Insights From CNP

3 Ways IP Telephony Translates into Cost Savings

CNP Technologies

By now, it’s no secret that IP telephony saves money over traditional PBX phone systems. Its potential as a cost saving and revenue earning solution for businesses is one of the most advertised features of VoIP. But simply saying that it can save your business money is one thing; explaining how is another. Here are three provable ways that switching to hosted IP telephony saves money:

1. Lower Capital Expenditure

In comparison to landline PBX systems, the capital expenditure necessary for cloud-based VoIP is miniscule. For PBX phones, not only is there a high initial investment in infrastructure, handsets, and wiring, there’s also expansion of the system to consider, which requires additional handsets and wiring installation. With cloud-based VoIP, the vendor hosts the infrastructure, leaving optional handsets and a possible internet service upgrade as the only startup costs for the business. Because all voice traffic is treated as data over an internet connection, the only costs incurred for expansion are additional phones or headsets, and even these are necessary only by personal preference. Softphones that use existing desktop or laptop computer hardware can eliminate capital expenditure for additional VoIP lines completely.

In the case of an on-premise VoIP system, there is an initial expense for infrastructure and installation, but in most cases, it is lower than a traditional PBX system. 

2. Lower Service Costs

With traditional phone systems, included in your monthly bill are charges for service in addition to costs like taxes, usage fees, and maintenance. Hosted VoIP uses a better solution: monthly service and line costs with all taxes and fees included are lower than what PBX providers can offer. Due to technological advancements in how data is used, transferred, and processed over the last few decades, IP telephony is just more cost effective for providers than landlines, and therefore cheaper for their clients.

Another area that VoIP saves businesses on service costs is long-distance calling. Again, due to the way voice calls are processed, long-distance calls require more infrastructure and maintenance spending over time for PBX providers, resulting in fees for users. With IP telephony, the increased cost of sending data long distance is negligible, and as a result, most providers offer unlimited long-distance calling.

3. Lower Maintenance Spending

With user error, degradation over time, and sometimes just bad luck, any hardware and wires in your office are subject to malfunction. When something breaks, it translates to money spent on replacements, time and opportunity cost for IT specialists, and lost revenue when employees can’t make or take calls. One of the biggest benefits of a hosted IP telephony system is the maintenance and support offered by the provider. Because they host the infrastructure and take care of software and other logistics, they are able to devote more time to maintenance, including around-the-clock monitoring so that your phones are ready to go when you are.

When thinking about upgrading to VoIP, it’s critical to build a business case that includes cost savings over your old phone system. While there are some unique costs associated with VoIP, such as increased broadband usage, you’ll find that the savings add up for a return on investment that will help your business succeed and grow.

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