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Selkowitz Technology | Seattle’s small business network and telecom consultant

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One way to get phone system functionality in your small business is a hosted VoIP phone system. According to the hosted VoIP providers, a hosted phone system has “low start-up costs and low monthly fees…implementation is cheaper, quicker, and easier.” Sounds good right? Trust me – don’t rush off to sign up just yet.

 

Features

Having the right feature set for your business needs is absolutely crucial. Both TalkSwitch and the hosted VoIP services have a modern feature-set – auto attendants, follow-me routing, voicemail, voicemail to e-mail, forwarding, external IP phones, etc. From a perspective of feature-set, most small businesses will find their needs met by any of these options.

 

Pricing

For the comparison against TalkSwitch, I’ve chosen three hosted VoIP service providers – Aptela, Packet8, and Vocalocity. Each system is configured with 12 extensions and a standard set of phone systems features.

 

So my favorite part – the dollars and cents. Below are the upfront costs and total cost of ownership at 1, 2, and 5 years for each package.

 

	TalkSwitch w/ Unlimited VoIP	Aptela Business VoIP 500 Minutes	Packet8 Unlimited Extension Plus	Vocalocity Unlimited Extension
Up Front	$3,243.00	$2,148.00	$479.88	$1,548.00
1 yr TCO	$5,763.00	$5,676.00	$9,118.44	$7,306.56
2 yr TCO	$8,283.00	$9,204.00	$17,757.00	$13,065.12
5 yr TCO	$15,843.00	$19,788.00	$43,672.68	$30,340.80

 

 

Understandably, you may be wondering why hosted VoIP is actually far more expensive than buying a phone system and service. Here’s what in each package:

 

TalkSwitch VoIP

Here I used a TalkSwitch 248vs phone system and 12 9133i IP phones. For service I picked 6 unlimited long distance VoIP lines at $35/line each month and no line activation charges. It’s worth noting if your office has lighter phone use you could easily cut a few lines out – cutting two lines further reduces the cost $840 each year.

 

Aptela Business VoIP 500 Minutes

For the Aptela package I quoted their metered package – each extension is $24.50/month and includes 500 minutes of outbound local and long distance calls. It’s worth putting 500 minutes in perspective – that’s about 22 minutes each workday – after that any outbound call is $.029/minute. For equipment and set-up, they charge $20/extension for activation and $159 for each Polycom IP330 phone. The cost above assumes no per minute overages, yet is still more expensive than TalkSwitch.

 

Packet8 Unlimited Extension Plus

The Packet8 Unlimited Extension Plus package is an unlimited long distance package with no upfront equipment costs – your only upfront cost is activation, making it over $1,000 less initially than the next least expensive option. Per extension activation is $39.99 and they include an Aastra 6753i phone. But this package has the highest monthly cost at $59.99/extension – causing the total cost of ownership to soar far beyond any other package. Of course, Packet8’s plus plan also has an extended phone warranty, but you’d be hard pressed to break enough phones to make up the difference.

 

Vocalocity Unlimited Extension

The Vocalocity Unlimited Extension plan has unlimited calling like Packet8, but the phones are purchased up front. Their least expensive phone is the Linksys SPA 941 at $129. Monthly service is $39.99/extension each month.

 

Why is hosted VoIP more expensive?

A few reasons – each month, you’re paying per extension rather than per simultaneous call (line) and instead of buying inexpensive equipment you pay more monthly for their equipment as a service. Over 5 years, the monthly cost of the TalkSwitch and unlimited VoIP lines is just $22 per extension – half to a third of the cost of hosted VoIP.

 

Installation

There is one honest statement hosted VoIP providers make about their service – quick set up. The phones are generally preconfigured – just plug them in and dial. A TalkSwitch with VoIP service is honestly not as easy, but TalkSwitch can be easier to set up than hosted VoIP – just call your local TalkSwitch Authorized Partner. Given that TalkSwitch will save you nearly $15,000 over Vocalocity in the next 5 years – paying a professional $1,000 to do the set up is a bargain and a time-saver.

 

Maintenance and Support

Hosted VoIP has an easy point-and-click interface to make changes – as does TalkSwitch. Hosted VoIP services have free phone support – as does TalkSwitch. Certainly, a phone system can fail, but so can hosted services – they have equipment too. But to protect your phone system investment, the $300 4-year extended warranty is a great idea.

 

If you’re really concerned about equipment, you could buy a second TalkSwitch, 12 spare phones, and pay $150/month for an on-call service technician and you’d still save thousands picking TalkSwitch over Vocalocity.

 

Bottom line – TalkSwitch is every bit as easy to maintain as a hosted service. Given the free phone support and local on-site support from your TalkSwitch Authorized Partner you will get the support you need.

 

Quality

Certainly price alone shouldn’t make your decision – quality is a key factor. So I went looking for user reviews. VoIPReview.org has a great user review section with feedback on all of these hosted VoIP providers. Out of 5 stars, all three hosted VoIP providers currently score a 3.

 

Hosted VoIP is trivial to set up, but getting reliable voice quality isn’t always so easy. Read the reviews and there are consistent complaints about call quality, support, and reliability. In my experience helping out purchasers of hosted VoIP, even when everything is right on your network, they still don’t always work well.

 

On the other hand, TalkSwitch was awarded the best small business VoIP product for 2008 by the readers of Small Business Computing Magazine. In my experience as a user and installer of TalkSwitch products, they are absolutely dependable.

 

Conclusion

Hosted VoIP has a terrific marketing message – but the reality just doesn’t add up. TalkSwitch delivers the features small businesses need, terrific service, unmatched quality, and a significantly lower total cost of ownership.

7 Responses to “Talkswitch vs. Aptela, Packet8 and Vocalocity”

1. Natalie Says:
   November 26th, 2008 at 7:18 am

   As a salesperson at Vocalocity I just wanted to chime in.

   First, I agree that hosted VoIP becomes less cost effective with larger deployments. However here a few things I thought needed to be addressed in your evaluation of Talkswitch’s costs:

   a) Maintenance fees: The people who sold and installed the phone system are going to want some more fees to maintain it. Fonality, for example, charges in the vicinity of $60/yr/user for support. Hosted providers include support free of charge.

   b) Volume discounts: At 10 seats, just about any sales person in the hosted VoIP space will go down to $34.99 per unlimited seat with a DID included if you ask nicely. I’ve seen as low as $29.99, but usually with a contract or proprietary equipment.

   c) Call Capacity Preferences: While some large businesses are willing to accept the limitations of only 1/3 or ½ of their employees being able to use the phone at the same time, our sales people have found that small businesses owners greatly prefer for everyone to be able to use the phone at the same time (as in the hosted model). Everybody is crucial when you only have 12 people.

   d) Startup cost should be given extra consideration. Small business loans just aren’t as easy to come across as they were only a few weeks ago. The money you save by not purchasing on premise equipment could be used to buy another computer or keep up with payroll.

   e) Machines break and become outdated: You don’t want to risk the lifeblood of your business (communication) to disaster when a viable hosted solution is available, and you don’t want to be stuck with yesterday’s technology. The internet cloud is built to be redundant, constantly upgraded, and (eventually) accessed from anywhere.

   f) Expansion: Most twelve person companies intend to grow, and on premise phone systems don’t expand well or stretch to multiple locations. You’re not going to want to purchase a new (and more expensive) phone system again when you open another office or hire new employees. A hosted solution easily expands and spreads from one location to the next simply by ordering more IP phones.

   Comparing an expandable hosted VoIP offering that enables everyone to be on the phone at the same time with a budget and breakable on-premise phone system that has half the call capacity isn’t as simple as it first appears. Of course, I’m biased, but there’s my 2 cents.

2. Kevin Selkowitz Says:
   November 26th, 2008 at 10:46 am

   Natalie,
   Thank you for sharing your perspective, obviously we both have different perspectives. Here’s my thoughts on your points:

   a) Maintenance: Talkswitch offers free phone support for life and free updates for life. With a point and click management interface just as hosted VoIP, the cost to maintain the system would be no higher than hosted VoIP.

   b) Discounts: I stuck with MSRP on all products to be fair. Talkswitch sometimes has deals as well, but like anything those change and its only fair to compare full retail.

   c) Call capacity: this is a good point that a few businesses do have higher utilization just as some have far lower utilization. I have one software development firm that has about a 10:1 ratio of staff to phone lines. The other side is high ratios can also lead to high bandwidth costs - 12 PSTN lines is still less expensive than a T1 plus hosted VoIP. Obviously there’s no DIDs in that setup, but plenty of businesses don’t need DIDs.

   d) Startup costs: this is a great point, but either way you need to buy the phones - the only difference is the phone system and maybe install cost. Its a hard decision to balance TCO with up front cost. I can say though to check your local banks - I know Sterling Savings in Washington is still offering good terms and availability on lines of credit.

   e) Machines break and become outdated: it is true that machines break, but services aren’t free from outages or problems either. Talkswitch has no moving parts to fail, I’ve seen plenty of 5+ year old systems which have run without flaw. Also with public internet VoIP there’s just no control over the data inbetween the customer and carrier. The downside of hosted services is most don’t have onsite techs, so should things not work right the customer’s only option is phone and email support. On the matter of hardware becoming outdated, Talkswitch has regular free software upgrades - if you bought a system running version 3, you can install version 6.1 for free and get all the new features.

   f) Expansion: Talkswitch does go to 64 extensions, a pretty good amount of growth for a small business. It does also support teleworkers and basic multisite functionality. Certainly there would be some expense to multisite, the TCO there would need to be a case-by-case basis. But even you admit “hosted VoIP becomes less cost effective with larger deployments.”

   I think hosted VoIP makes a lot of sense for a very small virtual office, but once you get more than a few people and a main location the balance tilts to a phone system. And while I did compare public internet VoIP phone system to public internet hosted VoIP - I think most businesses are best with carrier services still.

3. Hosted IP PBX Cost Calculator Says:
   December 8th, 2008 at 11:04 pm

   [...] Talkswitch vs. Aptela, Packet8 and Vocalocity [...]

4. Donato Says:
   December 24th, 2008 at 1:15 am

   I do have to say as a business user who has been shopping for the past few months, I actually found in our case that Vocalocity offered the better value. Like you said every case is different, our case is where we have 14 extensions, most with heavy usage. I won’t say which company but one of the three you mentioned actually quoted me at $25 per extension for unlimited incoming 800 and outgoing, and $9.99 for metered extensions. I guess what makes our case different is the fact that we have two offices to service and 4 employees who telecommute. I had not looked at talkswitch directly, but a similar offering from Allworx. Once all the trunks and actual per minute charge is factered in, I saw the hosted pbx as the most cost effective solution.

5. Carl Jorgensen Says:
   January 4th, 2009 at 1:11 am

   I would have to say the points made by Kevin are terrific, although there is an issue with this post and it may be due to the date it was published. I did quite extensive research before selecting a provider and reviewed aptela, packet8, and vocalocity. Clearly a hosted pbx is the way to go for most small businesses, but Nextiva must be considered. When it comes to price they are unmatched. I have been impressed with their interface and overall view the service as a great value.

6. Kevin Selkowitz Says:
   January 5th, 2009 at 8:15 am

   Carl, I wish there was more detail in your response. Its unclear why my points are terrific yet you somehow conclude that hosted PBX is the way to go for most small business. Certainly some of these carrier’s plans may have changed in the past few months, but they’re a reasonable example set of hosted PBX options.

   There are some cases when hosted costs less and every business needs to run the analysis for themselves. But once you get more than a few people in an office, phone systems are usually the best value.

7. Kevin Selkowitz Says:
   January 5th, 2009 at 1:57 pm

   I decided to check with Nextiva and see if their packages were much different - its fairly similar to these other packages. For example their SPA921 phone is $97.50 while Vocalocity is $129. Nextiva’s unlimited extension is listed as $34.95 while Vocalocity is $39.99. Basically the five year cost in the same setup as the table above would be $26,334 - a bit less than Vocalocity but still a lot more than Talkswitch.

   Obviously yes, Nextiva may give some discounts, just as Talkswitch and the SIP carrier may do. I stuck with retail listed pricing on all products to be equitable.

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