Cost of VoIP phone system – A Buyer’s Guide

Do you know how much the latest Apple iPhone 11 costs?

It is $699.

Do you know how much a VoIP phone system costs?

Well, there is no fixed price tag. It differs from vendor to vendor and the features that they provide. That makes the decision-making process difficult. Unfortunately, there is no IKEA like product catalog that makes the choice of a VoIP phone system easier.

One has to wade through endless pricing plans, tough-to-crack telephony jargon, jump on calls with sales folks who are not so keen on understanding your requirements, and try just to sell you something.

Well, now that you’re here on the Freshcaller blog, I want to help you clear the mist surrounding the cost of a VoIP phone system.

Cost components of a VoIP phone system

A VoIP phone system does not have a single price tag. There are several components to it that will determine the final cost. The most prominent cost components are:

  • Agent license
  • Virtual phone numbers
  • Call rates
  • Migration expenses
  • Other expenses

Agent license

Under the hood, a VoIP phone system is a software. Most often it comes in the form of a subscription service that is powered by the cloud. You can buy as many agent licenses or subscriptions that your business needs.

Suppose your business needs 15 agents, you will have to buy 15 agent licenses. Each license is for each individual user and is charged on a monthly or annual basis. The agent license allows users to access the software using a thin client, e.g. a web browser or a mobile app.

Virtual phone numbers

VoIP phone systems work with internet connectivity. They do not need individual phone connections or SIM cards like traditional phone systems. What they do need are virtual phone numbers.

Like any phone number, each virtual phone number is mapped to the country code and local area code. When a caller calls the virtual number, the cloud telephony service provider maps the phone number based on the country code, local area code, and subsequently to the subscriber number.

It is virtual phone numbers that allow a VoIP phone system to make and take calls through the internet. If you want to use a VoIP service on your internet-enabled devices like laptop, tablet or smartphone, it is virtual phone numbers that make it possible.

Also, long-distance calls are extremely cheap with virtual phone numbers. You can even buy a local phone number in another country other than your country of residence or business operation and still incur minimal call charges.

Call rates

Telephone network carriers charge users for every second of talk time. Similarly, a VoIP service provider charges you by the amount of voice data used. The call rates are calculated based on the number of seconds consumed. The talk time will be converted into equivalent data units to calculate the final charges.

For example, an outgoing to the United States could cost you $0.022 per minute.

Depending on the country where you purchase the virtual phone number, the call rates would differ. Further, there could be additional charges for conference calling, call forwarding, call recording, and such extra features.

Migration expenses

If your business is already using an analog phone system and wants to migrate to a VoIP phone system, it will add to the total cost. The migration will involve porting existing phone numbers to the next PBX system, recreating all call flows, setting up of admin privileges, IVR menus, and so on. The VoIP system provider could charge a nominal amount for these additional services provided.

Other expenses

In addition to agent licenses, phone numbers, call rates, and migration expenses there could be other expenses that could be added to the cost of your VoIP phone system. One such cost is enabling SIP calling. SIP protocol is what enables you to use your existing telephone headsets as VoIP devices. To turn your analog desk phones into internet-powered VoIP phones, you need SIP calling.

What makes a VoIP phone system more cost-effective than traditional phones?

Yes. VoIP phone systems tend to be cheaper than landlines due to two reasons. They use an existing internet connection which your office could be already using. Second, it does not require separate telephony connections for each user and also requires no additional hardware. The laptop that you are already using could double up as your phone system.

Here is a table that details the major differences between a VoIP phone system and a traditional phone system.

FactorTraditional phonesVoIP phones
Need for personnelTraditional phone systems require experts to set up and maintain PBX systems.VoIP phones are easy-to-use software that can be configured and used without expert intervention.
Physical hardwareRequires PBX hardware, telephone circuitry, analog cables, and desk phones to create a successful connection. The entire circuitry works with copper wires which is prone to quick wear and tear.Requires zero telephony hardware. Computers double up as PBX and endpoint telephony devices. VoIP works on smartphones, including Android & iOS devices.
Risk of downtimePhysical damage to wires can stall connectivity indefinitely. Prolonged repair and restoration can disrupt business continuity.Since VoIP is largely dependent on the internet for its connectivity, downtime happens only when there is a disruption in internet connectivity.
Data securityProne to eavesdropping, phone tapping, bugging, etc.The use of high-end data encryption measures helps ensure voice data integrity.
Call qualitySubpar call quality due to the excessive reliance on hardware. Faulty equipment can prove detrimental to call quality.The use of digital voice signals provides superior voice clarity.
Call conferencingTraditional phones have limited conferencing capabilities. The call quality also suffers when the call participants increase.VoIP phone systems enable call conferencing at scale without any call quality issues.

Cost of a VoIP phone system — let’s talk dollars and cents

For any business owner, one of the first questions that comes to their mind while buying business software is this — ‘How much does it cost?’ The same goes for buying a VoIP phone system as well.

Like I said before, the typical cost of a VoIP phone system is dependent on the agent license, phone numbers, and call rates charged by the vendor.

To help businesses make decisions easily, most businesses segregate the pricing into different plans. The pricing plans progress from basic to advanced or professional and would have different feature sets.

To cite an example, Freshcaller is a VoIP phone system. It has four pricing plans — Sprout, Blossom, Garden, and Estate. The annual cost of each of these plans are as follows:


The plans are available in monthly and yearly subscriptions. Yearly plans are recommended as they come 20% cheaper than monthly plans.

Also, Freshcaller offers local and toll-free virtual phone numbers from 90+ countries starting as low as $1.

Value for dollars spent — What does Freshcaller offer?

As a top-rated VoIP phone system, Freshcaller offers businesses a range of telephony features that can simplify communication and transform the way telephony operations are run at scale.

Number management

Assign local, toll-free, or landline phone numbers to individual team members or separate teams. You can also assign phone numbers to separate call flows based on working hours, teams, and so on.


Your callers could call at any hour. For all those calls that come in after your working hours, callers can leave a voicemail. Freshcaller also offers voicemail drop that lets your agents drop pre-recorded voice messages to dialed phone numbers.

Call handling

Freshcaller requires zero telephony hardware. But, it does offer every call handling features you can ask for. Customer call greetings, call routing, call conferencing, wait queues, shared lines — pretty much everything your business phone system will need.

Multi-level IVR system

VoIP phone systems are far more intelligent than landlines. They help you segment calls based on the purpose of the call even before the calls reach the agents. With Freshcaller’s multi-level IVR system, your agents will be spared from recurring low-value calls and allowed to focus on complex calls that require their personal attention.

SIP calling

SIP calling gives the best of both worlds — the comfort of your landlines and the power of cloud telephony. With Freshcaller SIP calling feature, you can attend to incoming calls and place outgoing calls using your SIP devices while using the Freshcaller dashboard.

Reporting & analytics

With Freshcaller by your side, you do not need any other BI visualization tool to make sense of your call center performance. Freshcaller VoIP phone system offers intuitive reporting of key metrics that you can make sense of with a quick glance.

About Freshcaller

Freshcaller is a modern-day VoIP phone system for customer support, sales, IT, and HR teams. With Freshcaller’s cloud-based architecture, it brings together the best of legacy features like IVR and advanced capabilities like Smart Escalations, Custom Call Center Analytics to help you set up a state-of-the-art business call center. Freshcaller offers phone numbers in 90+ countries, requires zero phone hardware, and is extremely easy to use.

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