Hosted pays for itself over and over
A brief workplan to determine your Total Cost of Ownership.
Cost drives nearly every decision a business owner makes. But, cost goes beyond up-front costs. It includes the total cost of ownership, too.
For some businesses, laying out more capital in the short-term is the right move if it means long-term savings. Other businesses may not use a product long enough to see a return on those up-front costs. A hosted phone system is no different.
For a hosted phone system, what makes the total cost of ownership lower than an on-site system is that there’s no equipment to purchase and own. That doesn’t make a hosted phone system less expensive in all cases, naturally. Yet, as soon as your business grows beyond one location and three or four extensions, it will pay off.
Some businesses decide to “bite the bullet” and pay a high one-time cost to own phone equipment. Really, though, that initial cost gets higher because the phone system will require an overhaul at some point. The equipment will have to be upgraded or replaced. With a hosted phone system, keeping equipment and software up-to-date is not the responsibility of the user; it’s on the hosted PBX service provider.
So, a low monthly fee for a hosted system is the answer! Not always. What some businesses pay in monthly fees is higher than what they would pay to maintain a system. Simply put, figuring out the total cost of ownership for any phone system requires an understanding of your cost structure.
1. Assemble your business requirements. Determine number of extensions, hardware types, and features needed for your phone system.
2. VoIP technology may place some bandwidth requirements on your network. Evaluate to determine if your network infrastructure meets these requirements. If needed, add the cost of network upgrade to your calculations. Keep in mind that some type of VoIP network upgrade is often required for premise-based and hosted systems.
3. In addition to up-front costs of premise-based equipment, software, and licensing, include the cost of financing (unless you pay for the entire system immediately).
4. Add the cost of endpoint devices. This could be software and/or hardware. These will be allocated to your individual users.
5. Add the cost of deployment. This includes installation time, training time, and any lost productivity learning the new system. Even though those costs do not directly impacting cash flow, still consider them.
6. Software and hardware maintenance. In a premise-based system, these counterbalance licensing and monthly service fees in a hosted service. Contracts amount to 15% of the cost of your equipment annually, on average.
7. With a premise based system, phone calls and telephony company service counterbalance hosted service’s costs of Internet bandwidth allocated to VoIP calls. Cost of bandwidth may vary drastically depending on where your business is located. With many premise-based telephone systems, there’s typically a cost of voice trunks—POTS (Plain Old Telephone Service), PRI (Prime Rate ISDN), VoIP (Voice over IP)—that relate to your system’s maximum number of concurrent outbound telephone calls. Few hosted service providers choose to charge for VoIP trunks.
8. For most businesses, a hosted phone system is worth it for the peace of mind alone.