Is VoIP Cheaper Than Other Phone Systems?

Vonage looks at the different elements that go into determining VoIP vs. landline costs to give you the fuller picture of what to expect.

If you’ve heard of VoIP phone systems but are worried they will raise your businesses phone bills, we have a nice surprise for you. In general, VoIP systems save businesses money over traditional landline phones.

This is especially true if you leverage the additional features available through VoIP to improve other areas of your business that traditional phones can’t help you with.

Is VoIP Cheaper Than Other Phone Systems? Key Considerations

Yes, for most businesses, VoIP is a more cost-effective solution than landlines or legacy PBX systems. It works over your existing internet connection, cutting out the need for separate wiring or expensive hardware. On top of that, VoIP often includes more built-in features at a lower monthly rate.

How VoIP Helps Reduce Costs

• Lower setup costs: VoIP systems typically require fewer physical components and less on-site installation compared to traditional options.
• Affordable monthly pricing: Many VoIP services offer competitive per-user rates and avoid the steep fees associated with long-distance or international calls.
• No separate phone lines: Since VoIP runs over the internet, you won’t need to maintain a dedicated phone network.
• Cheaper call rates: VoIP can significantly lower the cost of both domestic and international calls.
• Easier to scale: Adding or removing users is simple and less expensive compared to expanding a traditional phone infrastructure.

When VoIP is a Smart Financial Move

• Tight budgets: Small and midsize businesses often see major savings, up to 45% or more, after switching to VoIP.
• Feature needs: Tools like auto-attendants, voicemail transcription, and call routing are typically bundled into even basic VoIP plans.
• Remote teams: VoIP is ideal for distributed or mobile workforces since it works on smartphones, tablets, and desktops.

Costs You Might Still Encounter

• Upgrading your internet: A stable, high-speed connection is essential for reliable VoIP performance and may require an ISP upgrade.
• New hardware: Although many VoIP systems use existing devices, you might need to purchase IP phones or headsets during setup.

Why is VoIP Cheaper Than Using a Telephone?

VoIP is generally more affordable than traditional phone systems because it works over your existing internet connection and devices, with no need for dedicated phone lines, separate cabling, or extensive hardware setups.

Beyond lower setup costs, VoIP delivers operational value that helps businesses save in other areas:

• Lower equipment needs: Most teams can get started with computers or smartphones they already have.
• Simplified billing: A single provider can cover voice, mobile, and messaging needs, reducing the number of vendors.
• Reduced IT maintenance: With fewer physical components, there’s less to repair or troubleshoot.
• Location flexibility: Employees can make and receive calls from anywhere, which supports remote and hybrid work.
• Built-in features at no extra cost: Tools like call forwarding, virtual receptionists, etc. often come bundled in, without needing add-ons or third-party tools.

For small and midsize businesses in particular, these savings can add up quickly, making VoIP a smarter long-term investment than a traditional landline.

Cost Breakdown: VoIP vs. Landline

As noted earlier, VoIP systems typically deliver significant cost savings over traditional landlines.

In fact, studies have shown that businesses save on average between 30% and 50% on their phone bill each month when they switch to VoIP. So it’s no surprise that 31% of businesses currently use VoIP, and that number is growing all the time.

To understand the full financial impact, it helps to compare both systems across initial costs, ongoing expenses, and hidden fees.

Upfront Costs

Traditional landlines may require installation fees, desk phones, and on-premises PBX hardware, especially costly for large offices or multi-location businesses.

VoIP systems are easier to set up. Many companies launch with softphones on existing laptops or smartphones. Even when IP desk phones are needed, they’re typically plug-and-play, with no technician required.

Bottom line: VoIP offers a more budget-friendly, scalable setup, ideal for remote or fast-growing teams.

Monthly and Recurring Costs

Legacy phone systems charge per line and often tack on fees for voicemail, call forwarding, or long-distance. Monthly totals can add up fast.

VoIP plans usually charge per user and bundle in most essential features, from call routing to voicemail-to-email, keeping billing predictable and easier to manage.

Hidden or Additional Fees

Landlines can introduce unexpected costs for maintenance, upgrades, or international calling.

In contrast, VoIP providers tend to bundle support and system updates into their base plans. Scaling is simpler and less expensive, often just a matter of adjusting your plan online.

While VoIP may have costs for premium features or high call volumes, cloud-based infrastructure makes it easier to control expenses and avoid surprise fees.

Understanding the upfront costs and monthly cost differences can help clarify why VoIP is often the more affordable choice. Here’s a high-level comparison:

Cost Category	VoIP System	Traditional Landline
Monthly Service	$15-$40 Per User	$50-$100 Per Line
Long-Distance Charges	Included in Most Plans	Extra Per Minute
Voicemail, IVR, Call Forwarding	Bundled With Base Plans	Add-on or Not Available
System Maintenance	Included With Provider	Often Requires External Support
Hardware Needs	Minimal; Works on Existing Devices	Desk Phones, Wiring, PBX Setup

These recurring costs can add up quickly for traditional landline systems, especially when scaling or adding new features.

VoIP pricing typically offers lower base costs with a broader range of built-in capabilities, helping reduce both fixed and variable expenses over time.

Real-World VoIP vs. Landline Cost Examples

If you’re wondering how VoIP savings stack up in real-life scenarios, here’s a comparison of typical monthly and annual costs for different business sizes.

Small Business: 5-Person Team

Expense Type	Traditional Landline	VoIP System
Setup and Installation	$300-$500	$0-$100 (Softphone Setup)
Monthly Cost (5 Lines)	$300-$500	$75-$200
Long-Distance Calls	Charged Per Minute	Included in Most Plans
Maintenance	Pay as Needed	Included in Service Plans
Estimated Annual Cost	$4,300-$6,200	$900-$2,400

Mid-Sized Business: 50-Person Team

Expense Type	Traditional Landline	VoIP System
Setup and Installation	$5000 -$10,000	Less than $500 (If Any)
Monthly Cost (50 Lines)	$3000-$5000	$750-$1,500
Long-Distance Calls	Charged Per Minute	Included in Most Plans
Maintenance	Pay as Needed	Included in Base Plan
Estimated Annual Cost	$45,000-$70,000	$9000-$18,000

These examples show how VoIP can reduce costs for businesses of all sizes, especially as you grow. With fewer setup requirements, lower monthly fees, and bundled features, VoIP delivers value that legacy systems often can’t match.

How VoIP Works vs. Landline: Key Functional Differences

VoIP (Voice over Internet Protocol) and landline systems use fundamentally different technologies. A VoIP phone line transmits voice as data packets over the internet, while a traditional landline uses analog signals sent through copper wires on the Public Switched Telephone Network (PSTN).

These differences bring key functional advantages for VoIP:

• Advanced feature set: VoIP systems support capabilities that are not available or require third-party tools on landlines.
• Device flexibility: VoIP doesn’t require a specific desk phone. You can use VoIP business phones, or “softphones,” on desktops, laptops, tablets, and smartphones, or even convert a traditional handset using an adapter.
• Seamless scalability: VoIP lines can be added or removed with just a few clicks, no technicians or new wiring needed, making it easy to scale up or down as your business changes.
• Unified access: VoIP systems let users move between devices mid-call (with features like call flip), supporting work from anywhere without sacrificing consistency.

While landlines still offer simplicity, VoIP’s internet-based design offers far more agility and customization, making it a better fit for most modern businesses.

Advanced VoIP Features That Save You Money

With VoIP, the savings don’t stop at your monthly phone bill. Many VoIP systems include built-in features that would otherwise require expensive add-ons or third-party software with traditional phone setups.

Instead of paying extra for conferencing, voicemail tools, and CRM plug-ins, many VoIP platforms include them.

Here are a few feature-driven ways VoIP helps reduce costs:

• Call forwarding and call routing: Automatically redirect calls to the right team or device without the need for on-site hardware or manual handling.
• Auto-attendant or virtual receptionist: Provide a professional caller experience and reduce the need for dedicated staff to manage incoming calls.
• Voicemail-to-email transcription: Receive voicemails as text in your inbox, streamlining message management and saving time.
• Conference calling and video integration: Replace paid conferencing tools with features built into your phone system.
• Softphone access: Let your team make and receive calls from laptops or mobile devices, reducing hardware purchases.
• CRM integration and analytics: Connect your phone system to tools like Salesforce or HubSpot to gain insights and improve efficiency, without additional tech stacks.
• Business SMS and MMS messaging: Send and receive text or multimedia messages directly from your business number, ideal for quick updates, appointment reminders, or customer support.
• Call recording: Record conversations for training, compliance, or quality assurance without requiring external tools or software.
• Call queuing: Manage high call volumes efficiently by automatically placing callers in line and routing them to available team members based on priority or availability.

When bundled into a single solution, these advanced VoIP features not only reduce operating costs but also enhance productivity and customer experience.

VoIP Security, Compliance, and Call Reliability

For many businesses, especially those in finance, healthcare, or legal services, cost isn’t the only concern — security, compliance, and reliable connectivity matter just as much.

VoIP Security Standards

Modern VoIP systems use encryption and secure protocols to protect call data in transit. At Vonage, for example, VoIP services are backed by enterprise-grade security practices and third-party certifications such as ISO 27001, PCI DSS, and HIPAA-compliant offerings for eligible customers.

Regulatory Compliance

Many VoIP providers offer features to help meet industry-specific regulatory requirements. This may include call recording controls, audit trails, and admin-level access restrictions, all essential for businesses handling sensitive data.

Built-In Reliability Features

Reliable VoIP platforms come with call failover options, multiple data centres, and uptime guarantees. These redundancies help keep communications running even during local network issues.

Some providers also offer mobile backup options, allowing users to continue calls on cellular data if the internet goes down.

Quality of Service (QoS)

IT teams can also configure QoS settings on business networks to prioritize voice traffic, ensuring clear, uninterrupted call quality.

Together, these elements make VoIP a secure and resilient solution that meets the needs of modern, compliance-conscious organizations.

Common Myths About VoIP (Debunked)

Even though VoIP has become the go-to solution for modern business communication, a few persistent myths still create hesitation. Let’s set the record straight.

Myth 1: VoIP Costs More Than Traditional Phones

Reality: VoIP is often much cheaper than landlines, especially when you factor in bundled features like voicemail, call forwarding, and conferencing. With landlines, these tools typically come at an extra cost, or aren’t available at all.

Myth 2: You Need Expensive New Equipment For VoIP

Reality: Most businesses can start using VoIP with the devices they already own, like smartphones, laptops, or tablets.

Softphone apps eliminate the need for desk phones, but if you prefer physical hardware, plug-and-play VoIP phones are easy to add.

Myth 3: VoIP Has Poor Call Quality

Reality: Call quality depends more on your internet connection than on VoIP itself. With a strong, stable network, VoIP can deliver clear calls, often better than traditional landlines.

Myth 4: VoIP is Too Complex For Small Businesses

Reality: Today’s VoIP platforms are built for ease of use. With user-friendly dashboards and simple setup, even the smallest teams can manage their phone system without technical help.

Myth 5: VoIP Slows Down Your Internet

Reality: VoIP uses very little bandwidth and won’t noticeably affect internet speed. That said, if your internet is already slow or unstable, it may impact call quality, so a reliable connection is key.

VoIP isn’t just cost-effective, it’s also accessible, scalable, and easier to use than many assume.

This blog post has been re-published by kind permission of Vonage – View the Original Article

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Call Centre Helper is not responsible for the content of these guest blog posts. The opinions expressed in this article are those of the author, and do not necessarily reflect those of Call Centre Helper.

Author: Vonage
Reviewed by: Megan Jones