How Much Do Business Phones Cost?

Business Phone System Cost by Type

There’s an array of business phone systems to choose from, each with its own price range, advantages, and disadvantages. Some systems are a better fit than others, depending on the business size and unique requirements. The table below shows average price ranges for medium-size businesses of 50 to 100 employees.

Hosted VoIP Phone Systems

Hosted VoIP (voice over internet protocol) phone systems cost an average of $4,000 to $7,200 to service a medium-size company The cost of VoIP phones covers the initial installation and any necessary hardware, such as proprietary phones for each employee.

VoIP systems rely on an internet connection instead of a conventional phone line, which helps to keep costs down. However, you’ll pay a monthly subscription fee per user of around $15 to $40, as these systems require a robust internet service with increased bandwidth in addition to provider costs.

Hosted VoIP systems are the most popular phone system type, as the provider hosts the software on its own servers, saving you hassle though increasing the monthly subscription fee. You need an active computer network for this service. Installing a computer network costs anywhere from $410 to $6,000, depending on the size and features. 

On-Premise VoIP Phone Systems

Installing an on-premise VoIP business phone system costs around $5,000 to $60,000 to service a medium-size company. This cost covers the full range of necessary equipment to successfully host the VoIP on site, including servers, cards, routers, switches, phones, and a robust battery backup, among other hardware pieces. The major difference between this and a hosted VoIP service is that the company is the provider, as all the hardware to host the system exists on-site.

Upfront costs are exorbitant here since you’re building a robust network from scratch. But recurring subscription costs are drastically reduced when compared to hosted systems. You won't pay a per-user monthly fee. Instead, there’s just the licensing software fee at around $1,000 per year and the cost to maintain the network. 

Private Branch Exchange (PBX) Phone Systems

A PBX (private branch exchange) phone system is a private network installed on-site, similar to an on-premise VoIP. As such, you’ll pay a hefty amount upfront, anywhere from $4,700 to $60,000 for a medium-size business. This includes all the hardware to get started, a software license, and the first month's maintenance fees.

The main unit connects all the phones within the organization, as well as to the public-switched telephone network (PSTN) and any other third-party providers or trunks. Employees can make phone calls using one of the many outside lines, and the main unit processes all telephone communications going in and out of the business.

PBX systems are robust, allowing for private mailboxes, conference calling, in-system private messaging, and much more. Subscription fees are fairly nonexistent, though there’s typically a monthly maintenance cost. To that end, repairing a business phone system costs around $210. 

Key System Unit (KSU) Phone Systems

Key service unit (KSU) phone systems are basic multiline offerings ideal for smaller businesses of five to 40 employees. Installing a KSU system costs between $3,800 and $7,000 and includes the phones, the main unit for processing inbound and outbound calls, and all the necessary wiring. These services don't offer the features of a PBX system but allow for department extensions and the like.

Each phone typically includes several buttons that route to each line, which is why these systems are great for smaller businesses although they struggle to accommodate larger companies. Still, most KSU systems are adequate for basic business needs, with phones including hold buttons, a speakerphone, paging services, memory dialing, and more.

KSU-Less Phone Systems

As the name suggested, KSU-less systems work on the same principle as KSU phone systems—but without the main processing box. They cost around $2,000 to $4,500. Each phone processes the calls rather than a traditional central unit.  For this reason, they’re typically one of the least expensive phone system solutions, especially for smaller businesses with fewer than 10 employees.

Business Phone Prices

In addition to the various services and provider options, you also have your choice of different phones, each with an array of unique features and cost ranges. 

IP Phones

Internet protocol (IP) phones cost around $50 to $500 per item, depending on feature sets. This type of desk phone is compatible with VoIP systems, though many companies allow you to purchase them outright instead of renting them for use with a larger package.

They increase in price with the addition of newer technologies, such as Bluetooth receivers, color touch screens, integrated cameras, and more. 

Analog Phones

Analog phones, known as landlines, have been around for decades, offering a tried-and-true technology for small- or medium-sized businesses. They range in price according to how many lines are serviced. A standard two-line desk phone costs around $50 to $100, while a four-line phone costs around $150 to $250.

A six-line phone is even more expensive, at around $200 to $400 per unit. Additionally, extensive setups require new jacks and wiring. Installing telephone jacks and wiring costs around $50 to $400. 

Virtual Phones

The modern workforce is shifting from in-office employment to remote work. Virtual phones help ease this transition by offering a digital representation of a networked phone. This is essentially a high-tech call-forwarding service, with calls to the main business line getting routed to employees on their mobile or home phone lines.

As such, there are no affiliated hardware costs unless the company buys dedicated mobile phones for each employee. However, you'll pay fees for network access, software licensing, and other VoIP systems. 

Phone System Cost Factors

There are a number of additional factors worth considering that impact the cost of installing a phone system for your business. Read below for more in-depth information.

Number of Lines

The more lines you have, the more it costs to install a business phone system. This includes hardware costs, as each line requires a phone, but it also takes into account any required subscription costs. Hosted VoIP providers, for instance, charge a monthly fee of around $15 to $40 per user. 

Additionally, some of the systems mentioned above aren't built for large user bases, including KSU-less systems. Count on paying about $15 to $250 per line, which includes the hardware, software, and subscription fees. 

Subscriptions and Licensing

Business phone systems are not a one-and-done affair, so expect to pay monthly subscription fees for each line or user and a yearly licensing fee to access any necessary software. Licensing the software costs an average of $1,000 per year, depending on how large your business is, with VoIP provider subscription fees coming in at around $15 to $40 per user. 

Using an on-premise VoIP reduces these subscription costs, as does choosing a simple analog system with landlines. 

Installation Fees

Phone system prices for installations vary depending on the type of system and the number of lines. Some services, such as on-premises VoIP systems, are expensive to install, though with reduced subscription fees. 

Here are some average installation costs for popular business phone systems: 

• Cost of PBX phone systems: $1,700–$60,000 (includes all necessary in-house networking components)

• Cost of VoIP phone systems: $4,450 (includes phone, provisioning, power source, and router)

• Key systems: $3,000 (includes telephones and main KSU box)

• KSU-less systems: $1,500 (includes telephone units)

Size of the Business

The size of the business impacts installation costs in a variety of ways. First of all, there’s the increased price of hardware, such as networking devices and phones, to suit the needs of large companies. VoIP providers, for instance, charge a flat per-user fee, so large companies see monthly subscription costs increase as the size and scope of the business increase.

Finally, companies with more than 50 employees pay more for maintenance. Talk to your provider or service professional to ask about any available deals for larger-than-average workforces.

DIY vs. Hire a Phone System Installation Pro

It's best to leave it to the professionals here unless you operate a small business and opt for a simple landline-based phone system. Hiring a local phone system installer is the best bet to minimize headaches and ensure all goes smoothly, as many of these systems are complex. The installation process requires knowledge of electrical systems, wiring, and other finicky high-tech systems.

The networked components, such as hubs and routers, also require specialized expertise. If you opt for a hosted VoIP, the provider may handle the installation. Call to confirm before activating the service.