Business Phone System Cost: Hosted VoIP vs On-Premise Per User

Per user planning ranges for California work in 2026#

Phone systems are priced by the user, then adjusted by the site count, the analog device count and the condition of the network underneath. The figures below are California commercial planning ranges as of 2026. They are for budgeting, not for quoting.

Scenario	One time planning range per user
Hosted VoIP, existing certified cabling and switching, basic desk phones	About $250 to $500
Hosted VoIP, typical office replacement with some cabling and switch work	About $380 to $1,200
Hosted VoIP, multi site rollout with per site cutover and travel	About $500 to $1,500
On premise IP PBX, single site, including appliance and licensing share	About $500 to $1,600
Small system under about 15 users	Add a mobilization premium; per user cost rises sharply

Recurring cost sits outside those figures. Hosted platform subscriptions are commonly quoted at about $15 to $45 per user per month for a standard business tier, with contact center and analytics seats above that. On premise systems carry SIP trunking at roughly $15 to $35 per concurrent call path per month plus usage, and an annual software maintenance agreement.

Telelink Business Services does not resell carrier service. The subscription, the SIP trunk contract and the internet circuit are between the client and the provider. What we price is the system, the network work under it, the migration and the support.

Handsets, adapters and what each one costs#

Endpoint	Typical use	Planning range each
Basic desk phone, monochrome, two to four lines	Warehouse, break room, hoteling desk	$70 to $180
Color screen desk phone, gigabit pass through	The standard office endpoint	$150 to $400
Executive or video desk phone with expansion module	Reception, executive desks, dispatch	$300 to $800
Cordless DECT handset	Facilities, clinical staff, warehouse floor	$150 to $450 per handset
DECT base station or repeater	Coverage for cordless handsets	$200 to $700 each
Conference phone, small room	Huddle and small conference rooms	$300 to $900
Conference phone with expansion microphones	Boardrooms and training rooms	$800 to $2,500
Analog terminal adapter, 2 to 8 port	Fax, gate, elevator and legacy devices	$80 to $600
Wireless headset	Per user, where the work is phone heavy	$100 to $350

We install and configure Yealink desk phones, cordless DECT handsets and conference phones, provisioned from the platform by MAC address so a replacement phone takes on its extension when it is plugged in. Other manufacturers are installed where a specification calls for them. Staging, provisioning, deployment and desk side training run about $75 to $250 per endpoint on a standard rollout, lower per unit at higher counts.

The network work that has to happen first#

Call quality on an IP system is a network outcome. On most replacements this is where the unexpected money sits, because the phones are the visible line and the switch that cannot carry them is not.

Network item	What it covers	Planning range
Certification test of existing drops before cutover	Confirms which runs carry a gigabit phone with a PC behind it	$15 to $40 per drop
Cabling replacement where a drop fails	New Cat6 drop, terminated, labeled and tested	$200 to $400 per drop
PoE switch replacement	Port count or PoE budget short for the phone load	$1,500 to $6,000 per switch
Voice VLAN, quality of service, firewall prioritization	Per site configuration on switches and edge device	$500 to $3,000 per site
UPS in the telecom room	Keeps phones and switches up through a short outage	$600 to $3,000 per room
Internet circuit sizing review	Upstream bandwidth for the peak concurrent call count	Usually inside the design fee

The cabling replacement figure sits inside the Cat6 range published in the structured cabling cost guide, which runs about $150 to $450 per drop across conditions from open new construction to a fished hard lid ceiling. The $200 to $400 band used here is the part of that range that applies to a tenant improvement retrofit with an accessible ceiling, which is the usual condition on a phone replacement. Dedicated circuits for the switches and the UPS are electrical scope and are shown on our submittal rather than carried in the phone bid. The rooms themselves are covered under network room buildout.

Hosted versus on premise over five years#

The table below compares only the items that differ between the two architectures at 60 users on one site. Handsets, cabling remediation, switching, E911 work, porting and training are the same either way and are excluded so the comparison is clean. Assumptions: 60 users, 15 concurrent call paths on the on premise option, standard business tier on the hosted option, no contact center seats.

Line item, 60 users, one site	Hosted VoIP	On premise IP PBX
Call control hardware, year one	None	$3,000 to $15,000 appliance or server
User licensing, year one	Inside the subscription	$60 to $250 per user, so $3,600 to $15,000
Trunking	Usually inside the per user subscription	$15 to $35 per path per month, so $2,700 to $6,300 per year
Platform subscription	$15 to $45 per user per month	None
Annual software maintenance	Inside the subscription	About 15 to 22 percent of license, roughly $550 to $3,300 per year
Year one capital	$0	About $6,600 to $30,000
Five year recurring subtotal	About $54,000 to $162,000	About $16,250 to $48,000

Three things fall out of that table. Hosted has no capital line and a subscription that never stops. On premise front loads the money and then runs cheap, and the gap widens after year five. What the table does not price is owner staff time, the server replacement that arrives in year six or seven, and the risk that an appliance reaches end of support on the manufacturer’s schedule rather than yours.

The tie breaker is usually not cost. It is whether call control has to keep working when the internet does not. A single site clinic, a manufacturing plant with a dispatch function or an agency with a continuity requirement often justifies on premise on that basis alone. A multi site organization with remote workers usually does not.

Porting, E911 and analog devices#

Number porting. Every number is inventoried before the port is requested, including direct inward dial ranges, fax numbers, alarm and elevator lines and numbers nobody remembers issuing. Porting coordination typically runs about $1,000 to $3,000 per site for a normal office, with carrier port charges billed by the carrier. The old system stays live until the port completes.

E911 under Kari’s Law and the RAY BAUM’s Act rules. The system must allow direct 911 dialing with no prefix, send a notification to a central location on site when 911 is dialed, and deliver a dispatchable location such as the address plus the floor, suite or room. Building the location records, mapping every device, configuring the notification and testing with the public safety answering point typically runs about $500 to $3,000 per site, driven by floor and room count rather than user count. When a phone moves, the location record moves with it, which is one reason moves, adds and changes belong in a service and maintenance agreement rather than in an annual scramble.

Analog devices. Fax machines, elevator phones, gate phones, modems and alarm panel communicators each get their own decision: an analog terminal adapter, a cellular or IP replacement, or a retained carrier line where the device or the code requires it. Budget about $100 to $400 per device for adapters and configuration, plus a line item for any retained carrier line. Alarm panel changes are coordinated with the owner’s licensed alarm company, which is outside our scope.

Moves, adds and changes. After turnover, plan on a recurring line for new hire phones, extension changes, call flow edits and location record updates. Organizations that budget nothing for this end up paying for it as emergency work.

A worked example: 60 users at one site#

Assumptions: single site office replacing a legacy key system, 60 users, 55 color screen desk phones, 5 cordless DECT handsets, 3 conference phones, 4 analog devices consisting of one fax line, two elevator phones and one gate phone, one IDF, existing Cat5e that certifies clean on 50 drops with 10 requiring replacement, existing switches with enough ports but not enough PoE budget so two are replaced, hosted platform selected by the client, 62 numbers ported, private owner, no prevailing wage.

Line item	Quantity	Planning range	Extended planning range
Color screen desk phones	55	$150 to $400	$8,250 to $22,000
Cordless DECT handsets and base	5	$150 to $450	$750 to $2,250
Conference phones, small and medium rooms	3	$300 to $900	$900 to $2,700
Analog terminal adapters and analog device handling	4	$100 to $400	$400 to $1,600
PoE switch replacement	2	$1,500 to $6,000	$3,000 to $12,000
Voice VLAN, quality of service, firewall prioritization	1 site	$500 to $3,000	$500 to $3,000
Certification test of existing drops	60	$15 to $40	$900 to $2,400
Cabling replacement where a drop fails	10	$200 to $400	$2,000 to $4,000
Number porting coordination, 62 numbers	1 site	$1,000 to $3,000	$1,000 to $3,000
E911 location records, notification and PSAP test	1 site	$500 to $3,000	$500 to $3,000
Staging, provisioning, cutover and training	63 endpoints	$75 to $250	$4,725 to $15,750
Planning total, one time, low voltage scope			About $22,900 to $71,700

That works out to roughly $380 to $1,200 per user in one time cost. On top of it the hosted subscription at 60 users runs about $10,800 to $32,400 per year, and any retained carrier line for the elevator and gate phones is billed separately by the carrier. Adjust any assumption and the one time total follows: certify all 60 drops clean and the cabling replacement line disappears; find that the switches carry the PoE load and $3,000 to $12,000 comes out; add a second and third site and the porting, E911 and cutover lines repeat per site; put the job on a public agency floor and, on a planning assumption that labor is about 60 percent of an installed line, a 40 percent determination moves that line about 24 percent, with no change to the handset or subscription lines. On a tenant improvement the phone scope is sequenced with the cabling and the room work, the way the network scope was sequenced on the State Controller’s Office floor in Sacramento.

Next step#

Send your extension count, your locations, a copy of a recent carrier bill and a note on the age of the cabling through request a bid. What comes back is a hosted option and an on premise option, with the handsets, the network readiness work, the migration and the recurring subscription shown as separate lines so the comparison is honest. Telelink Business Services is a licensed C-7 Low Voltage Systems Contractor, CSLB License #472017, and our business phone systems page describes what a complete scope includes. Tenant improvement general contractors can find our process on the for general contractors page.