The Garam Group Blog

Stay current on new technology and business practices

VoIP vs. Traditional Telephone: Why Make the Change?

If you’re involved in a business of any sort, you’ve heard the acronym “VoIP” thrown around casually. It’s mentioned on conference calls and unsolicited email offers. Even the new intern goes on and on about VoIP.

So, what is it and why should you or your business use it?

What is it?

VoIP is an acronym for voice-over-IP. At its core, VoIP is telephone system that runs on the Internet. That said, there are a bunch of different variations out there that mix old and new technology. For the purposes of this article, we’re going to focus on hosted solutions, but first, let’s take a quick look at the tech behind VoIP.

How does it work?

At the core of any good business phone system is a PBX (private branch exchange). Way back at the advent of telecommunications, these systems were managed by normal folks in the form of the iconic switchboard operator. Since the late 80s/90s, these existed in the form of monstrous boxes locked away in a server room. If you picture someone connecting wires when you call someone, you’ll get the general idea of how a PBX functions.

Nowadays, these systems typically take the shape of server towers hidden in climate-controlled rooms if you host your own or, with VoIP, they can exist in the ever-elusive “Cloud”. Management of phone numbers, contacts, and phone setups are done through a web page in those cases.

Regardless of where you host your PBX, it’s the cornerstone of your entire VoIP phone system. Whenever you pick up your phone, the dial tone comes from there. Whenever you transfer a phone call, that’s the PBX handling that bit of logic.

Remember: your PBX is your business’s switchboard operator. Depending on your call volume, you may owe it some vacation time.

Why use it?

Let’s get into the meat of this article: why choose VoIP over a traditional phone system?

The most immediate reason anyone considers VoIP over phone is cost.

voip pricing less expensive
Chart by Gavin Graham (http://fitsmallbusiness.com/voip-vs-landline/)

This is the worst-case scenario (month to month), but traditional phone lines cost a LOT. I’ve worked with people over the years who are on yearly contracts and still pay $69+ per line.

On the VoIP side, the per user pricing is definitely more affordable from a comparison standpoint, but there is more here than meets the eye. Depending on how you set up your VoIP system, whether using an in-house PBX or Cloud PBX, the pricing could be drastically different.

Many VoIP vendors offer solutions where in-house users cost next to nothing beyond equipment purchase. This would mean that you could have 30-40 users on your system who can call each other, transfer calls, etc., and it wouldn’t cost you a dime.

The “per user” cost in the chart above would instead refer to external lines. This would mean that if you call your CTO, it wouldn’t count as a user. If you hung up and then called The Brooklyn Pickle to put in a lunch order, that would count as it’s going outside of your phone network. This allows you to scale down your costs to match your estimated simultaneous external calls rather than paying almost $90 per staff member.

Quick note on Cloud PBX

Cloud PBX is a fantastic service as it enables much more than an office phone system. Many Cloud PBX vendors provide mobile apps that allow you to receive and make calls from any mobile phone. Web apps are very common as well and they allow you to make and receive calls from any laptop or desktop computer.

Take the time to ask questions when working with a vendor to choose the right solution. Cloud PBX may be a little pricier than a locally hosted VoIP PBX, but the Work Anywhere features can make it worthwhile.

Summary

For the majority of businesses, VoIP phone systems have become the go to solution for their telecom needs. The cost, features, and accessibility of VoIP makes it incredibly attractive to any growing business.

Here are some things to consider when speaking with a VoIP vendor:

  • How many external lines do you need?
  • How many staff members will need their own line?
  • Based on the prior two questions, what type of internet do they recommend?
  • For equipment, what are the payment options?
  • Do you need mobile, on-the-run access to your office phone?
  • Do you need fax lines?  Most VoIP providers have solutions for this, but ask up front.
  • Do you have a security system that has required a dedicated phone line in the past?  There are a few different options in this case.  Many security companies are now providing cellular alarms and other alternatives.

That said, the key to a successful VoIP migration or deployment is to partner with an experienced VoIP vendor who provides support as well as installation services. Call us at 315-473-9600 to get more information and we can help you get started!

17279

Want to stay current on new technology and business practices?

Get our new blog posts emailed to you monthly!

Share this post:

Share on linkedin
Share on twitter
Share on facebook
Phil Montero

Phil Montero

Phil Montero is a Marketing and Solution Engineer at The Garam Group working with companies to help them choose the right tools and thoughtfully apply them to improve their business. He has spent the last 2 decades sharing his technology tips and strategies through consulting, blog posts, videos, and webinars to help educate clients, keep them up to date on current technology, and navigate the changing world of work. When he's not writing or talking about tech, he can be found drinking coffee, playing ukulele, or cheering on his NY Giants.