As VoIP technology has improved over the past decade, it is rapidly becoming a mainstream option for businesses both large and small. It’s a buyer’s market – there are hundreds of VoIP providers to choose from – some that are household names and some that are smaller. The features are rich and the ability to have an enterprise grade phone system is within reach at a reasonable price.
But, as with all things that cost money, buyer beware. The devil is in the details and unfortunately, the industry is not forced to be totally transparent.
Here are three common pitfalls to avoid when choosing a VoIP provider:
Hidden Fees and Taxes – can add 10 – 28% on top of the monthly fees
A. Federal Program, Regulatory Recovery, Federal Universal Service Fund Fees, etc.
The government has allowed providers to charge certain fees to offset the provider’s cost of doing business, it’s contribution the FCC, and for other government charges. While a portion is paid to the government, the actual amount is up to the discretion of the provider with no oversight by the government. Typically, the consumer assumes that this is a tax and do not question the fees. In some cases, the provider will opt to charge nothing or a minimal amount and, in some cases,, we have seen monthly charges as high as $300 on client’s bills. Needless to say, this is a huge surprise to the client, and in some cases, is more than the actual cost of services sold.
B. Emergency 911 and Information Services Fee
Again, this is not a government-mandated fee but one that providers are allowed to charge to cover their costs for 911 and directory assistance. This determined by the provider and has no cap or monitored parameters for execution. It is often set by line/seat – say $1.99/line - and can quickly add up.
C. Regulatory, Compliance and Intellectual Property Fee
Again, a nongovernment-mandated fee, that is set by and then used by the provider to off-set certain operating costs. This fee is often priced per line and adds to the total seat price.
D. State/Locale-Specific Taxes and Fees
Certain taxes are unavoidable and justifiable. These are paid by the provider directly to the state and local governments. You have to pay these but often the provider does not include these in the initial quote. In order to properly understand your total costs, the provider should be able to disclose these upon your request upfront.
To read more about research done on these fees for six large national providers, Click Here.
Feature Add-On Charges – a la carte pricing for UC features
One of the huge benefits of a VoIP phone system is the enterprise level features and functionality that come with the services. These are built into software and are part of the system. One tactic to win a client’s business is to offer a lower seat price such as $19.99 with the phone included - and then add for the extras that are most desirable like auto attendant, voicemail, transcription, find me-follow me, etc.. At a cost of $1.99/line per feature, the low seat entry pricing quickly increases.
Auto Billing – payment begins upon contract execution
A trend we have seen with VoIP providers is to start charging for services as soon as the contract is signed whether or not the VoIP system has been installed and is usable. The typical time from contract execution to installation is 45 to 60 days. If you sign with a provider, who implements auto billing, you need to be prepared to pay for two providers until you can disconnect your existing services. Again, this may only be a couple of months if you are lucky. But if you are unlucky, it may take up to 6 months. You need to factor this into the seat price to get a real cost to your company.
If you are considering a VoIP phone system, congratulations – it can be a game changer in your businesses’ ability to operate efficiently and profitably. But as with any service or purchase, be knowledgeable and ask questions so that you truly understand what you are getting for your money and that you have no surprises when the bill comes.
Comtel Communications is here to help! We pride ourselves on being transparent and providing options to best meet our clients’ needs. Click Here and we will contact you.
Comtel Communications, a telecom/technology consulting agency based in Richmond, Virginia since 1991, provides best-in-class solutions and unbiased counsel to a diverse group of small, medium, and enterprise-level businesses, totaling more than $18.2M in annual billings. Leveraging unique access to 350+ national and international providers, Comtel benefits its clients through competitive quotes from multiple sources, to ensure their business goals are met with current and dynamic telecom and technology services. Acting as a partner, long after contracts are signed and services are deployed, Comtel offers superb back-office support to manage upgrades, track orders, and provide training to clients.
Author: Amy Humphreys