoulders of the VoIP service provider.

VoIP setup and customization

With a VoIP phone service, setting up and managing features, users, and phone numbers is handled online through a web-based interface. There’s zero programming involved and often, zero hours required from IT.

Telzio provides an easy-to-use web portal to set up and manage all features, users, and call routing. Everything from creating call groups to uploading custom hold music can be done on the Telzio website. With visual tools like Call Flows, even non-technical users can customize an entire phone system in minutes.

Versa Products, a furniture manufacturer and ecommerce company in Los Angeles, stated management as one of the biggest pain points with their prior phone system.

Our communications are now much more efficient and Telzio’s user-friendly interface is much easier to use and manage as needed. Whereas before it was necessary to contact a technician for any little change, I can now manage everything right through my browser, and it goes live instantly. - Nathan Endow, IT Director

Online management enables businesses to save on ongoing service costs and time every time a change is needed in the phone system. What's more, advanced customization to the system is much easier. In fact, VoIP actually makes it possible to customize your phone system in ways that traditional phone systems cannot.

VoIP scales as your business grows

Since hosted phone systems are administered through a remote online control panel, scaling operations across physical office locations and within organizations is easy and immediate. With a hosted phone system, your business is never tied to any particular setup or location and you can scale your phone system as your business grows. Adding a new user, department, or even location can be done online. New phones can be shipped ready-for-calling, drastically cutting down deployment efforts for IT personnel.

In addition, VoIP pricing is much more scalable than traditional phone service, since you are not paying for lines. Each time you add a user with a traditional phone system, you have to pay for the physical line to be run to the desk. With Telzio, there is no cost for adding users.

3 Ways to Cut Costs When Switching to VoIP

A few years ago, before the “cloud” hype, these cost-cutting options were not available to small businesses. Most companies today are still attached to their traditional landline phone service, but with a fresh perspective, these tips for lowering your company phone bill are simple and easy to implement.

1. Consolidate Phone Lines

Are you still paying for “dummy” phone numbers so you can handle multiple calls? With traditional phone companies like Time Warner and Comcast, businesses are forced to purchase additional phone lines so that if there’s an existing call, a new incoming call will “rollover” to the next line. Now if there’s a third call? Well, you have to keep purchasing lines to avoid sending callers to a busy signal.

With Telzio’s cloud platform, rollover lines are completely unnecessary. One phone number can handle all simultaneous calls at once. What that means is, a company with 100 employees can all receive and make calls using the same phone number at the same time. Callers never get a busy signal and a business can handle as many calls as they have physical phones.

When callers dial in to a business they are usually directed to an auto attendant or a live receptionist. From there, callers can enter or look up the extension of the person they are trying to reach. This eliminates every employee having their own phone number, but also eliminates the cost of Direct Inward Dialing (DIDs). You can still assign a unique phone number for certain employees or departments, but for a majority of companies, this “number-trimming” will cut monthly costs down substantially.

***Tip:***Make a list and see how many of the phones sitting around your office actually need unique phone numbers. Now multiply that number by however much the monthly cost is for each of those numbers and you’ll start to see how it adds up.

2. Avoid “Unlimited” Calling Plans

Scaling is the number one rule in basic economics. It’s the reason cloud servers like Amazon are such a great resource for small businesses. You can just pay for what you use, rather than investing a set amount and losing on the unused capacity. Think of it this way - instead of renting my own storage unit, I can share a bigger space with others and come and go as I please, so my cost fluctuates if my usage fluctuates.

So if we’re doing that with everything else, why aren’t we doing that with our calls? “Unlimited” plans are a marketing ploy by phone companies to get you to pay for more than you use. Most employees call on average 400 minutes per month, which 99% of the time does not amount up to the higher price of the “unlimited” plan.

3. Migrate to a Cloud-Based PBX

Certain items in the office are easy to upgrade – computers, furniture, even an old copy machine. Others appear much more daunting, like the phone system. When was the last time you upgraded your phone system? Maybe never. Until recent years, there wasn’t an obvious reason to fix a phone system that simply “wasn’t broken”. Now that cloud-based phone systems using VoIP are widely available, there’s a much stronger financial incentive to consider an upgrade.

At Telzio, we've seen companies save over 70% on their monthly costs after switching to Telzio, and this is not a singular occurrence.

How is it possible that the cost savings are so substantial?

One, it’s the pricing model. Telzio includes all users with any plan or phone number, so not only can you save on consolidating phone numbers, you’ll be eliminating all user fees.

Second, Telzio is cloud based, so there’s no hardware or on-site PBX equipment. This means there are no maintenance, upgrades, or damages to pay for. You simply need internet service and your choice of devices. Telzio works with IP phones, softphones - and most prominently, our mobile app.

Third reason Telzio is so economical, the service is a full-featured business phone system. From IVR menus and call recording to voicemails and call forwarding, Telzio offers all the calling features that small businesses need in a phone system, with no hidden costs.

Switching to VoIP

Final advice for switching to VoIP: test the service before permanently transitioning your entire phone system. Not only will you get an idea of the service quality and usability of the interface, but you’ll get a glimpse into the customer service experience from the provider. A low-cost VoIP service does not have to mean low-quality service. That's why we provide you with a full 30 day free trial to test it for yourself.

Learn more about the leading, cost effective VoIP service from Telzio.