What’s the most common misconception about on-premise phone systems? The assumption that once you’ve paid for the phone system, it’s not costing you anything.    

All on-site phone systems have ongoing costs. Costs that you don’t have to deal with when you use Unified Communications as a Service (UCaaS).  

With UCaaS, you’re hosting your phone system in the cloud, so you’re not tasked with maintaining hardware, software and phone lines. Instead, everything is taken care of in a monthly cloud subscription.

12 Phone System Costs Included in a UCaaS Subscription 

Let's take a look at what is included in a monthly UCaaS subscription that you’d otherwise have to pay for à la carte with an on-premise phone system:

1. Phone Lines 

Even if you have already paid for your on-premise phone system, something still must connect to it for you to have dial tone. That means you’re going to pay for PRI (primary rate interface), SIP (session initiation protocol) or analog lines. A larger organization may be paying for a big global MPLS (multi-protocol label switching) network, which can be very expensive. Connections like these are no longer needed with UCaaS in the cloud. This is also the case for having a call center/contact center in the cloud (also called Contact Center as a Service, or CCaaS). If you have an on-site contact center, you need to have a phone line for every agent taking calls. You also need a line for every single call that is sitting on hold. If you have 50 agents on the phone, plus another 50 callers on hold, you need 100 lines coming into your business. That adds up to a lot of phone line expenses to support your on-site contact center. In the cloud, you can eliminate the need for these lines. 

2. Maintenance Contracts 

Maintenance contracts are for when something breaks and needs professional attention. They will ensure that your phone system vendor will diagnose and resolve the issue in a timely manner, so you can get back on the phones and back to work sooner. The hardware is not your responsibility to maintain in a cloud-based phone system, so there is no maintenance contract to pay.

3. Software Assurance Contracts 

Like maintenance contracts, software assurance contracts are written into phone system plans to ensure continued success. Software assurance makes sure that the software in your phone system will keep working as it was meant to, even through ongoing updates. It’s a way of ensuring that your system stays compatible over time. Like with a maintenance contract, software compatibility is the responsibility of the cloud provider, so when you host your phone system in the cloud, you no longer need to pay separately for software assurance.

4. Online Meeting Software 

In 2020, most organizations made a little bit of a jump into the cloud with online meeting software. A lot of workplaces that had on-site systems jumped on Zoom, WebEx, Teams or GoToMeeting, so they could have video conferencing abilities. But licensing for these options is expensive for an on-premise phone system. Voice and video conferencing abilities are built into a UCaaS subscription.

5. Hardware Replacement Costs 

All hardware at some point will reach end-of-life. On-premise phone systems last a really long time, but when they reach end-of life, they need to be replaced. There is a high expense involved in replacing these systems, and you have that ongoing hardware replacement cost every few years. With UCaaS, because your phone system is hosted in the cloud, there is no hardware involved for you to replace except for the physical phones themselves, if you choose to even have them. (You can always use the computer or mobile device applications instead of a dedicated desk phone). Some UCaaS providers even wrap the cost of a desk phone into their monthly subscription. 

6. Upgrades 

I still have nightmares about the evenings and weekends I’ve spent doing phone system upgrades. When upgrades are needed, you can't afford to be down during the day, so they often occur in the off-hours. I don't know of a vendor that will come out and do after-hours upgrades on weekends and evenings for free. There will always be some cost to phone system upgrades, whether that's once or twice a year, or every couple of years. Again, this is something wrapped into the monthly UCaaS subscription. 

7. Power, Cooling and Rack Space 

Here we have the costs associated with having the phone system equipment in your building(s). Power, cooling and rack space are not free, and they’re required to keep an on-premise phone system running smoothly. If you host your phone system in the cloud, you don't have the physical equipment to power, cool and store, so these costs go away.

8. Break/Fix Labor  

When something goes wrong with your phone system, someone's got to fix it. Depending on your maintenance contract, you may need to pay for break/fix labor. How often this occurs depends on your business. Sometimes monthly, sometimes annually, sometimes never, if your system is a workhorse that doesn’t need much attention. Like with a maintenance contract, hosting a phone system in the cloud with UCaaS means the equipment is not yours to maintain, so you wouldn't have any of these service fees.

9. eFax or Other Fax Services (Analog Lines) 

eFax or analog lines are used to support faxing. Believe it or not, faxing is still a common topic in almost every conversation that we have about phone systems. You've got fax service, eFax service, somewhere there's a cost for faxing. It might be the fax machine itself, and if so, how often do you refresh it? Faxing abilities are one of the features available as part of a monthly UCaaS subscription, without having to pay for additional analog lines or equipment.

10. Server Licensing and Virtualization 

Costs associated with hosting servers on-site go away when you host systems in the cloud. Why? Because your organization doesn't own the equipment. Organizations with on-site systems would typically pay for server licensing and virtualization to support their phone system hardware, but in the cloud, someone else (your cloud provider) owns the hardware. 

11. Redundancy and Disaster Recovery 

When an organization experiences a disaster, they need mobile access to their systems. Most organizations with on-premise systems aren't prepared to meet the needs of a mobile workforce. To make an on-premise system ready for a mobile workforce, additional licensing, redundant hardware and additional phone lines are needed, for which costs can quickly add up. In contrast, disaster recovery in the cloud doesn’t take any additional consideration. Your systems are always available anywhere you have an internet connection. You can hop on a call from a desktop app or an app on your mobile device. And your organization is not responsible for keeping everything functional. 

12. Cost and Complexity of Adding Additional Features 

What does it take to add a new feature, like a conference bridge, to your on-premise solution? You have to add a conferencing server, then you have to add the licensing for it. Then there’s going to be an increase to your maintenance costs because you’ve added to your system. If you’re going to have meetings with 15, 20 or 30 people dialing into a bridge, you’re also responsible for that dial tone. You'll also consider whether to add capacity to be able to handle more PRIs, more analog lines or more SIP trunks, whatever you're using for dial tone. In contrast, adding features or users to a cloud subscription is much more simple. Depending on which system you have, you can either add on yourself, or ask your vendor to help. Adding additional users is a known cost with low overhead, which makes scaling your business easy.

My advice, as someone who’s been working with phone systems for over 20 years, is if you don’t have to deal with all the stuff on this list, then don’t. That’s why so many organizations are turning to UCaaS solutions that are hosted in the cloud. They’re less expensive to maintain. Not to mention your end-users will appreciate that all the features they need are available in one app.  

Wondering what UCaaS costs? Here’s a look at some real-world monthly cost comparisons for UCaaS versus on-premise Unified Communications systems. 

Learn More About Unified Communications

Watch the Webinar: Unified Communications & Collaboration 

Terry LaPointe

Terry LaPointe is the Practice Manager for Unified Communications at Loffler Companies. He is an innovative technical-services expert who has achieved success performing all facets of the technical solution delivery lifecycle, including planning and analysis; technical project, resources and sales staff management; the design and delivery of complex converged enterprise networks featuring the seamless integration of voice video and data; and solution build/run.

Latest News

December 14, 2023

The Future of Printing: The Top Trends to Watch in 2024

As we navigate the post-pandemic era, the landscape of work continues to evolve. With remote and hybrid workplace ...
Read More
November 16, 2023

Is Your Data Protected? Explore All the Factors to Consider

If you don’t have good data protection practices in place, the risks to your organization can be extreme. Data ...
Read More
August 10, 2023

Empowering Your Network with SD-WAN

In today’s fast-paced digital landscape, maintaining a dependable and resilient network is crucial for businesses of ...
Read More