Written by Matt Reed Reviewed by James Macey Updated on November 18, 2024 On this page Telephone System Costs: Quick Summary Telephone System Costs by Business Size Small Business Telephone System Costs Medium-Sized Business Telephone System Costs Large Business Telephone System Costs Hosted VoIP vs On-Premise VoIP Costs Example VoIP Provider Costs Cost of IP Phone Hardware Analog Phone System Costs Telephone System Installation Costs Expert Verdict Expand Our site is reader-supported – by clicking our links, we can match you with a potential supplier, and we may earn a small commission for this referral. Business telephone system costs will depend on three things: your business’ size, the type of phone system that you plump for, and the system provider you choose.Generally, low-end hosted VoIP phone systems cost $10 to $25 per user, per month, while mid-range systems cost $25 to $40 per user, per month. High-end, enterprise-level systems can cost anywhere from $40 to $140 per user, per month.This article focuses on the factors driving hosted VoIP system prices, from software features and deskphones to any hidden costs. We’ll also cover on-premise VoIP and analog telephone costs for comparison, though we recommend hosted VoIP as the most affordable, easy-to-set-up, and scalable option. Read on to learn how much it will cost your business. Vonage is the best value for your money Affordable plans no matter the size of your business! Prices starting at $13.99/line/month. Try Vonage now Quick Summary: How Much Does a Telephone System Cost?Here are the costs you can expect for a telephone system in the US at a glance before we dive into the details down below. Telephone System Costs: At a Glance Small business hosted VoIP: $10–$40 per user/month; $500–$4,000 upfront for desk phones (10 users); no installation costs.Medium business hosted VoIP: $25–$40 per user/month; $10,000–$50,000 upfront for desk phones (100 users); no installation costs.Large business hosted VoIP: $30–$140 per user/month; $25,000–$125,000 upfront for desk phones (250 users); no installation costs.Alternatives:On-premise VoIP: $6,000–$7,000 upfront for hardware, $4,000 for software, and $1,000 for installation.Analog systems: $50/month for line rental, $50–$250+ per desk phone, and $150–$250 for installation.Verdict: VoIP is almost always cheaper than on-premise or analog systems. Telephone System Costs by Business SizeSince telephone system costs for a hosted VoIP system can vary substantially, one of the easiest ways to understand costs is to break them down by business size.Most hosted VoIP providers charge by user for each of their plans. Meanwhile, the more expensive that plan is, the greater the calling allowance, software features, and integration options, plus other improvements in functionality, that better suit larger businesses, too.Consequently, it makes sense to judge telephone system pricing by business size. Let’s look into how much you can expect to spend for small, medium, and large business operations. How much does a small business telephone system cost?Small business telephone lines tend to have fewer features than the most complex setups, as well as need require fewer users to use them, too. Here are some prices you can expect:Typical costTotal for 10 usersHosted VoIP system software$10 – $40 per user, per month$100 – $400 per monthIP desk phones$50 – $400 upfront, per phone$500 – $4,000 upfront ▶ Read more: The best small business phone systems How much does a medium-sized business telephone system cost?Medium-sized phone lines have a few extra calling features, such as an auto-attendant, and you might need to have more staff using the phone system to handle greater calls. The table below details the prices you can expect for this size of system.Typical costTotal for 100 usersHosted VoIP system software$25 – $40 per user, per month$2,500 – $4,000 per monthCall/contact center add-on$10+ per user, per month$1,000+ per monthIP desk phones$100 – $500 upfront, per phone$10,000 – $50,000 upfront How much does a large business telephone system cost?Large business telephone lines have the most features of the lot, often including advanced training features for calling like call whisper as well as extra reporting tools. Naturally, large businesses will be taking and making more calls, too. Below are some typical prices for systems of this size and complexity:Typical costTotal for 250 usersHosted VoIP system software$30 – $140 per user, per month$7,500 – $35,000 per monthCall/contact center add-on$10+ per user, per month$2,500+ per monthIP desk phones$100 – $500 upfront, per phone$25,000 – $125,000 upfront 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.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. Hosted VoIP vs On-Premise VoIP System Costs ComparedAnother option to consider besides a hosted VoIP system is an on-premise VoIP system. Hosted VoIP vs On-Premise VoIP Explained Hosted VoIP is a cloud-based phone system managed by a third-party provider, offering services over the Internet without requiring on-site hardware or maintenance. It is highly scalable and cost-effective upfront, with minimal setup requirements, but involves ongoing subscription fees.On the other hand, On-Premise VoIP – or more specifically on-premise PBX (private branch exchange) – is hosted on a business’s own servers, giving full control over customization and security. While it requires significant initial investment to build, host, and maintain, it can reduce long-term costs for businesses with dedicated IT resources.With an on-premise setup, costs differ significantly from hosted VoIP. These include expenses for PBX hardware, software licenses, setup and installation, ongoing maintenance, and any required desk phones.This tends to mean that on-premise VoIP involves higher upfront costs and setup fees, and ongoing expenses primarily relate to maintenance and configuration. The table below provides a quick comparison of the expected costs compared to a hosted system.Cost typeHosted VoIPOn-Premise VoIPSetup costsMinimal or free (provider handles setup remotely)$6,000–$7,000 upfront for hardware (server, routers, switches, backup); $1,000 for professional setupMonthly subscription fee$10–$140 per user, depending on package (Basic, Premium, Advanced)None (no ongoing subscription costs)Add-ons$10–$49 per user, per month for features like call centers or advanced communication toolsIncluded in upfront PBX software licenses or added for a feePBX software licensesIncluded in subscription fee$4,000 upfront for team of 20 users (free if using open-source software like Asterisk)Maintenance costsNone (provider manages updates and scaling)Costs vary – requires a dedicated team or outsourced maintenanceHardware (phones)$50–$416 per IP phone$50–$416 per IP phoneScalabilityHigh – Add/remove users flexiblyModerate – Limited by hardware capacityControlProvider manages hosting and maintenanceFull control over system configuration and updatesInstallation timeQuick – Provider offers remote assistanceLonger – Requires professional installation and configurationLong-term costsHigher ongoing costs due to subscription feesHigher initial costs; potentially lower long-term costs if well-maintainedIdeal forBusinesses looking for flexibility, ease of setup, and lower upfront costsBusinesses needing complete control over their phone system ▶ Read more: The best business VoIP phone systems Compare tailored quotes from the right phone system providers for your business – tell us a little about your business to start Get free quotes Hosted VoIP Provider Costs: Real Provider ExamplesPrice ranges are helpful, but sometimes you need to have an example of a cost with a real-world example. Here is a table of our top-rated VoIP providers and how much you could spend. Swipe right to see more 0 out of 0 backward forward RingCentral Zoom Phone Vonage Nextiva Ooma Price $20 – $35 per user, per month Price $10-20 per user, per month Price $13.99 – $27.99 per user, per month Price $18.95 – $40.95 per user, per month Price $19.95 – $29.95 per user, per month Hardware Costs: IP Phone PricesAn 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 – $100Medium-spec IP phones$100 – $220High-spec IP phones$250 – $416 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.Choosing the right phone system means savings for your business ▶ Read more: The best office phones for businesses Get tailored prices for the right telephone systems for you Do you already have a business phone system? Yes No Simply answer a few questions about your business – it only takes a minute How Much Does an Analog Phone System Cost?Analog phone systems, also known as landlines or POTS (Plain Old Telephone Service), rely on traditional phone networks. While they are being phased out in favor of VoIP, analog systems can still be a short-term solution for businesses. Unlike residential landlines, businesses require multi-line phone systems to handle multiple calls simultaneously.Here are the key costs to consider:Line rental: Starts at $50 per month, with additional lines costing around $25 each. Verizon and AT&T offer tailored plans based on location and line requirements.Hardware: Telecom equipment (PBX or KSU) and desk phones are necessary. Desk phone prices vary:Two-line: $50–$100Four-line: $150+Six-line: $250+Installation and configuration: Expect to pay $150–$250 for line installation, plus technician fees to configure your PBX or KSU for optimal use.Analog systems are less flexible than VoIP and require dedicated phones, but they remain a viable option for certain business setups. ▶ Read more: The best multi-line phone systems for businesses 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. Compare tailored quotes from the right phone system providers for your business – tell us a little about your business to start Get free quotes 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 processHosted 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. Verdict You should now know exactly how the costs of business telephone systems break down and vary between hosted VoIP, on-premise VoIP, and analog options. In short, hosted VoIP is typically the most flexible and scalable choice, with costs ranging from $10 to $140 per user/month depending on business size and features.On-premise VoIP involves higher upfront investments but offers full control, while analog systems are a less flexible, short-term solution with ongoing line rental and hardware costs. Installation costs vary, with hosted VoIP usually free, on-premise requiring $1,000 or more, and analog systems costing $150–$250.But if you’d like to find out exactly how much a phone system is going to cost for your business, since some VoIP providers use custom pricing, our free quotes comparison service can help you out. Simply answer a few quick questions, and you’ll receive no-obligation quotes customized to your requirements, saving you time and effort. Why not get started today? Written by: Matt Reed Senior Writer Matt Reed is a Senior Writer at Expert Market. Adept at evaluating products, he focuses mainly on assessing fleet management and business communication software. Matt began his career in technology publishing with Expert Reviews, where he spent several years putting the latest audio-related products and releases through their paces, revealing his findings in transparent, in-depth articles and guides. Holding a Master’s degree in Journalism from City, University of London, Matt is no stranger to diving into challenging topics and summarising them into practical, helpful information. Reviewed by: James Macey Senior Business Software Researcher James draws on his 4+ years experience as a researcher to offer specialized advice on a wide range of categories from CRM to Fleet Management. He believes all businesses can grow if they use the right tools and services.