VoIP, or Voice Over Internet Protocol, has been steadily replacing traditional communications since 2004. VoIP is where calls are made through the internet versus using analog phone lines to route the calls. It is similar to the way Skype makes video calls, or the way Facebook allows you to make calls through its Messenger Application.
Since making calls through the internet is less expensive and users can enjoy many enterprise level features through VoIP, analog lines are being replaced by hosted or on premise VoIP solutions across many residential and business settings.
There are major differences between an On-Premise solution and a Hosted VoIP Solution, and their initial costs are very different, but overall they both can offer cost savings ranging from 50% to 70% in the long run. The amount of savings is different on a case by case basis, but 99.99% of customers witness a decrease in their phone expenses after switching to VoIP.
Let’s first sum up why VoIP is a less expensive option over a traditional phone system:
- VoIP takes advantage of the existing technology businesses already have, the Internet. In contrast, traditional telephone systems require that the business be wired with telephone lines. The customer would then incur the installation expense of the telephone company through their monthly bill. If a business is already equipped with a traditional phone system, chances are that the monthly bill is higher than what you would pay a VoIP provider.
- VoIP allows for users to call anywhere, even internationally, for way less than a regular telephone call. Users can make international calls at local rates because when you dial an international call, VoIP technology initiates the call within that country so that the call is made “locally” and you are paying their local rate.
- VoIP is also a less expensive option because the quality of a VoIP call does not surpass the quality of a call through a regular telephone line. Since VoIP calls are sent through the Internet connection, if the internet connection is poor, it will in turn hinder the call quality. That being said, there are thousands of businesses and large corporations that use VoIP as their main telephony solution and it has proven to be an effective method of communication.
Now that we’ve discussed why VoIP is a better option, let’s get into the two types of VoIP solutions that are available.
On-Premise VoIP
An On-Premise VoIP solution is where you have all the phone system hardware required to run VoIP right on your site (Servers, switches, phones.) Having access to your equipment provides ease of scalability and migration and offers great flexibility when it comes to adding lines and routing calls. When selecting this option, it is best and recommended to have someone who has a working knowledge in VoIP.
The main thing about switching to an on site VoIP solution is that the startup costs are significantly higher than a hosted solution. With this option you must purchase the hardware. The system would also need to be maintained periodically, so although a dedicated IT person isn’t necessary after the initial installation, it is recommended, especially if you are planning on making continuous changes to the system.
One of the benefits of an on site solution is that the hardware is yours to keep and can be great investment for your business. Equipment can range anywhere from the low hundreds all the way up to six figures depending on the size of the deployment. Moreover, an on site solution comes with low monthly rate, allowing you to save money on your communications that can utilize to improve another aspect of your business.
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Hosted VoIP Solution
A Hosted VoIP solution is where everything is taken care of for you off premise “in the cloud” by a third party company. You pay the Cloud System Provider a monthly fee for using their VoIP services, but the upfront expense of buying the equipment is eliminated. You simply house your phones and any maintenance or upgrade is taken care of by the provider.
For both Hosted and On-premise solutions, you do not have to purchase VoIP phones, per say, you are able to keep your existing infrastructure and use adapters to give service to your existing analog phones. You can find a small adapter for $40. If you choose to purchase IP phones, they range anywhere from $50 to $700 for high end models.
Deciding on an On-Premise or Hosted solution is a decision that calls for careful consideration because 1. An On-Prem solution requires an upfront expense, and 2. Hosted seats for a Hosted solution run around $20 a seat. For large businesses or enterprises, paying $20 a seat for a Hosted solution may not be cost-effective, so here an On-Prem solution makes more sense. However, for small-medium-business (SMB’s), a Hosted solution could be a great fit because they may not have the initial capital necessary to purchase hardware for an On-site solution, but they can afford to pay a low monthly fee for the number of seats that they need.
So there you have it, VoIP is an amazing technology that is cheaper than regular landlines and that many individuals and businesses have already began to take advantage of. VoIP telephony is highly customizable and offers many features.
The benefits of a VoIP system are endless and the cost savings are real. VoIP can be implemented on many different settings and platforms. To find out more about the benefits of VoIP when implemented in a school system check out 5 Benefits of VoIP Phone Systems in Schools.
Feel free to give our Solution Experts a call at 1-800-398-VoIP if you are wanting to find out more about how you can save money by using a VoIP system. The cost savings vary on a case by case basis, so give us a call and we can personalize your situation and let you know how much you can save!
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