VOIP vs traditional phone systems: Which saves you more money?
In the past, businesses relied on traditional phone systems to communicate with customers, employees, and partners. However, with the rise of VoIP technology, companies are now shifting towards using cloud-based phone systems that promise lower costs and better functionality. But what are the actual cost savings of VoIP versus traditional phone systems? In this article, we will explore both options and compare their costs, as well as other factors that may influence which system is best for your business.
VoIP: A Revolutionary Technology
Voice over Internet Protocol (VoIP) is a technology that allows people to make phone calls using a broadband internet connection instead of a traditional phone line. VoIP systems transform the voice signal into data that can be transmitted over the internet and then converted back into a voice signal at the other end. This technology has been around for over 20 years but its popularity grew in the early 2000s. Today, VoIP is widely used in the business world.
Cost Savings with VoIP
One of the most significant advantages of VoIP is its cost savings potential. VoIP phone systems are significantly cheaper than traditional phone systems. VoIP calls use the internet to transmit data, which means that long-distance calls and international calls can be made for a fraction of the cost of traditional phone systems. Additionally, VoIP has lower infrastructure costs since there is no need to install additional phone lines and hardware. VoIP systems are also easy to use, eliminating the need for expensive training programs and technical support.
Another area where VoIP saves money is in scalability. Traditional phone systems require businesses to make a substantial upfront investment to purchase hardware and lines to accommodate future expansion. Conversely, with a VoIP system, businesses can add new phones or extensions instantly since they are cloud-based. Therefore, there is no need for expensive equipment upgrades during periods of growth, ultimately reducing costs.
Lastly, VoIP systems eliminate the need for a separate phone bill since it’s included in your internet bill. This means businesses experience a lower overall cost and can simplify their billing process.
Traditional phone systems: Still a Viable Option?
Despite the rise of VoIP, traditional phone systems still have a place in the business world. Traditional phone systems operate over the Public Switched Telephone Network (PSTN), which is a collection of telephone lines and switching centers operated by telecommunications companies. Traditional phone systems offer excellent reliability, security, and sound quality that businesses have been relying on for decades.
However, traditional phone systems can be costly when it comes to long-distance and international calls. Since these calls are transmitted using the PSTN, there are high tariffs applied by phone service providers. Additionally, adding new phone lines or extensions can be expensive and time-consuming.
Another area where traditional phone systems fall short is scalability. As previously mentioned, businesses need to make significant upfront investments in infrastructure for growth. Additionally, businesses that wish to expand to new locations will have to purchase new hardware and lines. All of these costs can add up.
Lastly, traditional phone systems require businesses to have separate phone bills. This can create additional challenges when it comes to budgeting and may require additional resources to manage.
VoIP vs Traditional Phone Systems: Which Option Suits Your Business?
VoIP and traditional phone systems each come with their own set of advantages and disadvantages when it comes to cost savings. Here are some factors to consider when choosing the right option for your business:
1. Company Size
VoIP is an advantageous option for small businesses that are starting out since it eliminates the need for expensive equipment and allows for easy scalability. On the other hand, larger companies that have already invested in traditional phone systems may prefer to stick with their existing infrastructure.
2. Physical Location
For businesses that operate out of one location, both VoIP and traditional phone systems may be suitable options. However, for those that have multiple locations, VoIP may be the better option since it enables all locations to be connected without the need for expensive hardware and telecom technicians.
3. Usage
For businesses that require a lot of long-distance and international calls, VoIP will provide significant savings. In contrast, if your business only requires standardized local calls, then a traditional phone system may be the best option.
4. Features
Traditional phone systems typically have a limited set of features such as call forwarding and conference calling. In comparison, VoIP systems offer an array of advanced features that may be more suitable for businesses that require advanced functionality.
Final Thoughts
When it comes to cost savings, VoIP phone systems prove to be a better option than traditional phone systems. The cost savings come from lower infrastructure costs and lower international/long-distance calling costs. With VoIP, businesses have the flexibility to scale quickly and easily, without making significant investments. However, traditional phone systems may still be advantageous for those who are more established and require a higher level of security and sound quality. Ultimately, it’s essential to evaluate your business’s needs before making a decision.