Average Business Phone Line Cost

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Although today, more and more businesses are switching to other forms of communication for business such email, messaging, social media communication and tweeting, telephone calls are far from being outdated and is still a very significant form of business communication. Using a telephone is still the most personal way for businesses to communicate with their customers and is also extremely convenient. This makes investing in phone lines mandatory for modern businesses.

Today, with advancements in technology, phone systems for businesses are becoming more powerful and with more capabilities. So, whether you are a small business looking for a reliable and secure way to communicate with your customers and enhancing efficiency, or your business is quite large and you’re looking for increased capability and flexibility, a phone system gives you a distinctive advantage over your competition.

Looking For Low Cost Business Phone Services?

  • RingCentral – ($19.95) excellent business landline replacement
  • Grasshopper – ($24.95) virtual business line your cell phone

Average Cost of Business Phone System

There are essentially 3 kinds of business phone systems:

PBX or Private Branch Exchange System

PBX phone systems are ideal for businesses having over 40 employees and which need complex functions. A PBX phone system is suitable for businesses with several departments and divisions and can support several features like conferencing, auto attendant, voicemail, etc.

When it comes to business phone systems, a PBX system is usually at the top and the price range of these systems are around $800 – $1,000 for each user. While the initial investment and set up costs of PBX systems may be higher at the outset, the cost is offset in the long term, as the business grows and expands.

Key System

A key phone system is ideal for businesses with 5-50 employees. The system makes use of a central unit, which controls the multiple phone lines and extensions that include telephones that have lights and buttons to indicate which phone lines and extensions are being used. Some of the features of a key system are hold, music on hold, memory dialing, speakerphone, paging, etc.

Many features of the key system may overlap with the PBX system. Key systems are usually less customizable and flexible compared to the PBX phone system and they are much cheaper too, around $300 – $1,000 per user.

KSU-Less System

This type of a phone system is suited for small businesses will lesser than 10 employees. The KSU-less system does not have a centralized control unit and each individual phone can link to the others in the phone system. Due to this, the phones do not require permanent wiring or professional installation and can be easily unplugged and moved to another location if required. The KSU-less phone system is extremely simple, which also makes it the least expensive option and it costs around $100 – $250 per phone.

What Do Most Businesses Pay per Month?

If you are wondering how much most businesses pay for their phone systems per month, well, the factors depend on your business requirements. Some of the factors that determine how much you will be spending on your phone system per month for your business are:

  • Number of users or the number of phone lines.
  • Number of Sites: Single or multiple locations. If your company has 20 users at a single location, then the cost of installation will be significantly lower than the cost of the installation of phone lines across multiple sites.
  • Model of the Phone: The cost will vary depending on whether you are opting for a generic model, a medium-range model or a top-of-the-line brand.
  • Add-On Services: Most basic service packages provide the facility to receive and make local and long-distance phone calls. However, there are some add-on services that businesses may require such as conferencing, IVR, mobility, call center, integration with ERP, CRM, etc. These not only increase the employee and customer satisfaction, but also the costs.
  • Redundancy
  • Type of Phone System: This affects the costs of the equipment, installation and maintenance and also the pricing of the add-on services.
  • Training costs
  • Annual maintenance costs

Estimated Costs of a Phone System for a Small Business

Depending on the add-on services you choose, the cost of a low-end phone system may cost around $200 per handset, a medium-range system can cost between $400 – $600 per handset and a top-of-the-line, fully-loaded system can cost around $1,000 per handset. And, this can help to estimate the cost for the phone system for your business. For example, if you require 20 phones, then a top-of-the-line system will cost your business $1,000 * 20 = $20,000.

Costs of Phone Services for Businesses


This is a virtual phone system which lets small business owners have a business phone number that can either be used on mobile phones or existing landlines. The Grasshopper software is very simple to install and use. Overall, the Grasshopper service is reliable and affordable too.

Grasshopper Pricing

Grasshopper offers 3 pricing plans:

  • Solo: $29/month (1 number, 3 extensions)
  • Partner: $49/month (3 number, 6 extensions)
  • Small Business: $89/month (5 number, unlimited extensions)


The Vonage Business Solutions is a VoIP service which is cloud based and caters to businesses of various sizes. The Vonage service offers unlimited calls, both local and long distance and it can be accessed on multiple platforms such as a desktop, iOS and Android devices. The service offers various features like call monitoring, recording, transcription, waiting and forwarding, voicemail, caller ID and call block, in-network calling, 3-way calling, etc.

Update – see here why I no longer recommend Vonage

Vonage Pricing

The offering for small businesses is Vonage Essentials and the pricing is as below:

  • $39.99/extension/month (1-5 lines)
  • $29.99/extension/month (6-9 lines)
  • $24.99/extension/month (10-20 lines)
  • $19.99/extension/month (21+ lines)


If you’re looking for a feature-rich VoIP phone system for your business, then you can consider RingCentral. You not only can make and receive calls with RingCentral, but also use their other features such as call back, call diverting, call conference etc. RingCentral offers a whole host of other features such as local, toll-free and international numbers, directory listings, auto-receptionist, hosted BX services, call monitoring, reports, desktop app and many more.

RingCentral Pricing

RingCentral offers 4 pricing tiers:

Essentials (Per Month)

  • 1 User: $39.99
  • 2-99 Users: $29.99
  • 100-999 Users: NA
  • 1,000-1,999 Users: NA

Standard (Per Month)

  • 1 User: $49.99
  • 2-99 Users: $34.99
  • 100-999 Users: $32.99
  • 1,000-1,999 Users: $29.99

Premium (Per Month)

  • 1 User: $54.99
  • 2-99 Users: $44.99
  • 100-999 Users: $42.99
  • 1,000-1,999 Users: $39.99

Ultimate (Per Month)

  • 1 User: $69.99
  • 2-99 Users: $59.99
  • 100-999 Users: $52.99
  • 1,000-1,999 Users: $49.99

Are Contracts Worth the Price Reduction?

While getting into a contract with your business phone service provider may result in reduced costs, the important question to ask is if it is worth getting into a long-term contract. Typically, while the initial costs may be low, the monthly costs are usually much higher and you may end up paying more in the long run.

It is always a good idea to consider the flexibility of the phone service or the plan. Getting to a contract means that you are bound with the specific service provider for a specific period of time and in the interim, even if you are not happy with the phone service, you will not be able to switch your service or your plan.

And, switching to another service provider may attract a hefty fee. Many service providers offer a trial period before entering into a contract, so it is better to check out the service before you enter a long-term contract that you may regret later on.

Which Is Really Cheaper — VoIP or Landline?

Usually, when a business is considering setting up a phone system, the deciding factor is the cost of a landline service vs VoIP.


The setup fees for a landline is around $100 and then there is a monthly fee of $100 per line and if you require around 10 phone lines for your business, you could be spending around $1,000 or more per month. And, if you require additional features such as call transfer, intercom, call queuing, etc., then you will require to install a PBX system, which can cost thousands of dollars and you will also require a professional to install it for you.


VoIP, on the other hand, is a much cheaper proposition compared to a landline phone system, as it does not require the initial outlay for installation of expensive hardware and maintenance costs of the phone system. VoIP is around 40% – 80% cheaper compared to a traditional landline system, which makes it ideal for startups and small- and medium-sized businesses, as they require only a few lines as they grow.

While telephony is a necessity for businesses, it is also a considerable financial investment. So, whether you are planning to install a new phone system for your business or replace the existing one, getting the right system can serve you well for years to come. You must also consider the financial implications of the equipment, the cost of the phone service and the installation and maintenance costs before deciding on the right kind of phone system for your business.









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