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Buyers Guide for Choosing a Phone System

7 Steps to take when choosing a telephone system for your business

Choosing the right phone system is essential for all businesses. After all, it is how we communicate with partners, affiliates and customers. The process of choosing a phone system can be complicated and frustrating, but it doesn't have to be.

You just have to be able to pick the right vendor and dealer for your needs. This guide will walk you through the basics of making an informed decision when discussing potential phone system vendors. We'll discuss small office phone systems and systems used by larger corporations, average prices, advantages and disadvantages between the various systems and phone system terminology so you can setup your business communication lines with confidence.

Buyers Guide for Choosing a Phone System, Tips Advice Select Telephone System

1. The importance of choosing the right telephone system

Whether you operate a small business or large corporation, your business telephone system holds a great deal of power in how you are perceived by your customers. If your customers cannot understand you, you will not be able to sell your products leading to decreased productivity. On the other hand, the right telephone system can enhance the perceived value of your business in the eyes of your customers and lead to increased productivity by your employees.

When choosing the right business phone system, remember that it is not only about the actually cost, but how your company is perceived which will result in a greater long-term value for your company. Telephone systems are not cheap - this is a given. However, when you consider the bigger picture – the true values of an office phone system begin to reveal themselves when you consider how the phone system will affect, positively or otherwise, your business.

Think not only about what features you need in a phone answering system today, but what you will need in the future to save costs in the long-run.

2. Understanding phone system jargon

Before you begin choosing an office phone system, you must understand the terminology used to describe some the systems, their components, and features. The technology for digital telephone systems is continually changing so it is important to understand what these words mean and which features are important to your business model. To help get you familiarized with the industry ‘tech talk’, we’ve put together a list of terms used by telephone systems dealers and vendors:

  • Cabinet – Can be referred as the “central office” or “CO”, “KSU” or “key system unit”, “central unit” and even “base”. A telephone system’s cabinet is the main unit where internal routing, external routing, and configurations take place on PBX and key telephone systems.
  • CTI – CTI, or computer telephony integration, is an optional set of applications that integrate your business’ telephone system with a computer. Features can include video conferencing, one-click dialing, incoming call routing, and a variety of other timesaving features that appeal to larger businesses.
  • Extensions – Extensions are essentially unique identifiers used within a telephone system’s internal network. Internal communication, fax machines, and modems can all operate without a dedicated phone line with the use of extensions.
  • Hybrid – “Hybrid” phone systems are the middle system between key systems and PBX telephone systems. The term “hybrid” refers to its ability to offer benefits and features of both types of these small business phone systems.
  • Key Systems – Key Systems, also called key telephone systems, are the entry-level choice for small business phone systems. Each individual phone has a selection of buttons corresponding to the number of phone lines available. Offering support for up to forty employees, key telephone systems are generally cheaper than PBX phone systems and offer features suiting small businesses.
  • Lines –Sometimes phone system vendors refer to lines as “trunks”, lines refer to the telephone lines coming into your business.
  • PBX – PBX phone systems, also known as Private Branch Exchange, are customizable phone systems for businesses with forty or more employees. Similar to key systems, but generally PBX systems offer more features, easier upgrades, and extensive customization opportunities, thus justifying a higher expense when compared to other systems.
  • Ports – The term port refers to the number of connections a certain phone system can handle, specifically when referring to PBX phone systems. The number of ports that a phone system has includes both the total number of incoming lines and extensions available.
  • VOIP – VOIP, or Voice over Internet Protocol, is a type of internet phone system. Instead of using landlines, or regular telephone lines, to transmit conversations, VOIP phone systems rely on your internet connection to send and receive telephone calls. Oftentimes, this system requires a router to translate the internet signal into a useable signal for traditional business telephones. VOIP is considered an alternative to key and KSU-less options for small office phone systems.

3. How to evaluate your telephone system needs

Prior to contacting telephone system vendors and dealers, sit down and think about what features and benefits your business needs. This will help guide you when seeking quotes from potential phone systems dealers and offer a base for discussion.

Phone system vendors and dealers will certainly be able to assist you with the specific features and needs for your business, but nobody knows your business’ needs better than you do, at least for the time being.

A few questions you should ask yourself before discussing your needs with a phone system vendor include:

How many lines and extensions do you need right now?

Add up the number of employees you currently have considering growth in the near future. Be sure to include extension totals for fax machines, modems, and credit card terminals if applicable for your needs.

Business Phone System GuideWhat are your future expansion goals?

Whether you plan to grow proactively, or wish to remain relatively small over a period of many years, take note of this as it is important in your decision. If you think you will add more employees to your payroll and additional work stations over the next couple of years, consider this in your decision. It is always better to overestimate and have more lines than needed than to underestimate and customers receive a busy signal.

Choose how many lines you need with the next two to three years in mind. To restate the above, while you may only have four or five employees today, it would likely be a large hassle, not to mention an exorbitant expense, to switch from a Key system to a PBX telephone system. Failing to plan for future growth today can prove to be a costly mistake tomorrow.

What accessories and options do you need?

Features such as call forwarding, caller-id, one-touch dialing, on-hold music, conferencing, and speakerphone options are all available and can be a valuable asset for your business. Voicemail should be a necessity for any office telephone system. When discussing your needs with phone system vendors, consider that these features such as voicemail may not be included and come with an additional price tag.

With the rise of mobile technology, you can also request your phone system to alert your mobile device when you receive a message which allows a quick real-time response any time of the week or day.

Note that not all office phone systems are capable of handling these features and you’ll need to discuss what is important to your business with vendors.

4. Different phone system options

There are three main business phone system options to consider.

Key systems

Key telephone systems are ideal for businesses with two to twenty five employees. This business phone system generally offers the right features that small businesses commonly need while keeping your overall costs within a manageable level if you are working with a smaller budget.

Key telephone systems are not as customizable as PBX phone systems, but do offer a wide range of features for a lower price. If you choose a key system, it is easily upgradable. However, it is said that PBX systems offer a better long-term value.

Hybrid options like Panasonic phone systems are also an option and can give you a bundle of features like a PBX phone system, but at a lower rate comparable to key telephone systems.

PBX Phone Systems

PBX phone systems are ideal for businesses with twenty five or more employees or businesses that require features that key telephone systems cannot offer. Offering more flexibility and the possibility of customization than key systems do, PBX phone systems are often the first choice.

Adding extensions and lines to a PBX telephone system is very simple and straightforward, making upgrades relatively simple and cost-efficient. PBX phone systems are more expensive up-front because of scaling, but the costs per employee actually decrease with the number of ports required In other words, bigger businesses spend less money per employee with PBX systems than smaller businesses.

Smaller businesses that plan to grow can also benefit from purchasing a PBX phone system because it is easy to upgrade than other systems.


VOIP, or voice over internet protocol, is an internet phone system that uses the internet, rather than traditional phone lines, to send and receive telephone communications.

Typically costing much less than other types of phone systems, VOIP are oftentimes portable and do not require the use of specialized telephones. You can purchase specialized telephones that will connect directly to your DSL, but most businesses prefer to purchase a router so the internet signal converts for use with standard business telephones. Note that if your business uses DSL, your phone service is technically running through your phone lines, but it is a different type of signal.

5. Price points of business telephone systems

There is an average price for each type of business telephone system generally, but additional features, services and requirements can cause the overall costs to fluctuate quite a bit. For example – wiring, installation, the actual telephones themselves, the telephone system (cabinet), optional accessories such as CTI, on-hold music and your monthly service fees can be all included in the costs of a office telephone system.

Typical costs of different phone systems

We have outlined the standard costs per employee for each telephone system below.

  • Key systems range from $350 to $1,000 per employee depending on what features your business needs.
  • PBX telephone systems can run anywhere from $800 to $1,000 per employee with the average price the latter. If you have more than 100 employees the costs per employee are generally less with PBX systems.
  • VOIP phone systems are similar in cost with KSU-less systems and on average cost between $100 and $250; however, internet phone systems require a router which may increase your cost up-front one time only. But be aware that the quality of service is not always guaranteed from your service provider and can be much more technical to trouble shoot any issues.

Additional costs to consider when choosing a phone system There are other factors you will want to consider that affect the costs of your office phones.

  • Installation – Installation and wiring costs are not cheap, but key systems and PBX phone systems are complex setups that typically require professional installation. If your office is not wired for a particular phone system, you’ll incur additional costs beyond the general price of the office phone system set up.
  • Cabinet – The cabinet is the head of operations for your entire telephone system. Depending on the size and complexity of the system that you need, the cabinet alone can run anywhere from $1,000 to $10,000 or more in some cases. While the cabinet is included in your telephone system’s cost – this is a somewhat significant part of your expense.
  • Telephones – Telephones range in price and will affect the overall costs. name brand phone systems will cost more but there are other options out there. Speak to your vender for compatible options at a cheaper price.
  • Optional features –On-hold music, voicemail and a CTI are not usually a part of standard phone system packages and will increase your costs if needed.

6. How to choose a phone system vendor

Phone systems vendors do not just supply a product – they supply a service. Because of the complexity associated with phone systems such as professional installation, proper training and ongoing maintenance, you want to choose a vendor you and your team can rely on.

  • Dont let a pushy salesman talk you into an over priced system
  • Make sure the vendor you are working with understands your business needs. If you hear YES, YES, YES to all your questions contact another vedor to collaborate the information provided.
  • Does the phone system vendor set up and train you with the phone system? What is their customer service policy?

7. Top tips for phone system buyers

When making a sound decision regarding your business telephone system, keep these best practices in mind to save you money and time.

  • Engage with other business owners – By talking to other businesses that have gone through the process of acquiring a phone system before you, you will gain insight and recommendations helpful to your search. Make sure you speak to businesses that are similar in size to yours so if you are a small business owner, research small business phone systems with others.
  • Consider future growth – When you are sorting through potential telephone system dealers, get an estimate for future upgrades. It is important to talk about costs and viability of future expansion in regards to your proposed telephone system. Also consider purchasing more wiring than you need initially to cut down on future costs. Yes, extra wiring will add to your initial investment, but it saves you from the possibility of a complete rewiring should you need to upgrade your system in the future.
  • Compare quotes from various vendors – There are several phone system providers to choose from so do not settle for the first price you get, even if you feel that the price is right. The concept is the same with any high-value item or service; check with different suppliers, get different quotes and check out different offers – you may be able to “play the game” a little bit and get a better deal.

Choosing a telephone system for your office or place of business does not have to be difficult. Yes, it can appear overwhelming at first – but the truth of the matter is that you do not have to decide everything or even know everything yourself.

Your job as a business owner is not to know every detail of the inner-workings of the different types of telephone systems available today; rather, it is to estimate your needs to the best of your ability and to weigh out the options put in front of you by perspective phone systems dealers.

We hope that this guide has shed some light on the phone system buying process, the costs involved, and what to expect when you are ready to move forward. Choosing a phone system for your business is an important decision – one that you now should be able to make with the help of a competent professional.

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Checklist for choosing business phone systems for your organisation.

Business phone systems have come a long way in the last decade. With the explosion of the internet, VoIP systems have become widespread for businesses, and for homes. Before choosing a system, it’s always useful to identify the needs of your organisation and match these requirements against what’s available on the market.

1. Identify Your Business Needs and Goals

What are the immediate telecommunication needs of your business? How may they change in five years’ time?

  • How many employees do you have?
  • What are their usage requirements?
  • What is your organisation’s collective usage needs – e.g., local, interstate, or international calls.
  • Do you have a large mobile workforce?
  • Do you intend on significantly growing your workforce over the medium term?

2. Additional Features

What kind of additional features will you regularly need? For example, do you expect to make conference calls or video calls? Do you need a system that offers mobility, call forwarding, auto-attendants, and voicemail? Start by making a list of your needs in terms of additional features to refer to as you come to compare systems.

3. Handsets and Equipment

  • Do you need cordless handsets that allow you and staff to move around the site?
  • Hands-free features or headsets may come in handy for staff and employees who need to type or make notes while on the phone.
  • Do different departments in your organisation have different needs when it comes to handsets?
  • Does your reception area or line switchboard have specific needs in terms of hardware and phone display?

4. Calls

Identifying the key types of calls that you make can help you narrow down the types of telephone systems you’re considering for your organisation.

For example, what types of calls do you and your staff make?

  • Conference calls;
  • Video calls;
  • Internal calls;
  • Local calls;
  • Interstate calls; or
  • Long-distance/overseas calls.

If you will be making a lot of long term calls, how cost effective are the different types of systems you’re considering? Land line systems tend to be more expensive than VoIP systems when it comes to setup and ongoing costs.

5. Growth

Identify your business plans in terms of growth and expansion.

  • If you expect to expand in the near future, will your new system accommodate more users?
  • Will you be able to make higher volumes of calls without needing to change your equipment? Can these calls be made simultaneously?
  • Will your new system allow you to monitor and check usage, if necessary?
  • How easy will it be to upgrade your contract to accommodate higher call volumes as your business expands?

6. Quality

You should also consider the call quality. For example:

  • Does the company guarantee an uptime?
  • How is the call and sound quality?
  • Is there a warranty on the hardware and handsets?

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