VoIP Resources Small Business Tips Small Business Management

5 Steps to a Lower Business Phone Bill for Business Owners

by Kevin Bartley

Here are five ways to help you lower your business phone bill, including switching to a new phone solution that will help you succeed.

Phone bills are often an overlooked aspect of a company's overall operating cost. It's not uncommon for business owners to be out of touch with the unnecessary maintenance fees, hidden charges, and built-in cost inefficiency that drive phone bills to excessive highs.

This is especially true for SMBs moving beyond the 5-10 employee mark. Fortune.com suggests, "Fast-growing firms need to upgrade their infrastructure at three critical points or their teams will get lost in inefficiency: At 10 employees, you need a better phone system... Procrastinating on this will kill your growth. Trust me: Your most aggressive rivals made these changes—last year..."

At OnSIP, we often get inquiries from business owners who admit they hadn't even looked at their phone bills in over a year, only now coming to the realization that they're losing hundreds or even thousands of dollars a month on solutions that fall under the 'if it's not broke, don't fix it' threshold. But with modest research, they can find new phone system solutions at substantially lower total cost of ownership with more functionality than they have today.

If you suspect you need to lower your phone bill, here are five steps to clarify your potential ROI of switching to a new phone solution that will help you succeed.

1. Learn How to Assess "Total Cost of Ownership" of a Phone System Solution

This step is particularly important, quite frankly, if you don't already have a hosted or "cloud" VoIP phone system. Why? Because there are other costs to consider beyond the monthly phone bill. We recommend you baseline your total cost of ownership and understand what the switching costs would be if you chose an alternative on-premise solution. Here are common on-premise solutions:

  • Plain Old Telephone Service - Here, your costs are pretty straightforward. You have a number of lines, and you pay for them monthly. But do not forget to add in your time (or your employees' time) spent requesting a new line from your phone service provider— as well as any fees associated with this. You can factor this into your annual cost. As far as one-time fees, you pay for phones and cabling.
  • POTS Lines with Centrex Service - In this case, you're paying for Centrex to add extension dialing and voicemail boxes to POTS. Again, the pricing for this is pretty simple: your monthly Centrex bill with your telecom provider plus your time spent on change requests. One time fees include phones and cabling.
  • Traditional On-Premise PBX Service - This one is a bit more involved on the hidden-cost factor. If you're using a Toshiba, Nortel Meridian, or Panasonic system that relies on a separate network from your LAN, you likely use a telecom consultant to maintain it. If your system has reached end-of-life status, you may even be paying a premium on your maintenance contract. Be sure to add your ongoing support costs to your monthly T1/PRI bill. One time fees: PBX equipment (thousands), phones, cabling, and setup charges from a telecom consultant.
  • On Premise IP Phone System (PBX) and UC - Whether it's open source (e.g. FreePBX/Asterisk) or commercial (e.g. ShoreTel, Avaya, Cisco, Microsoft Lync), an on-premise VoIP phone system solution has ongoing maintenance costs: you employ an IT person on staff, or you have an IT consultant. Either way, an IT specialist (not necessarily a telecom specialist) handles system upgrades, equipment maintenance, and assistance in adding a new phones/features to your platform. Be sure to consider those contracts in calculating your total cost. Add that to your monthly phone bill for your PRIs or SIP Trunking service. For a very complete assessment, you could add in your PBX's power consumption as it runs 24/7 in your office. This can be found in manufacturer's documentation, but it's probably not substantial compared to your other costs. One time fees include phones, PBX equipment (thousands), and setup charges from a telecom consultant.
  • Employee Cell Phone / Residential Phone Bills - The systems described thus far do not support remote extensions or registered phones, so you may be footing the bill for your on-the-go and remote employees to answer calls on their cell or a residential line. If so, add this to your total costs.
  • Conference Call Services - If you currently have an on-premise solution (such as Centrex) with no conference bridge capabilities, you may be paying for a conference call or webinar service such as GoToMeeting. Add this to your total costs.

Finally, if any of these solutions are becoming unreliable for you, consider what that phone system downtime is costing your business.

Graphs with phone system total cost of ownership

2. List Your Must-Have Phone System Features

At this point in time, if you're considering a phone system replacement, we wouldn't recommend anything that isn't VoIP-based. Business VoIP solutions nowadays provide hundreds of phone system features and leverage existing IP networks for savings on infrastructure and maintenance. Take the time to think on your must-have phone system features so you can get apples-to-apples base quotes on pricing. For your convenience, here are top features we often see businesses needing:

  • Extension dialing across locations
  • Voicemail
  • Auto Attendant (Virtual Receptionist)
  • Ring Groups
  • Call Distribution Queues
  • Music on Hold
  • Conference Bridges

3. Approach Phone System Providers with Your Must-Have Features and Current Bill

Now that you've baselined your current expenses and have a list of needed features, you can efficiently approach new phone system providers for price quotes. We've already reviewed on-premise phone systems (for which you'll want to approach a local IT consultant or rely on your internal IT staff). Let's take a look at costs to consider for hosted solutions:

  •  "Virtual" Lines - A.k.a. call forwarding, this is a solution like Grasshopper that forwards extension calls to your existing phones. If you have this, or you consider a service like this, you can expect to pay for the existing phone service (e.g. POTS or cell phones), plus your monthly Virtual Phone Service. A common mistake is to simply consider the monthly Virtual Lines service cost, but the actual phones (POTS or employees' cell phones) can substantially add up.
  • Cloud Phone System - A hosted business VoIP service such as OnSIP will deliver a monthly phone bill for the business phone system features and calling. Most providers such as 8x8 or RingCentral charge a flat fee per user. (OnSIP has a unique pay-as-you-go model for features and calling.) These services are typically intuitive enough that you may not need a dedicated IT professional to run them, but some charge fees for adding new phones and features. 

You'll want to ask for quotes on both the initial setup and ongoing maintenance costs. Then, translate those quotes to annual total cost of ownership vs. your existing solution long-term— for the next 5-10 years.

4. Assess The Value and Savings From Modern Phone System Features

If you currently have a traditional phone system solution, you may be missing out on features that save your business money. As Entrepreneur.com put it, "If your phone system doesn't offer much more than a dial tone, a few extensions and voice mail, it could be holding back your business."

For example, perhaps you run a Centrex system and have a receptionist answer the phone for a main number and transfer calls to extensions. With an IP phone system, you can leverage an Auto Attendant feature to perform that function and reallocate your receptionist's efforts to other important work.

Or, perhaps you have an on-premise IP system that you need to dial into to check your voicemail. How much time savings would you and your employees experience from receiving voicemail to email from a hosted phone system solution? Furthermore, perhaps your Sales team uses Salesforce.com— Would you benefit from performance improvements that a phone system integration with Salesforce can provide?

At this point, there are so many productivity-enhancing features that (especially hosted) business VoIP can offer, that we won't cover them all here. Instead, as you get quotes from phone system providers, ask them how they can help your business run more smoothly, and factor their offerings in.

5. Take the Plunge! Select a New Provider and Enlist Your Team

One of the most common hurdles we see for business owners is finding the time to make the switch. If you cannot find the time yourself, you might consider an alternate phone system solution provider with whom a staff member can work. For example, find a local IT consultant whose quote covers all the aspects of total cost of ownership so that you feel confident it'll mean savings for your business. Or, select a hosted VoIP provider that has extensive setup support and easy-to-use management interfaces; that way, a staff member can head up the phone system migration and ongoing changes.

If you are worried on the cost of switching, you should be able to revisit your total cost of ownership assessment to find the savings in the long run. Plus keep in mind, if you are on an end-of-life phone system, you may reach an actual end-of-life moment, which could be very costly to your business and put you in a bad position. As an entrepreneur, we're confident you will make the best decision to lower your business operating costs!

Learn more about Small Business Tips