The Dirty Lowdown of Hosted Phone Systems

It’s the latest buzz in telecom… a “hosted phone system.” So, what is it and why should you want it? First, I’ll explain what it is, then you can decide if you want it or not. A traditional business phone system consists of desk phones and a server (a black box about the size of your DVR at home). This is known as a PBX system, and it comes with all the right stuff like voice mail boxes, auto attendant, caller ID, voicemail-to-email, and music-on-hold. You buy this “bundled” system and you own it. Period.

A hosted phone system has all these features but you only need to buy the phones, not the server. Your host owns the server. Here’s what a hosted system provides:

1.       Lower upfront costs

2.       Easy as 1,2,3 process

3.       Same phone features that you would get if you purchased your own system

Soooo, why wouldn’t you go with this? Read on.   

With a hosted solution, you spend money up front for new phones. Two items you don’t pay for are installation and the server. Here’s a scenario that happens more often than not:

Sue’s company decides to go with a hosted phone plan. They purchase 5 phones for around $600. It’s a great price. Then they decide that they want voice mail boxes, an auto attendant, caller ID, voicemail-to-email, and music-on-hold. Ok, great… that’s going to cost, on average, an additional $5 per month for each feature on top of each user’s fee of around $20 per month.

Doing the math our total is $100 + $25 per month. Not too bad. Keep reading…

Next, most folks don’t know this, but companies that provide hosted solutions often charge you extra for minutes - outgoing AND incoming- at around 2.9 cents per minute. Sue’s company uses around 3,000 minutes per month, adding an additional $90.

Again, the math says $125 + 90 = $215/month. Are you seeing a trend?

Still not too bad… right? Well, Sue receives that “box of phones” via U.S. mail. She stares at it for a moment and wonders “what do I do now?” She calls her hosting company; they tell her how to plug the phones in. She does… they don’t work. The service rep (from who-knows-where) tells her “Well, it sounds like you need a new router;  yours isn’t big enough to handle more than one call.” Great… Sue drives to an electronic store, talks to the tech geeks, and discovers she needs a $500 router. “What?!” Exasperated and knowing she’s tied into this hosted system, she buys it. After four hours of fruitless attempts struggling to get the network set up, she finally calls an IT guy to come out and help. They charge $125/hour. It takes them two hours.

Now her total is $600 (phones) + $500 (router) + $250 (IT guy) = $1,350 in upfront costs. Add in the $215/month, every month for phone use and she’s at $2,580/year – how did that happen?

Her first year total is $3,930; the second year it “goes down” to $2,580…

Now, let’s compare to the traditional PBX system. Of course, in this scenario, Sue decides to work with Phoneworx. Hey it’s my blog and I’m a Phoneworx’er J

She visits the Phoneworx showroom and plays around with the phones – seeing how they feel, look, and sound – and picks the one she wants. She loves the look and feel of the Cisco system and she is ready to go!  Four to seven days later our technicians visit her office and handle the entire installation.

They set up the phones and internet with voicemail boxes, an auto attendant, caller ID, voicemail-to-email, and music-on-hold all at no extra cost – it’s included! The next day a Phoneworx representative visits Sue’s office and provides training to all the employees.

Sue is excited because she never had to stop working or be involved in the installation or networking… there is a reason why IT networking people exist. It is not easy to do it all yourself.  The coolest part?

There are no added fees for incoming or outgoing calls, no long distance charges, and no additional monthly fees. For a five-phone system Sue spent $2,900.00 once, that’s it!

Her first year total = $2,900.00; the second year = $0…

So, what’s the moral to Sue’s story? If you spend a little more money upfront you can spare yourself frustration and stress in the long term. Plus you can save A LOT of money over time. Even better – Phoneworx is right here in Greenville to help you and your employees if anything ever goes wrong.

So there you have it, the dirty lowdown of hosted phone systems.

-          Sabrina –

“Your phone system expert”