The Real Cost of Your Business Phone System

Apr 2017

Many on-premise phone system (PBX) manufacturers claim that the total cost of ownership (TCO) of their systems is lower than an equivalent cloud VoIP system. What the PBX guys don’t tell you about is all the extra hidden components of the cost picture.  If you look carefully, you may be surprised to discover that the obvious components of your PBX system are not necessarily the largest pieces of the overall expense picture, even though the initial up-front outlay is substantial.

Obvious Costs Of Your PBX

Initial PBX Hardware & Licensing. The most obvious cost of an on-premise system is the PBX hardware itself together with the initial software licensing for all of the features you want to use.

New Phones. If you are buying a new PBX, then chances are you are purchasing new phone sets too.

Install Labor. Whether bundled with the hardware or broken out separately, you will pay a telecom engineer, technician, or trainer to program your system and get your team up and running.

So, thus far we have the hardware, initial software licensing, and labor to get the whole project implemented.  Easy peasy.  Most PBX salespeople will tell you that this is the cost of your new phone system, but don’t be fooled so easily…

Hidden Costs Of Your PBX

Ongoing Licensing. The biggest bogeyman in PBX land is what’s known as software assurance or partner support.  If you do not purchase this, then you will not be able to do any upgrades and you will not have access to support from the PBX manufacturer.

Replacements & Upgrade Parts. If something breaks, or if you add more employees or locations, you need to purchase additional hardware, phone sets, and potentially undertake a costly expansion of your core PBX to accommodate more users.

Service Labor. Whether bundled with a maintenance contract on a monthly or annual basis, or paid for hourly on an as-needed basis, somebody besides you – a skilled technician – will need to be paid to perform the maintenance, upgrades, and moves/adds/changes.

Carrier Connectivity. This is one of the biggest expense categories for the on premise PBX, and the one that is most often missed in a TCO comparison.  A PBX requires telco connectivity, whether POTS, PRI, T1s or multi-site solutions like MPLS.  Add on usage charges like local, long-distance, toll-free, and your carrier bill can get pretty large in a hurry.

Standalone Services.  Do you have a standalone conferencing solution for audio, video, or web meetings?  What about team collaboration or fax services?  These charges also need to be taken into account when calculating your TCO for business communications.

Make The Right Choice

The cloud phone system providers, like Altus, would have you believe they are always cheaper, but the facts wThe real cost of your business phone systemill be different in each case.  Cloud phone systems do reduce the burden on your internal IT staff, eliminate capital expenditures (if you are willing to rent the phones), automatically update to the latest features and versions without costly upgrades, and help you manage multiple sites and mobile workers more effectively.  On top of this, you can wipe out your telco charges by removing PRIs and legacy phone lines.   Saving 30% to 70% vs. traditional on premise PBX phone systems is very significant, but more importantly, costs are only one piece of the business communications puzzle.  For your company it may be the case that features and functionality for example, or connecting mobile workers and remote offices to the corporate HQ, is more important than the lowest possible price.  As with all things, do your homework, educate yourself, and make an informed judgment.

About Altus

Altus is the premier choice for cloud-based business communications, providing companies with flexible and secure technologies that help employees and customers stay connected more easily.  Whether looking for basic voice service, comprehensive unified communications, or contact center, business executives trust Altus to deliver the latest features and functionality without costly capital spending programs.  As an FCC-registered service provider, Altus offers enterprise-grade performance across its secure, geo-redundant carrier platform. Start communicating better with Altus.  For more information, visit or call toll free 866.922.4001.

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