Is hosted VoIP right for your business?

We sell telephone systems to small and medium sized business throughout New Jersey. Recently a potential new customer called to say their phone system wasn't working correctly. We quoted them a repair price of $1600 for their 7 year old Nortel BCM telephone system and we included a two year warranty on the equipment. They have 12 telephone sets and 5 outside lines.

The customer chose to scrap their system in favor of hosted VoIP. We weren't surprised they chose hosted voip but from a business perspective we were puzzled.

Here is what they paid with a 2 year contract:

• $300.00 monthly service charge
• $30 per month per telephone ($360)
• So figure $660 per month for 24 months = $15,840.00
• That price includes all of their US and North America long distance

So they get new phones but over spent by thousands. How?

They could easily switch to a cable phone service and repair their Nortel BCM:

• 5 lines from a Cable company with high speed internet and unlimited long distance: $300 per month
• That works out to be $7200
• Plus the repair cost of $1600
• Total 2 year cost: $8800!

So they over pay by: 15,840 - 8800 = $7040!!!!

Technically speaking, hosted VoIP is pretty cool and you don't have to worry about any equipment to maintain. But what are the drawbacks: 

• You could have quality issues on your LAN 
• The chance of an outage is not reduced compared to your own equipment or a cut cable on the street.
• You may have to re-wire your office
• Can you trust the cloud?