ClarityTel Industry Insights

Why is VoIP Cheaper Than a Landline?


In 2019, phone calls are expected to influence $1 trillion in US consumer spending, with phone calls converting to 10-15 times more revenue than web leads.¹ For businesses to succeed, an effective phone system is essential, but traditional systems are expensive. Traditional private branch exchange (PBX) phone systems can cost up to $1,000 per user. Even more inexpensive KSU-less systems can cost up to $250 per phone.²

A VoIP phone system, on the other hand, can be significantly cheaper. VoIP systems can cost as little as $20 per line, depending on system technology and setup selection.

Businesses looking to switch to Voice over Internet Protocol (VoIP) services may wonder why VoIP is cheaper than a landline. The short answer: VoIP is cheaper than a landline because it uses an existing internet connection rather than requiring a separate system or additional hardware.

Here are some reasons VoIP business phone systems are more affordable – and cut costs for businesses, too.

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What is the VoIP Difference?

A traditional landline phone system sends voice communications via a traditional analog PBX system. VoIP phone systems instead transmit voice calls using IP, as data packets. VoIP solutions bring together voice and data capabilities on a single network, eliminating the need for separate lines and providers for each.

VoIP business phone systems enhance business access to communications, improve collaboration among teams, encourage working smarter, and enable flexibility. They can also be cheaper than the landline telephone, in many instances.

Related Reading: Advantages of VoIP for Small Business

4 Ways VoIP Cuts Costs and Simplifies Communication

VoIP services today are reliable, clear, customizable solutions for businesses of all sizes. Leveraging VoIP technology can simplify your communication tools and increase financial efficiency in several ways:

1. Reduce Communication Expenses with a Single Provider

A VoIP phone system typically brings cost savings by cutting business phone bill expenses. A company using a VoIP service no longer needs to work with multiple service providers for its office, mobile, and data services. All of these are handled on the data network.

2. Lessen Internal IT and Support Burdens

With a hosted VoIP solution, the provider manages and maintains the network, hardware and software. This reduces the need for IT support on the business’s end and leaves more time to innovate other business efficiencies.

3. Increase ROI with Efficient Payment Models

With VoIP systems users typically pay on a monthly per-user basis. Data limits or different costs at different times of day are a thing of the past. Plus, VoIP users are no longer tied down to a particular country, address or phone line for their communications — giving the employee mobility and saving the company the cost of long distance charges.

4. Decrease Hardware and Installation Needs

The VoIP phone system is also easy to get up and running — there’s no need for hardware and extensive equipment installation. The VoIP provider can send phones or provision existing phones; all you need to do is plug them into the Internet and get back to work.

Related Reading: Types of VoIP Technology

VoIP Provides Cost Savings by Increasing Business Efficiency

VoIP services can improve office productivity in a way that a traditional landline cannot. In addition to direct financial savings, VoIP can cut costs by increasing business efficiency through:

  • Time Savings: Employees will spend less time dealing with paper jams and pacing the office looking for faxes to arrive with vFax (virtual fax). VoIP sends inbound fax communications directly to the user’s email box, with a PDF attachment that is clear, crisp, and easy to forward on as needed.
  • Automated Customer Service: Employees may spend less time on the phone troubleshooting customer concerns. A VoIP auto attendant can present the caller with recorded messages addressing common problems, making it easier for the customers to solve their own problems. Learn more about how an auto attendant can increase employee efficiency and productivity.
  • Accurate Call Routing: The business can better utilize human resources by forwarding phones to a particular number or voice mail at a given time of day or better address peak call times via ring/call groups, night mode, or time of day routing.

Scaling up to match a company’s growing needs or down to reflect reduced staffing during a slow season is also easier and costs less with an IP- or cloud-based system as opposed to traditional landline equipment.

Base Your Business Phone System Decision on More than Just Cost

Whether you’re determining whether VoIP is cheaper than a landline or just trying to choose which type of VoIP system is best for your business, don’t let cost be only the factor in your decision. In selecting a new partner for technology needs, be certain to go with a business VoIP leader that proactively monitors network status, provides technology updates, and offers customer support to help with any concerns and also detect fraud or mitigate any compliance risks.

Ultimately, selecting a provider that can adequately support your communication needs is more likely to provide an effective long-term solution than simply choosing the lowest price option.

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Editor’s Note: This article was most recently updated in 2019 to include accurate price, solution, and market information. It was first published in 2016.