Published December 5, 2026
Running a small business means every dollar counts. When it comes to your phone system, you're probably wondering which option won't break the bank while still keeping your customers happy and your team connected.
The short answer? Hosted VoIP crushes traditional phone systems when it comes to saving money. We're talking about 30-60% cost savings – sometimes even more. But let's dig into the real numbers so you can make the smartest choice for your business.
What's The Real Deal With Phone System Costs?
Before we dive deep into the numbers, here's what you need to know: phone systems have completely changed over the past few years. The old-school landline setup that your parents' business used? It's expensive, clunky, and honestly pretty outdated for today's work environment.
Hosted VoIP (Voice over Internet Protocol) runs through your internet connection and lives in the cloud. Traditional phone systems require physical hardware, landlines, and a lot more maintenance. The cost difference is pretty dramatic.
Breaking Down Hosted VoIP Expenses
Let's talk real numbers. With hosted VoIP, you're looking at $15-$50 per user each month, with most basic business plans starting around $15-$25 per user. That's it – no surprise fees, no complicated billing.
Here's what makes hosted VoIP so budget-friendly:
Setup Costs: Usually $0-$100, and many providers waive setup fees entirely. Since everything runs through your existing internet connection, there's no need for expensive installation or rewiring your office.
Hardware: This is the cool part – you don't actually need any special hardware to get started. You can use free software on your existing computers and smartphones right away. If you want desk phones later, they're around $80 each, and good headsets run $40-$350 depending on what features you want.
Monthly Service: That flat rate per user covers pretty much everything – voicemail, call routing, auto-attendant, conference calling, and usually free long-distance within the US.
Maintenance: Zero. Your provider handles all the technical stuff through their cloud servers. No more calling a technician every time something breaks.
For a 20-person team, you're looking at roughly $399 per month for basic service, plus optional hardware costs if you want them.
Traditional Phone System Price Tag
Now let's look at what traditional systems actually cost – and prepare yourself, because it's not pretty.
For that same 20-person business, you're looking at over $14,500 in the first year alone:
- PBX hardware: $6,500
- VoIP phones: $3,000
- Setup and installation: $1,000
- Software licenses: $4,000
That's just to get started. Then you've got monthly line fees of $30-$60 per line, plus long-distance charges that can run $0.10-$0.50 per minute.
And here's the kicker – maintenance is expensive and ongoing. Every time something breaks, you're calling a technician. Want to add a new phone line? That's another service call. Need a new feature? Usually costs extra.
Side-By-Side Cost Comparison
Here's how the numbers actually stack up:
| What You're Paying For | Hosted VoIP | Traditional Phone System |
|---|---|---|
| Getting Started | $0–$100 (often free) | $500–$2,000+ (can be $6,500+ for PBX) |
| Monthly Per User | $15–$50 (flat rate) | $30–$60 + long-distance fees |
| Long-Distance Calls | Usually free/included | $0.10–$0.50 per minute |
| Phone Hardware | Optional (use existing devices) | Required desk phones + PBX equipment |
| Fixing Problems | Provider handles it | Pay for on-site technician visits |
| Extra Features | Mostly included | Usually cost extra |
| Adding New Users | Instant online setup | Need technician visit |
| Works From Anywhere | Built-in mobile apps | Limited call forwarding options |
| 20-Person Team (Year 1) | ~$3,600–$4,800 | $14,500+ |
Real Numbers: A 20-Person Business Example
Let's say you're running a growing business with 20 employees. Here's what your first-year costs look like:
With Hosted VoIP: Around $3,600-$4,800 total for the year. That includes your monthly service for everyone, maybe some desk phones for key staff, and you're good to go.
With Traditional Systems: Over $14,500 in year one, and that doesn't include the ongoing maintenance costs, extra feature fees, or long-distance charges that'll keep piling up.
That's over 40% savings in the first year alone with hosted VoIP. In year two and beyond, the gap gets even bigger since you won't have those massive upfront costs with VoIP.
Which System Actually Saves You Money?
The math is pretty clear – hosted VoIP wins by a landslide. But let's be real about when each option makes sense:
Go with hosted VoIP if:
- You want predictable monthly costs
- Your team works remotely or hybrid
- You need to add/remove users regularly
- You don't want to deal with maintenance headaches
- You want modern features without extra fees
- You have reliable internet (which most businesses do these days)
Stick with traditional systems only if:
- You have very specific regulatory requirements
- Your internet connection is unreliable
- You absolutely need on-premise control for security reasons
Even then, the cost difference is so significant that most businesses find ways to make hosted VoIP work.
Making The Right Choice For Your Business
Look, we get it – changing phone systems feels like a big decision. But when you're looking at saving thousands of dollars every year while getting better features and flexibility, it's pretty much a no-brainer.
The telecommunications world has shifted, and small businesses that make the switch to hosted VoIP are seeing immediate benefits to their bottom line. Plus, your team gets features that actually help them work better – mobile apps, video calling, instant messaging, and easy call routing.
Want to see exactly how much your business could save? Drop us a line at Premier Broadband. We've helped tons of small businesses make the switch, and we can show you the real numbers for your specific situation. No pressure, no complicated sales pitch – just straight talk about what makes sense for your business.
Ready to start saving money on your phone system? Let's make it happen.
