Small business phone systems generally use one of two technologies: voice-over-internet protocol (VoIP) or landlines. Traditional landlines use reliable copper wires, while VoIP uses your internet connection to transmit your voice as data. VoIP business phone systems generally have more features, better functionality, and a cost that can start as low as $22.99 monthly.
This means that a VoIP system like RingCentral is likely a better option for your small business. RingCentral offers unlimited calls to the U.S. and Canada and can be less expensive to set up and use than a traditional landline. You can even save your old phone number. Click here for a 7-day trial of RingCentral.
VoIP vs Landline at a Glance
$124.99-249.95/month for five lines**
$295.00/month for five lines + taxes (based in New York)
1Quote was obtained from a chat with an online Verizon customer service representative on December 10, 2019, and based on a service address in New York, NY. Pricing is based on a two-year contract.
$70 (1 line)
Domestic Call Rates
International Call Rates
depending on destination
depending on destination
International Call-in Numbers
Advanced Call Routing
Third-party App Integrations
*For the following, we used RingCentral and Verizon as examples for VoIP and landlines, respectively.
**Pricing is on an annual basis for two to 19 users on a plan.
VoIP vs Landline: What They Are & How They Work
Unlike a landline, which requires dedicated wires, VoIP phone services use your business’ existing internet connection to convert and transmit audio as data. While Skype and other services like Vonage are examples of good VoIP services for individuals, other VoIP options like RingCentral and Nextiva offer the same technology, but on a larger scale for businesses.
With that in mind, VoIP also works in a nearly identical fashion to a traditional phone system. You can make and receive business calls using any type of phone, whether it’s another VoIP phone, a cell phone, or a landline. It may run on a different network, but you can use it just like any other device. For more information, you can read our guide to VoIP systems.
How VoIP Systems Differs From Landline Systems
There are a number of key differences between a VoIP platform and a traditional landline service. If you are a small business, the first thing you might notice is that VoIP systems are much cheaper. When you compare RingCentral with Verizon’s landline service, RingCentral starts at less than half the price for five users.
A VoIP service can also do things that a traditional landline simply can’t do. For example, VoIP services allow you to use your mobile phone as an extension of your office phone, which extends your phone system to literally anywhere you’re located. You can also integrate most VoIP platforms with outside business software like customer relationship management (CRM) platforms as well as take advantage of additional features such as advanced call routing and voicemail to email.
VoIP systems even give you the option to buy your equipment outright and have your IT team self-host and manage the service. For example, you can choose to rent the equipment from your service provider and have them host your service in the cloud. This cloud-based solution is typically best for small businesses due to its ease of use, cost-efficiency, and limited in-house support requirements.
However, the most significant technical advantage of VoIP services is their scalability. Landline systems are limited to the number of lines that you have connected, and adding more means installing and upgrading your hardware. VoIP systems, in contrast, only rely on your internet connection, meaning it can support an unlimited number of lines (depending on the strength of your connection). This drastically reduces your setup and maintenance costs.
By and large, VoIP systems are cheaper than their traditional landline counterparts. While you can find a phone service as low as $19.99 per month, plans usually start at around $25 per user, per month. This pricing accounts for the cost of setup, equipment, and ongoing maintenance costs. You also have to pay for an internet connection.
Prices for landlines vary by provider. However, expect to pay between $100 and $200 on your base unit, plus additional costs for each handset you use. Based on our calculation for five lines for a New York small business, companies can spend $295.00 per month plus taxes, but you should be sure to consult your local provider for more concrete information.
When to Use a VoIP System
Any business not subject to a poor internet connection or regular power outages will want to check out a VoIP system like RingCentral. They offer inexpensive international calling, integrations with outside apps, and the ability to use your phone number on any device. Unless your circumstances demand a landline, VoIP is a much better investment.
When to Use a Landline
Companies in remote areas, or in areas that have poorer internet connections or areas prone to electrical power issues, may want to consider a landline over a VoIP system due to its time-tested technology and reliability. Verizon is a popular landline provider and is generally considered one of the best service providers in the United States.
When to Use an Alternate Choice: Virtual Phone Services
A virtual phone service is another option for small businesses, as it offers a unique phone number that forwards incoming calls to your personal phone at a lower price than VoIP or landline systems. Grasshopper is a leading virtual phone service worth considering for solopreneurs and small teams. For more information on Grasshopper, click the link below.
VoIP vs Landline: Features
Both VoIP and landline systems offer a core set of calling features, giving phone service customers the ability to send, receive, and route calls. However, VoIP offers more functions beyond what a landline system can do and comes at a lower average price.
The fact that VoIP services work over the internet allows for advanced features that simply aren’t possible with a landline. The ability to access business phone system features via a mobile app as well as use your same business phone number no matter where you go is one example. International numbers, integrations, and other factors also give VoIP a large advantage over landline services.
Reliability & Call Quality
For years, VoIP systems had worse call quality than traditional landlines. However, rising internet speeds and advancements in technology have closed this gap. With that in mind, the reliability of those calls is still dependent than the strength of your internet connection, and businesses can miss calls during power outages.
Landline phones, in comparison, operate on a purpose-built network that can run even when there is a power outage. As it is not tied to the internet connection, the call quality will remain high, even when the internet has a poor connection.
VoIP services usually offer a mobile app allowing you to use your smartphone as an extension of your office phone. You can have calls forwarded to you and receive them anywhere you are, as well as make calls from your mobile device and have them appear to come from your office phone number. Most internet-based business phone systems offer some kind of mobile functionality.
As its name implies, a landline limits you to a wired office phone. Clients will not be able to reach you on your mobile device, requiring professionals who travel out of the office to maintain a separate business cell phone number. Therefore, VoIP systems are a more economical choice for teams that are out of the office frequently.
International Calling & Numbers
The majority of VoIP systems allow you to make international calls with ease. Some providers, like RingCentral and 8×8, even allow you to purchase international call-in numbers. Outgoing international call rates vary by destination.
Landlines also offer international calling, but at a higher price. In fact, international calls on Verizon’s landlines started at almost 30% higher per minute than RingCentral. This makes VoIP a better option for companies with multinational operations.
VoIP systems can be integrated with third-party applications, such as CRM software. For example, your CRM can record the number and time of all incoming calls and log them into your system for later reference.
Landlines offer no such integrations. Businesses that use CRMs, cloud services, and other popular types of business apps will find that VoIP services better suit their needs because they save staff from unnecessary data entry tasks.
Landline systems are very basic compared to their VoIP counterparts. Outside of sending, receiving, and routing calls, landlines don’t offer much in the way of features. With that in mind, its reliable call quality makes it a good option for some businesses with unreliable internet.
Reliability & Call Quality
Landlines use a purpose-built network built from the ground up to transmit telephone calls. As such, it offers consistently good call quality as well as reliability. As the network runs separately from the power grid and the internet, you don’t have to worry about losing service if there is a power outage.
In most areas, VoIP call quality has caught up with call quality found on landlines. However, VoIP still requires a stable internet connection to run, meaning teams without stable connections will want to go with a traditional phone system.
Landlines do not offer the ability to make and receive calls from your work number on a mobile device. While many landline providers can bundle in mobile phones with your service package at an additional cost, those phones will have different numbers.
This is very different from today’s leading VoIP providers, which offer mobile functionality that lets you take calls on your work number anywhere you go. Therefore, landlines are a good fit for organizations that have no need for mobility.
International Calling & Numbers
International call rates vary depending on location. In the case of Verizon, rates start at 5 cents per minute but go up depending on location. Additionally, you cannot purchase an international number to hook up to your landline system.
VoIP systems offer international calling at much lower rates. In fact, when comparing rates from RingCentral and Verizon, international calls on Verizon’s landlines were almost 30% more expensive than on RingCentral’s VoIP network. Landlines are a better fit for organizations that do all of their business domestically.
Landlines offer no software integrations, which hampers their effectiveness in the modern business world. All of your CRMs, collaboration apps, and other business tools will have to run entirely separate from your phone system, requiring staff to perform significantly more manual data entry or toggle back and forth between screens.
VoIP platforms, on the other hand, connect data to all sorts of business applications. Some customers just want simplicity and reliability, though, and landline systems are a good fit for them.
VoIP vs Landline: Ease of Use
From initial setup to everyday use, your phone system should be easy to use and operate so that your employees can focus on important work. We looked at the overall usability of each system. Because using a landline handset is so simple, it has the edge over more complex VoIP services.
VoIP Ease of Use
Most VoIP providers offer help with the initial setup. After that, using the systems and navigating through the various features on mobile and desktop apps is usually easy enough for users of all skill levels to understand. That said, the web-based features of VoIP systems could potentially be confusing for less tech-savvy team members.
Landline Ease of Use
Once you’ve plugged your landline connection into the wall, everyday use of your phone system mostly comprises sending, receiving, and routing calls. Businesses that do not care to use complicated web apps will likely appreciate the simplistic nature of a landline phone system.
VoIP vs Landline: Customer Service
No matter what type of system you choose, your phone system vendor should offer customer support channels to help you when you need something. Because customer service varies so widely among providers, it’s difficult to rate the customer service of one type of system over the other. A majority of today’s phone services offer a customer support line that you can call and a support chat that you can speak with on the company’s website.
VoIP vs Landline: Customer Reviews
Customers like different aspects of VoIP and landline phone systems. Both offer basic calling modules, but customers appreciate the consistency of a landline while appreciating the robust features offered by VoIP. The advanced functionality and lower cost of VoIP solutions give it the edge in terms of customer impressions.
VoIP Customer Reviews
Dave Labowitz, a business coach in Los Angeles, has used both types of systems and finds VoIP to be far superior. “VoIP is great for setting up things like call forwarding, call queues, ring groups, and telephony metrics. I haven’t had good experiences with landline software trying to accomplish the same tasks.”
Landline Customer Reviews
Rural organizations find landlines to suit their needs because it offers a stable connection. Other customers find their phone systems expensive and constricting if they want to be out of the office. “Landlines hardly ever go down, but VoIP can and will,” Labowitz said. “Landlines are great for reliability. VoIP simply isn’t as good in that respect.”
How We Evaluated VoIP & Landline systems
When your organization adopts a phone system, it should let you route call traffic, handle calls, and provide people calling your business with an auto-attendant system. However, we couldn’t help comparing extra features like mobile functionality and integrations with business apps.
The factors we looked at to evaluate each system type in this comparison include:
- Price: Systems should be affordable to set up and use.
- Call management features: Each system type’s ability to route and handle calls.
- Auto-attendant features: The inclusion of a virtual receptionist to handle call traffic.
- Portability: The ability to take your business phone number with you either on a mobile app or desktop.
- Software integrations: The ability for each type of system to connect with outside pieces of software.
- Ease of use: Each type of system should be simple to use.
Based on these criteria, we find that the majority of small businesses will want to go with a VoIP system. Unless you are located in a rural area and need the stability of a landline, VoIP gives you much more functionality for your money.
VoIP technology has advanced to the point where it’s no longer just an alternative to traditional landlines—it’s a complete replacement. A VoIP system can provide your business with additional features that weren’t previously available to you with a landline. A cloud-based service will also relieve your business of the responsibility of managing and maintaining your system while reducing costs.
RingCentral is one of the best VoIP platforms out there. It offers a wealth of advanced calling, unlimited domestic calling, voicemail-to-email and text, and integrations at an affordable price. Visit RingCentral’s website for more information