Traditional phone systems present two main problems for businesses: limited features and high costs. This is why small businesses are migrating to voice over Internet protocol (VoIP) systems that deliver advanced communication features over a broadband Internet connection. In fact, a recent survey showed that small businesses are leading the charge in this shift, with 70% of these purchases coming from businesses with 30 or fewer phones.

Business-class VoIP solutions are often much less expensive than traditional phone systems.

That all sounds good, but how much can a small business really save by switching?
The answer is: a lot!
The biggest cost reductions are seen in monthly service bills. “Since leaving Verizon, we have cut our phone bill by 80%. The features that our VoIP phone service provides, along with the system clarity and reliability, are a blessing to our business,” says Matt Roberts, VP and general manager of C&S Precision Machining, Inc.
Much of the cost reduction comes from decreased long distance bills. Some VoIP systems let people within a company reach each other by extension dialing—just picking up a phone and dialing the four-digit extension of the other person—and this avoids long-distance charges, even if the called party is in another state or even traveling abroad.

Why don’t more small businesses switch?

Communications are the lifeblood of any business, so some small business owners are reluctant to take a chance on “new” telephone technology—no matter how attractive the pricing.
But improvements in network technology now enable service providers to offer highly reliable VoIP solutions with outstanding call quality, on par with traditional phone systems. So these days, the most noticeable difference is the lower monthly bill. But the savings are not just limited to reducing equipment costs or long distance charges. In fact, there are at least six ways your small business can save when you migrate to a hosted VoIP solution.

This guide explains these cost advantages, and what these savings have meant to small businesses who have switched from closet-style PBXs and old-style phone service.

1. Eliminate PBX maintenance and upgrade costs.

Many older telephone systems are based on PBX equipment installed in the telecom closet at the business location. Businesses that use a dedicated PBX must maintain and operate the system themselves, which can be very expensive. For example, to support 100 users over five years, 75% of your operations and administration costs go to system administration and technical support. The remaining 25% goes to planning, security management, physical space, insurance, and power.
But when you switch to a hosted VoIP solution, there is no need for a PBX in the telecom closet. You no longer have to pay PBX maintenance and upgrade fees; it’s all handled by your service provider. Instead, you pay a predictable and more consistent monthly fee that allows you to manage a long-term fixed cost. And when it’s time to upgrade to the latest software, your service provider automatically pushes the updates out to your system as part of your monthly service fee.
In addition, maintaining your own PBX requires either outside consultants or dedicated IT staff. With a VoIP solution hosted by your service provider, you can reduce or eliminate outside consultant fees, and your IT staff can focus on business initiatives instead of your outdated phone system.
That was the experience of Brian Flores, President of Cognetics. “We replaced our dying $16K legacy phone system with a VoIP phone system,” says Flores. “We love how affordable and easy it is to manage and set up. With our VoIP phone system, there are no more $900 a month PRI costs, no more service calls or costs to maintain the legacy PBX system, no more hardware maintenance costs, and no more analog-line monthly costs.” 

2. Easily make changes.

A traditional PBX phone system is difficult to grow or change. Consequently, you may end up purchasing excess capacity you don’t need now just in case you need it later. And when you do need to add employees or change your setup, you often have to pay traditional service providers steep additional fees, dedicate your IT staff to the project, and possibly hire outside consultants, just to help with the transition.
VoIP solutions, on the other hand, are hosted in the cloud, so you can easily make changes to your own phone system. Some providers even let you add lines by simply logging into your account and placing the order. When you need to move an employee, it’s as easy as unplugging the phone and plugging it back in at the new location.
Web-based system management also makes it easy to set up and modify your ring groups (hunt groups), auto attendant, voicemail boxes, and many other features—all without purchasing a service contract or hiring an IT consultant to help you.
Many customers love the control VoIP gives them. “This is something I love about my VoIP system,” says Dr. Angelique Andrews MD, pediatrician and owner of HAPPI pediatrics practice in Huntsville, AL. “It’s so easy to administer by myself. I can log in, see a complete picture of our setup, and make any tweaks I want without calling my IT consultant for support.”

Download the full e-guide to learn the other 4 ways that you can save with internet phone service.