The cost of unified communications (UC) varies based on multiple factors, such as deployment model, number of users, and service provider. Switching to a cloud-hosted solution incurs a monthly fee ranging from $15 to $50 per user, including features, support, onboarding, and maintenance. Meanwhile, an on-premise system entails a one-time equipment cost between $201 and $750, excluding maintenance and system upgrades.
Unified Communications Costs: Cloud-hosted vs On-premise
In determining the cost of unified communications, it’s important to initially consider whether you want to implement it in the cloud or on-premise. Each type has a unique pricing structure determined by its services, features, and deployment model.
Cloud-based unified communications as a service (UCaaS) is widely favored by businesses that value flexibility and lower upfront costs. It’s hosted by a third-party provider who handles the support, maintenance, security, and software updates. The end user simply pays a monthly subscription fee for the platform and its features.
Most organizations use an on-premise UC solution with complete control over their communications infrastructure, security, and data management. Unlike its cloud-based alternative, it doesn’t rely on the internet and the reliability of a third-party provider. The company manages it on-site with an in-house IT staff that handles maintenance and server upgrades.
The cost structure of cloud-based and on-premises unified communications differs in upfront and ongoing operational expenses. Let’s delve deeper into the specific factors that affect the overall costs of each deployment type.
| Cloud-hosted | On-premise | |
|---|---|---|
| Best For | Any size business seeking a flexible communications platform accessible from anywhere | Security-driven companies seeking full control over their communications system |
| User License Costs | Charges a monthly fee of $15 to $50 per user | Charges upfront license fees with maintenance charges |
| Phones and Communication Equipment | Offers hardware rentals and handles maintenance | Allows hardware leasing, but the end user is responsible for the maintenance |
| Components (Presence, Video Conferencing, and Mobility) | Part of the service | Requires a specialized server to support a certain component |
| Admin Training | Part of the service | Has an average cost of $5,000 in the initial year then $3,800 for each succeeding year |
| Ongoing Maintenance and Support | Part of the service | Requires additional staff or a third-party service provider |
| Software Upgrades | Part of the service | Involves a one-time upgrade fee or a new server purchase |
| Upfront Costs | ✕ | $70,000 to $90,0000 for the hardware and deployment |
| Average Cost | Monthly: $30 per userYearly: $360 per user | Monthly: $50 per userYearly: $600 per user |
The table above shows that a UCaaS solution is the least expensive option in terms of initial investment compared to managing an on-premises UC. Besides its transparent pricing, small businesses increasingly favor UCaaS as it allows employees to choose when and where they want to work.
Among companies that use an on-premise private branch exchange (PBX) solution for communication, “80% … plan to spend money upgrading their PBX within the next 5 years,” said Brent Kelly, a unified communications analyst. Vendors are also pushing clients to the cloud because of the cost advantages of using unified communications and its ability to create long-term revenue rather than simply selling an on-premises perpetual license.
Factors Affecting UCaaS Costs
The costs of switching to unified communications can impact a small business’s financial strategy. Companies spend an average of $791 per year for every UCaaS license, including staff and training, according to Metrigy. Understanding these costs before investing in a UCaaS platform ensures it aligns with your needs and budget.
To help you optimize the value of your investment, we outlined key factors influencing cloud unified communications costs.
- Subscription fees: UCaaS providers use a tiered pricing model that charges monthly per user. A paid user can access all the features of the chosen service tier.
A base plan ranges from $15 to $35 per user monthly, offering standard capabilities, such as unlimited local calling, team chat, video conferencing, and file sharing. Higher tiers range from $20 to $50 per user monthly, unlocking advanced features like real-time analytics, third-party app integrations, and priority support.
- Number of users: Since UCaaS providers charge for each user, the monthly fee increases with each user you add to your company’s subscription. Discounts apply after reaching a certain number of users, allowing you to benefit from volume pricing.
Note that vendors like Zoom distinguish a basic user and a licensed one. A basic user can use the platform, but a licensed user gains access to admin controls and large meeting add-ons. Assigning a license to a user may incur a one-time or recurring fee.
- Add-ons: Some vendors offer the ability to purchase an advanced feature a la carte to extend the functionality of a monthly plan. Add-ons are optional and typically apply to features, such as call recording, high-volume SMS, and webinar functionality. As a result, users pay only for the features they need and forgo the need to upgrade a plan solely to access a specific feature.
- Contract duration: Companies can commit to a long-term, multiyear contract to reduce the per-user fee and get bigger discounts. Most providers typically offer annual billing with discounts of up to 30%. Eligible nonprofits receive similar benefits.
- Hardware: Switching to UCaaS involves assessing your current communications setup to determine where retaining existing equipment is necessary. Compatibility between your UCaaS software and hardware can ensure a seamless user experience. Hardware includes your desk phone, conference phone, headset, and the operating systems of your desktop and mobile devices.
RingCentral and Nextiva offer a comprehensive list of desk phones, headsets, and conference phone equipment for purchase and long-term lease. This ensures businesses can readily access state-of-the-art hardware that integrates with the UCaaS provider’s latest software.
Top UCaaS Providers Compared
Unified communications costs vary by provider, each offering different price points. While UCaaS offerings have become standardized, vendors distinguish themselves through various aspects, such as scalability, security, and AI features.
When searching for a UCaaS provider, it’s important to consider the initial cost and the long-term value. Conveniently, we’ve highlighted the major UCaaS providers to inform your purchase decision.
| Top UCaaS Providers | Monthly Starting Price (per User)All providers offer annual billing. | Key Features | Learn More |
|---|---|---|---|
 | $30 |
| Read Our RingCentral Review |
| Visit RingCentral | |||
 | $25 |
| Read Our Nextiva Review |
| Visit Nextiva | |||
 | $19.99 |
| Read Our Vonage Review |
| Visit Vonage | |||
 | Free or $15.99 |
| Read Our Zoom Review |
| Visit Zoom | |||
 | $27 |
| Read Our Dialpad Review |
| Visit Dialpad | |||
Cost-saving Tips for Effective UCaaS Implementation
While UCaaS proves to be more cost-effective than on-premise systems because of its predictable pricing, poor implementation can lead to unnecessary spending. Let’s look into ways to save costs as your business transitions to UCaaS.
- Conduct a needs assessment: Identify all channels, collaboration tools, and third-party apps your team uses. Then take inventory of the number of users, office locations, and phone lines to include in your subscription. This assessment will help determine the most appropriate plan for your current communication setup.
- Choose the right provider: Take advantage of the provider’s free trial and demo accounts to get first-hand experience with the platform. For product feedback, browse customer reviews to understand the solution’s pros and cons.
- Look for a UCaaS plan with the features you need: When comparing subscription plans, use your needs assessment to find the service tier that covers all the features you need. If possible, choose an easy-to-scale plan that lets you easily add or remove users as your company size changes. Or meet with a provider’s sales team to discuss building a custom plan.
- Monitor usage across the team: Once you’ve chosen a UCaaS provider, actively monitor your usage and ongoing expenses. Identify potential bottlenecks, such as uptime, call quality, and user adoption rates, to ensure your UCaaS solution effectively meets your business requirements. This proactive approach will enable you to manage costs and adjust the service as needed.
Frequently Asked Questions (FAQs)
Unified communications enhance collaboration by integrating all communication tools into a single platform. This enables team members to access the same files and conversation histories in one location, saving time and eliminating organizational silos. In terms of the cost benefits of unified communications, businesses can consolidate their expenses by paying for a single application that covers all communication capabilities.
The difference between unified communications and a contact center lies in their intended users. UC provides a suite of integrated communication features to facilitate internal collaboration within a business. Sales and support teams use a contact center to engage with customers across various channels.
Unified communications have three main components: voice calling, video conferencing, and instant messaging. Each component includes features that enable businesses to facilitate real-time and asynchronous communication for their remote and hybrid workforce.
Bottom Line
Navigating the cost of implementing unified communications involves considerations such as the deployment model, number of users, subscription fees, and equipment. An on-premise system comes with an upfront cost of $70,000 to $90,0000 for the installation and an average monthly fee of $50 per user.
If you want to take advantage of the cost benefits of UC, the cloud-based route is your best option as it will only cost, on average, $30 per user monthly. UCaaS providers charge a predictable fee for monthly subscriptions while providing all the capabilities you need to facilitate collaboration and remote work.
