Five Indicators You Are Paying Too Much for Business Phone Service

Posted by Mark Greim on Aug 26, 2019 9:20:00 AM

There has been a lot of disruption in the telecommunications market over the past decade. With the Hosted VoIP providers not only bursting on the scene, but taking over the business phone service market, the telecom landscape has changed forever.  Competitiveness has never been greater, yet there remains significant inconsistencies in how businesses are charged for phone service.

Paying too Much for Phone ServiceSo, how does a business know they are paying too much for phone service?  Here are five indicators to examine relating to your current service:

Contract / Auto Renewals -  Competition has largely made term contracts a thing of the past.  You still see these with traditional analog phone carriers and some of the cable providers who have phone service.  Most promote contracts as a way to get the best rate, but that doesn't seem to stop rate increases after promotional or term periods end.  Additionally, term contracts have a way of auto renewing, often without notice.   Auto renew language often doesn't even appear on the contract signed, but on a referenced document on a website.

Concern over Telecom ContractThe bottom line is that you do not need to subject your company to term contracts.  There are many options out there, none of which coerce you into a contract to get the "best rate" or other "benefits".  The only one who benefits is the provider.  Look at your options before entering into a term contract.  If you are currently under a contract, be sure to understand when it expires and when you need to provide notice before it auto renews. 

Analog Phone Service -  Analog phone service for business is a dying breed.  To say that the providers of analog phone service have been steadily raising rates for years is a significant understatement.  Moreover, there are hidden costs to businesses who continue to hold on to this service.  Finding companies to service the equipment and sourcing replacement phones or parts is becoming increasingly more difficult and expensive.

Most businesses have already made the shift to Hosted VoIP phone service.  They find that the cost of the hardware is much less than securing a traditional phone system and the feature set is much more robust.  Not only can the shift to VoIP improve your communication practices, there's a great chance that you will save money on the monthly phone service and overall cost to maintain the current system.

Hosted VoIP Feature Bundles - There are many different approaches to pricing within the Hosted VoIP provider community.  The fundamental commonality lies in that there are no more "lines" to charge for, so there tends to be a charge by phone or "user".  Commonality ends here.  Some providers charge by levels of features chosen by the company.  For example, they may have a basic rate (low feature set), a "professional" rate (features that most businesses need) and a "premium" package rate (high-end feature set).  The price per user increases with features added.  Other providers have a rate that includes all features provided.  Still others have a declining rate schedule based upon the number of users on the system, along with lower charges for low-use "convenience" phones, such as conference room and break room phones.

The indicator here is to compare the features received in your existing or proposed bundle (that you're paying a premium for) to a provider that has a one rate for all features approach.  Chances are you can find a rate for the same level of features that is less than what you are paying under the feature bundle approach.

Leasing phones - When entertaining a Hosted VoIP provider to replace your current phone system, you are required to purchase VoIP phones that work on their network.  Even though the capital cost of a Hosted VoIP service is much less than purchasing an on-site phone system (VoIP enabled or analog), many businesses are enticed by a leasing option  for their phones.  These lease arrangements are built for driving more long-term advantages to the provider, not the customer.  You are either tied into a term contract to have this option or you end up paying much more for the phones than you would have if you would have paid for the capital up front.

When examining the lease option, see if it has an end.  Multiply the amount of payments and make sure that you are comfortable with the premium you are paying for the phones over time.  If there is no end and you pay the rental for as long as you have the service, do not enter into that agreement.

Surcharges - This is always the surprise of every phone bill.  Rarely are proposals made to reflect the surcharges you will be paying.  As you know, traditional phone service providers layer on 15% to 30% in additional charges for surcharges, fees, and taxes.  Some of these are legitimate fees collected and passed through to the government regulators.  Some are add-on charges for the benefit of the provider’s bottom line. 

There are some Hosted VoIP providers who absorb surcharges into their rates.  It is always best to know that what you are being proposed will be consistent with what you will be paying on a monthly basis.

Going with a Hosted VoIP phone service will provide your business with the opportunity to save money and advance your communication features.  Pay attention to these indicators and you will assure yourself of securing a long-term financial benefit.



About the author:  Mark Greim is the Vice President of Sales and Marketing at sipVine, a provider of a variety of VoIP phone solutions and services. Mark has extensive experience working for start-up or entrepreneurial organizations and has a passion for affordable, reliable, and purposeful technology solutions in those environments. 

Topics: small business phone service, Phone Service Bill

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