A Short Guide to Budgeting a Business Telephone System

If you are moving into a new office then communication will be on top of your list. In the new digital era, telephone systems are not just simply sticking your device in the phone socket and it’s done. There is a lot of technology involved and the costs are significant.

For budgeting a business phone system installation, you will need to consider many things like –

  • Phone costs
  • Wiring & installation
  • Cabinet
  • Programming
  • Optional accessories
  • Configuration
  • Reliability
  • Gains from enhanced employee productivity
  • Potential cost savings
  • Maintenance for quality performance

Ultimately, how much the business communication structure will cost depends on the size, complexity, and installation environment.

Breakdown of components

The hardware can be broken down into the following components


Each computer and phone will have to be lined to a central location. CAT 5e wires to connect to a location can be approximately $190. In addition, there will be a need of wire management, patch panels, and wall brackets. A budget of $500 will be needed to build data closet. In case you are replacing the current system, then wiring costs gets reduced.

Telephone stations

There is a wide variety of telephone stations to select from. The cost will depend on the technology, features and complexity.

  • Digital phone system – $200/station
  • IP phone – $350/station
  • Reception phone with call director – $750
  • Standard conference phone – $650

Network services

Additionally you will need POTS lines and internet services.

  • POTS lines – $40/line monthly
  • PRI (23 lines) digital service – $450 monthly
  • Internet – Basic DSL ($85) to high speed cable internet ($100), every month

A medium sized Office Telephone System and the internet access could cost you $600 monthly.

IP PBX server or control unit & licensing

A server or cabinet is the common control equipment for a phone system. The control unit’s average cost is based on the system size it is laid out upon. It is important to select the ideal package for your business.

Small IP-PBX or digital (non server based) includes voice mail & basic unified messaging capacity.

  • 5 phones – $1500
  • 25 phones – $5300
  • 50 phones – $10,000
  • 75+ phones – $250/phone

Server based IP PBX including station, IP phones along with desktop interface licensing.

  • 20 phones – $6000
  • 40 phones – $11,000
  • 50+phones – $290/phone

Installation & training

Installing process includes building and mounting the control unit, positioning telephones in their locations, labeling the telephones and programming the applications. Ultimately, training administrators and users on how to employ the system properly is provided.

All these steps have to be performed for both small and large systems. The time taken can be nearly as long as it takes to install 10 to 30 phone systems. An approximate installation budget is given below.

  • 5 – 15 phones – $1200
  • 25 – 50 phones – $3000
  • Above 50 phones – $50/phone

Many other variables can affect the final cost though the above guide can be helpful to calculate your initial budget.

Make sure to find a reputable phone system installer because of the complexities related to VoIP & unified communication systems.


  • IP phone systems have a myriad of features, which are usually locked initially. Software licenses are needed to access these features. Therefore, discuss which functions are free and which ones need to be paid for before purchasing.
  • It is wise to put in as much wiring in as possible before framed walls of a new building are enclosed. It will be less expensive than adding wires later.

Knowing what your needs are and planning ahead, can save you hundreds of dollars.