How Much Do Business Phone Systems Cost [2020]?

Submitted by Jim Williams on Thu, 04/ 18/ 19 - 09: 08 AM

How Much Do Business Phone System Cost


If you're searching for how much do business phone system cost, chances are you're looking for more than what you can buy at a retail store. You may have also tried options through a communications carrier like Verizon or AT&T only to discover they don't fit your needs.

This article breaks down the cost of a business phone systems provided by an office technology company based on our research of the industry as a whole. These systems are for growing or established businesses who need options when it comes to their phone system.

Not a lot of time? Skip to what you need:

What is a PBX Phone System?
Business Phone System Features
On-Premise Phone System Costs
What About Phone System Service?
Hosted Phone System Costs
Important Considerations for Host Phone System
Other Considerations

Business phone systems have changed a lot over the decades, and at the same time, they haven't changed much at all. There are technically still switches and lines that must be considered to make phone calls, but today's systems can be fully integrated into your network. This provides users with the opportunity for a seamless system to create the most efficiency.

But a system that advanced must be more expensive, right? Yes and no. The answers below may surprise you.

There are two main options you can choose from when purchasing a business phone system through a service provider:

  • On-Premise Phone Systems
  • Hosted Phone Systems

Let's break each one down by benefits and costs. But first...

What is a PBX Phone System?

What is a PBX

PBX stands for Private Branch Exchange and serves as a private phone network within a company. This allows businesses to make internal calls to other phones on its network through an extension, as well as outbound calls to outside locations.

PBX phone systems include an on-premise server or virtual server for handling calls (like an operator at a switchboard), and multiple phone lines that terminate and are within the PBX.

Regardless of whether you choose on-premise or hosted, you will need a PBX.

Business Phone System Features

Business Phone System Features

There are advantages to having a business phone system over a personal cell phone or other retail option. Some of the features that you may find useful for your business include:

Mobility. The ability for someone to forward calls directly to an employee's cell phone if they are away from their desk.

Conferencing. The ability to have numbers greater than three on a single call (most retail options only allow up to three on a single call).

Instant Messaging. This allows you to text a caller back from your computer when you aren't able to speak with them at the time of their call.

Call Center. Advanced features include the ability to record calls for training purposes, track metrics, and leverage "call whisper" (allowing a team member to speak into the earpiece of another while on the phone with a customer - without the customer being able to hear).

Mobile Transfer. Allows a user to continue a call on their mobile device that originated from their desktop phone.

On-Premise Phone System Costs

$800-$1,000 per user (paid at one time)

The price range listed above includes the phone, PBX, license, and five years of maintenance/support from the manufacturer (which in most cases is optional). Let's breakdown each so you have a better understanding of what goes into these numbers.


There are generally three phone options when you purchase a business phone system: basic, black and white or color, and executive/conference

Basic: a standard phone that has simple call features and is typically only found in a break room or front lobby as a courtesy phone.

B&W or Color: a step up from the Basic model, this phone includes a black and white or color LCD display that will project certain features on its screen like caller-ID. This is the most common model purchased for the majority of offices.

Executive/Conference: the highest end of phone models which may include a touchscreen display and allows for conferencing external microphones to be connected to the phone for more effective conferencing. Typically, only used in a conference room or by senior management at most companies.

PBX (Private Branch Exchange) 

This must include an on-premise server in order to operate, however, companies that don't have this capability may find some cost savings in utilizing a virtual server through a service provider.

If you choose to go with an on-premise server, keep in mind there are additional costs associated with that purchase. An example would be the air conditioned room and power that is required to keep a server at optimal temperatures to avoid overheating.

Depending on the requirements of the technology chosen (phones) will change the price of the total cost of the PBX system. The range above is typically included in the total cost of the phone system.


Licensing can be broken down into three categories:

  • Telephony/Basic 
    • Extensions and mailboxes
    • Ad hoc 3-party audio conferencing
  • Essentials
    • Everything above
    • Desktop client - allows for computer integrated phone
    • Basic Mobility (call forwarding to personal/company mobile phone)
    • Professional Call Manager 
      • Instant Messaging
      • Collaboration (requires server for audio and web licenses)
      • Web and App Dialer
      • Mobility Basic (call forwarding to person/company mobile phone)
  • Standard 
    • Everything above
    • Mobility Client (requires a server)
    • Remote Phone - allows for calls to be made to other branches via extension
    • CRM Integration (such as Salesforce, etc) 
  • Advanced 
    • Everything above
    • Includes Operator License (administrator rights for employee managing the phone system)

Annual Maintenance/Service (optional)

This is a highly recommended feature. Why? Because in addition to the maintenance and service support, when a new phone hits the market, you're covered and won't have to pay another set of licensing fees (which if you remember is per device).

This is a tremendous savings unless you plan to keep your phones for 10+ years, even as new technology continues to be developed.

What About Phone System Service?

Business Phone System Service

The numbers above do not include service. Service is a recurring expense that is in addition in order to give your new phones dial tone. There are two main types of service you can receive: POTS and PRI.

POTS (plain ole telephone line) $30-$50 per line, per month

This is a 1:1 ratio, meaning you can receive an inbound call or make an outbound call per line. This is similar to a home landline, meaning that if more than one person is on a phone/line, two people would be unable to make a separate call at the same time.

This is not a good option for businesses, but these lines are still used for businesses to connect smoke and fire alarms, as well as elevators (all which require a telephone line).

PRI (prime rate interface)

Also known as a T1 lines, PRIs include multiple options and offer users a little more flexibility. Business can choose a partial PRI, full PRI, or a SIP Trunk.

  • Partial PRI - includes 8-12 channels/lines (channels cannot be reduced but can be increased to meet needs)
  • Full PRI - includes 23 channels at $300-$800 per month
  • SIP Trunks (session initiation protocol) - offers more customization at $15-$30 per month, per line.

Keep in mind that these are per month costs and will remain as long as you have phone service. When selecting a provider, you will also want to double check and make sure the service you are purchasing includes unlimited minutes and understand what their policy is for long distance calls.

Hosted Phone System Costs

$17-$45 per month, per user

+ Call Center = $100-$150 per month, per user

You'll notice that the section on hosted systems is much shorter than the previous. That's because it's less complicated. Let's start with what hosted means.

Hosted means that the service provider is providing the phones and service through themselves. This gives them more flexibility to give you options and better cost savings provided you believe they are a strong enough company to provide such services.

Hosted systems still allow businesses to own their phones (typically in 12-24 months) and contacts can range from 12 month contracts to 36 month contracts, on average.

In addition, hosted business phone systems include many of the add-ons that are up-charges for on-premise systems. This includes mobility, instant messenger, and conferencing at no additional cost (conferencing, however, does bring your total up a bit higher).

Because the system is a flat monthly fee, businesses can easily scale as they grow and upgraded color screen phones are usually an option (no need to get complicated trying to save here and there by purchasing basic phones).

RELATED: How to Buy a Business Phone System

Important Considerations for Hosted Phone Systems

Important Business Phone System Considerations

Based on the price and what you get for that price, choosing a hosted phone system seems like a no-brainer, and for the most part, it is. But it can't all be good, right?

What are some important considerations when choosing between on-premise and hosted business phone systems?

  1. The cost never goes away. Yes, you will eventually own your phones, but you will always have the same monthly cost. If you do the ROI on the cost, though, it would take around 8-10 years to see savings going the on-premise route.
  2. If your internet goes down, your phones also go down. Hosted systems that use Voiceover IP are connected to the internet, which makes them vulnerable to internet issues. Being connected to the internet is also how they are able to offer so many great features that keep your business operating efficiently.
  3. Many VoIP companies are out of state (not local) and that typically means you will be required to self-install and self-train. This also may mean that their customer service is also out-of-state (or out-of-country), so service can be questionable. Look for a hosted company that is local and meets your needs.

Other Considerations

It's important to look at the provider and not just the bottom line. We work with companies every day who tell us of the horrors and costs involved with choosing a low-cost provider, only to experience so much downtime that they spent more money in lost opportunity than they saved on the phones.

Make sure your provider can offer support 24 hours a day, seven days per week. Also, make sure their help desk support (the folks you call first when something goes wrong) is located within their company and isn't farmed out to a third-party.

When something goes wrong, a local option provides the quickest response time if they have the infrastructure to support it. This might include a dedicated team of specialists located in a network operations center.

Ultimately, you have to carefully consider all of the costs involved with your decision. Look at testimonials and reviews. Understand the value of what you are receiving and make sure you understand your contract before signing.

If you consider everything above when making your decision, you'll be able to spot a great deal quickly and will find the phone system of your company's dreams.


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Posted by Jim Williams


business phone systems