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Is VoIP Cheaper Than Other Phone Systems?

This article was updated on May 30, 2024

If you’ve heard of VoIP phone systems but are worried they will raise your businesses phone bills, we have a nice surprise for you. In general, VoIP systems save businesses money over traditional landline phones. This is especially true if you leverage the additional features available through VoIP to improve other areas of your business that traditional phones can’t help you with.

Photo of a man sitting in a chair. In one hand he is holding his cellphone; in the other he is holding a credit card as he makes a purchase with his phone.

How Does VoIP Stack Up on Cost?

Yes, a Voice over Internet Protocol (VoIP) business phone is often cheaper than an analog phone system. In fact, studies have shown that small businesses save up to 45% on their phone bill each month when they switch to VoIP. So it’s no surprise that 31% of businesses currently use VoIP, and that number is growing all the time.

However, business VoIP pricing depends on several factors, so costs will vary based on the services selected and the number of users. In this article, we’ll look at the different elements that go into determining VoIP vs. landline cost to give you the fuller picture of what to expect.

Are VoIP Phones a Cheaper Alternative to Traditional Phones?

In general, VoIP phones are less expensive than a traditional wired telephone service. In fact, the above study found that when a business changes from a traditional phone service to VoIP they: 

  • Save an average of 50% to 75% on overall phone cost

  • Lower their local call costs by 40% 

  • Reduce cell phone and long distance fees by an average of $1,727/month

Why Is VoIP Cheaper than Using a Telephone?

The biggest reason VoIP is less expensive than a traditional telephone service is because it uses internet connections and devices you already have, instead of needing a totally separate system and extra hardware. VoIP operates over the internet, which most businesses already have. This means VoIP services won’t require additional wires to be installed for each line.

There are other ways VoIP vs. analog represents increased value to a business without a bigger price tag. These include:

  1. Increased flexibility of staff, since they can answer calls from anywhere so they aren’t chained to their desks

  2. Added team communication and collaboration, when everyone can stay connected

  3. Reduced expense by using a single provider, since now a company doesn’t need separate office phones, cell phones, and data plans

  4. Fewer IT pieces to break, meaning less time spent troubleshooting problems

  5. Improved feature availability, so a business can add things like call forwarding, auto attendants, and paperless fax in the same system, often without any additional cost

What Is the Difference Between a VoIP Phone Line and a Normal Landline?

A VoIP phone line involves the transmission of packets of data over the internet, while a landline sends analog signals over dedicated copper wires through the public switched telephone network (PSTN).

There are some definite advantages to VoIP due to these differences. If asked to give three advantages of using VoIP, we would say:

  1. More features — The internet connection inherent in VoIP systems means there’s a huge range of additional features possible compared to an analog system. These include things like business SMS and MMS messaging, on-demand call recording, and call queueing.

  2. Device flexibilityVoIP-specific phones or adaptors that can be added to traditional landline phones allow you to use regular looking phones to send and receive calls. But most devices that can connect to the internet can also be used as “softphones,” or software phones. So staff can use mobile phones, desktops, laptops, and tablets for calls as well. A call flip feature can even allow users to seamlessly switch between devices without the other person on the call knowing it happened.

  3. Scalability — Adding additional phone lines with a traditional landline involved the expense and time of physically running more wires into a building. With VoIP systems, lines can be added and removed without big infrastructure changes, meaning they can scale seamlessly with your business.

Does VoIP Slow Down the Internet?

No, VoIP does not slow down the internet by any meaningful amount since it involves transmission of relatively tiny amounts of data. Even in a large business with hundreds of phone calls being placed simultaneously, it’s very unlikely that a slowdown would be big enough to be noticeable.

However, a VoIP system will be negatively affected by a slow or erratic internet connection. A “jitter” or other audio distortion is the most common problem users report due to a bad internet connection. A jitter happens when the small packets of information used in a voice call are delivered in the wrong order or missing all together, making a call sound garbled. In fact, disruptions to call quality over VoIP systems can be used as a warning sign that a business's internet isn’t performing at its usual capacity — a canary in the coalmine for internet issues.

It’s common advice that if you plan to implement a VoIP phone system, you’ll need to make sure you have access to high-quality internet service. This is true not because your VoIP will slow it down, but because VoIP needs it to operate well.

Vonage: Business VoIP Made Easy

Vonage has been at the forefront of VoIP since its introduction. We offer a huge range of features that lets businesses take advantage of everything VoIP has to offer through our Unified Communications. Whatever your size, we offer customizable solutions for your exact needs. From basic calling to virtual receptionists, we have you covered.

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