VoIP Systems: How They Work and Why They’re Game-Changers

Written by Sarah Dodrill | Aug 8, 2025 2:00:00 PM

VoIP Systems are voice over internet protocol systems that enable voice communication by converting analog voice signals into digital data packets that are transmitted over the internet. Traditional phone systems are usually connected to a landline, lacking the cloud capabilities of VoIP systems and costing more.

How VoIP Works:

  1. Conversion of signal -> voice is converted to digital data that is compressed and sent to recipient in internet packets.
  2. Transmission -> the VoIP service provider routes these packets to recipient's device, where they are converted back to audio, allowing a real-time conversation. 
  3. Devices used -> various devices are available including IP phones, computers, smartphones, tablets, and any other device with internet connection.

Benefits & Disadvantages of VoIP

Benefits  Disadvantages 
Cost-effective (scalable with fixed costs) Requires stable internet connection
Flexibility & mobility (work anywhere with internet) Inconsistent call quality (depends on connection strength)
Advanced features (forwarding, voicemail, video, etc.) Features may be overwhelming (IVR menus & analytics)
Easy set-up Hidden fees

Types of VoIP:

  • Hosted VoIP - provider handles hardware and software.
  • Cloud based - provider handles hardware, software, and app installation.
  • UCaaS - Unified Communication as a Service plans bundle multiple channels including VoIP, SMS texting, team chats, and more.
  • CPaas - Communication Platform as a Service has the voice API integrated into the company's current systems. 

Essential Features:

  1.  Friendly user-interface
  2. IVR and call routing (self-service menus for customers to select call route)
  3. Business phone numbers (local, toll-free, and protection of personal numbers)
  4. Unlimited call area (international calling is usually included)
  5. SMS texting 
  6. Call queue 
  7. Call controls & flipping (forward, hold, etc. & seamlessly switch devices)
  8. Analytics (track KPI's)
  9. Call parking & monitoring (communal panel to place calls & monitoring for security)

Common Add-Ons:

  • Video conferencing & live chats 
  • Conference calling 
  • CRM integrations (examples: Monday.com & Hubspot.com)

Tips for Choosing a VoIP System:

  • Use free trials & demos
  • Consider communication channels & anticipate call/text needs
      • Hardware or software?
      • Is SMS and video required?
      • How many calls/texts will employees be making/receiving per day?
  • Check routing features 
  • Consider CRM integrations 
  • Prioritize value over cost 

Average Cost of VoIP vs. Traditional Phone Systems

 

VoIP Traditional Phone Systems
Initial Setup: $0-$60 per line Installation Fees: $50-$100 per drop 
Monthly Cost: $19-$45 Deposit: $100-$500
Device Cost: $80-$600 per IP phone  Maintenance Contract: $1000+ annually
International Calls: $0-$0.01 per minute International Calls: $1+ per minute
Maximum Total (one line): $1,200 for the year including initial setup & device costs

Maximum Total (one drop): $1,600 for installation, deposit, & contract

 

Best Business Types for VoIP:

  • Hybrid or work-from-home businesses
  • Businesses with multiple locations or departments 
  • Sales or support services 

Many business owners are too intimidated to switch from a traditional phone to a VoIP system, but the transition is surprisingly easy. VoIP integrates into your business, which means you can keep your current business number and easily set up extensions. The systems advanced features, scalability and flexibility makes VoIP a great solution for any business. 

Sources 

What Is VoIP? The Ultimate Guide – Forbes Advisor
https://www.forbes.com/advisor/business/software/what-voip/ 

What Is VoIP? The Definitive Guide to VoIP in 2025
https://www.nextiva.com/blog/what-is-voip.html 

Top VoIP Solution 2025
https://www.topvoipsolution.com/?utm_source=bing&utm_term=best%20voip&utm_ad=1150090847076492&utm_medium=kwd-71881363984230:loc-4109&externalcampaign=627212964&matchtype=e&ts=&locphysicalms=80283&from_ad=1&c=71880831281035&k=71881363984230&bag=Voip&bcamp=Bing%20BusinessVoIP%20Exact&bidm=be&bnet=o&bd=c&bmobval=0&bt=search&topic=high_quality&binterest=&bfeedid=&query_string=top%20voip%20solution&tt=providers&lang=&camtype=&msclkid=5f608d0263cb1252e5c9e582b7f9a5ba&utm_campaign=Bing%20BusinessVoIP%20Exact&utm_content=Voip 
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