Voice-over-internet-protocol (VoIP) services and virtual phone systems are two popular kinds of telephony solutions for businesses. VoIP is a standalone service that usually comes with advanced features at a higher cost, while virtual phone systems require an existing line to forward calls from but come at a lower monthly price.
- VoIP: Best for midsize and larger teams that want powerful features like video calling, file sharing, and advanced auto-attendants.
- Virtual phone: Solo workers, freelancers, and very small teams that are looking to save money, but also want a dedicated business line for customers to call.
VoIP vs Virtual Phone Systems at a Glance
$9.99 - $59.99 per extension, per month
$26 - $80 per extension, per month
Supports Multiple Simultaneous Phone Calls
Supports Video Conferencing
Does Not Require an Existing Phone Line
Runs independently, typically offer more features beyond calling
Affordable, some advanced features like auto-attendant
Could be too expensive for smaller teams
Limited feature set, requires existing line
Takeaway: A VoIP service is much more than just a business phone system. On top of calling and texting, VoIP systems typically come with video calling, file sharing, and call queuing. This is helpful to larger teams, but comes at a substantially higher cost than a virtual phone service. While they require you to keep an existing line, virtual phone services offer a streamlined set of calling, texting, and voicemail features at a lower overall monthly price. For smaller teams that want a dedicated work line, they could be a perfect choice.
When to Use a VoIP System
If you have a midsize team and consider your company to be established, then you might want to explore what a VoIP service has to offer. Since it doesn’t require an existing line, you won’t have to worry about using your personal cell or landline number to make calls. On top of that, most VoIP systems serve as complete communication platforms, with mobile apps, video chat between team members, and team chat tools.
Should you choose to go with a VoIP service, you should be advised that you will need a fast, stable internet connection in order to use your system. We recommend taking our VoIP speed test to measure the overall health of your network. For more details on how many lines your setup can support, we recommend looking at our VoIP speed test guide.
VoIP Pros & Cons
More than just calling: Today’s leading VoIP systems come with call queuing, reports on call data, and video conferencing
Expensive: Most VoIP systems are far more expensive than their virtual phone counterparts
Runs independently: Unlike a virtual phone service, you do not need an existing line to forward calls from
Potential overkill: If you only need a new phone service with call and text, investing in a VoIP service can be a waste of money
The price of a VoIP solution will depend entirely on what service you go with. For reference, our top overall pick, RingCentral, starts at $19.99 per user, per month for two to 20 users on an annual basis. Depending on what package you choose, pricing can go all the way up to $49.99 per user, per month. You can check out our VoIP reviews page for a list of other top providers, or take advantage of RingCentral’s free trial by visiting their website today.
Why VoIP Is the Better Choice for Established Companies
If you have a team of five or more people, it can be cumbersome to keep one business line open to forward calls from. Larger teams are also more likely to take advantage of video calling, file sharing, and instant messaging features. While virtual phone systems are great for solar workers, VoIP is a good fit for those who have grown out of the likes of Grasshopper and Google Voice.
When to Use a Virtual Phone System
If all you need is a dedicated phone line for your business, then a virtual phone system may be a better fit for you. While they often lack advanced features like team file sharing, they still come with local and toll-free numbers, voicemail, text, and mobile apps. Some even come with an auto-attendant that can greet and route callers without human intervention. Best of all, most virtual phone systems cost far less than a traditional VoIP service.
Virtual Phone Pros & Cons
Virtual Phone Pros
Virtual Phone Cons
Affordable: Virtual phone services can be found at a low price, or even for free.
Requires existing line: Unlike a VoIP service, you will need an existing phone line to forward calls from
Flexible: Services can use any type of existing line to forward calls from. This includes any landline or cellular device
Limited features: Most mainstream virtual phone systems offer little functionality beyond calls, SMS, and voicemail
Virtual Phone Pricing
Virtual phone services come at different price points. For example, Grasshopper, which is one of our top picks for virtual phone service, offers plans starting from $26 per month for one number and three extensions. Considering that multiple people can share this plan, it is far less expensive than most VoIP services.
However, if you are just starting out and are a team of one, we also recommend Google Voice. This is because the service offers a local number and simple-to-use, basic features completely free of charge.
Why Virtual Phone Is the Better Choice for Smaller Teams
If you are a freelancer, or leading a team that is just starting out, you are likely on a very tight budget in terms of what you can afford to spend on a phone service. Unless you really need a standalone service with a full range of extra communication features, a virtual phone system will suit your needs just fine. These services let even the most modest business enjoy the professional image that comes with a dedicated work line.
Virtual Phone vs VoIP: Which Is Better for Small Businesses?
When deciding between a VoIP service and a virtual phone solution, you will need to take stock of your company’s size and unique needs. If you have a larger organization and can afford to pay for advanced capabilities, then a VoIP solution will be your best fit. However, smaller startups may want to go with a virtual phone service until they grow into needing something more powerful.
Frequently Asked Questions (FAQs)
Can I use a VoIP system on my smartphone?
Yes. The vast majority of leading VoIP systems offer apps for iOS and Android devices.
Can I transfer my number from a virtual phone system to a VoIP service (& vice versa)?
Yes. In most cases, your service provider will offer some way to transfer existing numbers from one service to another. This can usually be done through your system settings menu or by contacting your provider’s customer support team.
What number does someone see when I call them with my virtual phone system?
When you call someone with a virtual phone solution, the call will get forwarded from an existing line, such as a landline or mobile phone. However, the person you are calling will see your virtual phone number on their caller ID.
VoIP and virtual phone services have overtaken landline-based services because of their flexibility, cost savings, and advanced features. These internet-based providers offer more than traditional services do and save companies money in the process. VoIP systems work independently and suit the needs of larger teams while virtual phones are excellent for solo workers, freelancers, and brand-new startups.
If you are in the market for a new VoIP system, we suggest looking at RingCentral, which is our best overall pick. The system comes in a wide range of pricing plans, has a powerful feature set, and is exceptionally easy to use. Click the button below to learn more.