How to calculate the TCO of VoIP

Posted on Wednesday April 04, 2018

Choosing whether or not to deploy VoIP phone systems is an easy decision. But choosing a system that works for your business can be difficult, with all the products, vendors, features, and data plans available. Oftentimes, however, selecting a VoIP system comes down to calculating the total cost of ownership (TCO).

What is TCO? The TCO is the overall sum of procuring, deploying, and operating a VoIP system has over its life cycle, which is typically five years. Naturally, some of the costs (like operating costs) can be predicted only before the implementation, but an experienced VoIP expert should be able to give you an informed approximation.

Upfront costs When selecting a VoIP system, make sure to check the features offered and the quality of the system -- by looking at reviews -- so you get the best bang for your buck. While full-featured, high-quality phone systems will come at much higher price points, they do tend to be more reliable and require less maintenance than a cheap phone system.

Beyond the price of the VoIP package, there are also additional costs like headsets, webcams, and a stronger network connection to ensure crystal-clear calls.

You also have to consider the payment options. You could either buy it outright or rent it from a reputable third party. Although the former carries a steep upfront cost, payment will not continue indefinitely. This makes sense for large, fully staffed corporations with massive budgets. Meanwhile, the latter option is better for small- and medium-sized businesses that prefer to pay a monthly subscription for the phone features they need rather than make a huge investment.

Implementation costs In addition to upfront costs, you'll have to pay a consultant or managed services provider (MSP) to design, deploy, and configure your VoIP system.

Then, there's onboarding. Since you're installing a completely new phone system, you'll need to hire experts who can teach employees how to use the VoIP system effectively and securely.

Operational costs This covers monthly recurring costs of voice and data plans. For example, some service providers charge local and long distance calls per minute, while others offer unlimited local calls for a fixed monthly cost.

If you're managing your VoIP system yourself, you'll also have to take into account the monthly power, cooling, and maintenance fees. If you opt for hosted VoIP services, however, you'll be billed only for the maintenance.

Upgrade costs You should also set aside some room in your budget for VoIP upgrades. For instance, to improve customer service, you may need to integrate customer relationship management software with VoIP, but that requires a certified CRM expert to facilitate the entire integration process.

Evaluating all the costs that apply to your business will give you a clear idea of how much you can expect to pay for your VoIP system. You can also compare VoIP TCO with traditional phone system TCO to make a business case for VoIP.

If you're having difficulty calculating the real costs of VoIP, call our experts today. We'll help you figure out which VoIP solution is most ideal for your business and budget.