Iowa City 319-333-7714
Cedar Rapids 319-393-0585
Contact us about an onsite 'Hosted' service in which you have complete administrative control, without the ongoing monthly cost of a Hosted system... that you will 'pay forever' without the benefit of ownership.
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Des Moines 515-331-0444
So you have heard about hosted or cloud based phone systems but are not sure that you understand the differences between a hosted phone system and an on premise phone system. Providers like to call it cool things like a hosted system, cloud system, server based or virtual system, but at the end of the day,
it's a PHONE SYSTEM.
There is a myth that a hosted phone system costs you less money. That is simply not true. A hosted system can cost you twice the price of purchasing your own phone system.
"Hosted” service, or now "Cloud" based service to make it sound cool, is a ‘virtual’ phone service offered by an Internet Service Provider. It is phone service that provides users with basic telephony features voicemail and automated attendant for a monthly fee. It uses the Internet or other high speed broadband connection to deliver service to IP phones on the customer premise.
Like Centrex service if a company has 25 employees they will need to purchase 25 Hosted ‘stations.’ Hosted service providers talk about managing costs and budgeting communication expenses rather than saving money because Hosted service is not inexpensive. Like Centrex, a Hosted solution will result in higher long term costs because monthly payments never end. Like Centrex service, Hosted service users will pay forever with no benefit of ownership. Hosted service customers will pay forever just like their Centrex service predecessors before them.
In the beginning there was Centrex service, a PBX-like service offered by the local phone company. Popular before companies could buy their own phone system in the mid-80s, the phone company sold Centrex on a per-line basis. If a company had 25 employees, they would rent 25 Centrex lines. While an individual Centrex line was less expensive than a standard business line, it was still not inexpensive because of the number of lines needed – one for each phone user.
Centrex resulted in higher long term costs because it was an ongoing charge – customers paid the same price for as long as they used the service. It was referred to as a ‘pay-forever’ service for monthly payments never ended. Once customers discovered they could significantly reduce their ongoing communication costs with the purchase of their own phone system, Centrex was phased out.
Let’s run the numbers using the above example of 25 phone users (or ‘stations’) so you can see for yourself.
For Hosted service -
· A competitive ongoing rate for Hosted service is $15 per month per station.
· The monthly charge would be: 25 users x $15 per month or $375.00 per month.
· On an annual basis this would equate to $4,500: $375 x 12 mo. = $4,500
· Over five years this would equate to $22,500: $4,500 x 5 yrs. = $22,500 for five years of Hosted services.
For an On-Premise system -
· It has been our experience that an On-Premise phone system will price out at $500 per station for an installed system. (Usually less than that actually.)
· But let’s use $500 per station as the price of a new phone system.
· That means that a 25 station phone system would cost $12,500.
· Since Samsung systems come with five year warranty, we won’t need to add in any maintenance costs over that period.
Let’s compare the two options.
Hosted service for five years = $22,500
On-Premise phone system = $12,500
That is a savings of $10,000, or 44%.
Run the numbers out to seven years or longer and the savings become even more dramatic. Those selling Hosted service will tell you that is too long to run the comparison out.
Really? How long have you had your present phone system? Our guess is 7-10 years.