Leasing vs. Buying Phone Systems for Business

Options for Buying Phone Systems for Business

What used to be a simple purchase for a small and mid-sized business has evolved into many options: on premise VoIP, hybrid VoIP installations, cloud based VoIP and even a traditional phone environment are still applicable in 2015 and the years ahead.

On top of these innovations in the telecommunications industry are how phone systems can be purchased. For consumers, leasing has often been the only choice for smartphones, until Verizon joined T-mobile in ending the practice of 2 year contracts and subsidized devices.

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Although for businesses, this isn’t likely to happen. Entire companies have been created in the last 5 years, simply by offering a lease option. Typically, cloud based VoIP re-sellers or hosted VoIP companies operate on a lease cycles only and advertise a low monthly cost per phone or even user.

There are a variety of reasons why leasing a phone system can be a better option than buying and vice versa. In addition, buying a used phone system can deliver similar benefits as leasing and financing offers a final option for small operations and entrepreneurs.

Leasing a Phone System

Pro 1: No upfront costs

Typically the biggest incentive for a company to choose leasing is to avoid all up front costs. Most companies purchase phone equipment during an expansion, new office move or simply to replace outdated technology. All of these situations involve costly overhead in a short amount of time. Leasing eliminates added financial stress.

Pro 2: Afford the latest equipment and advanced phone features

Just like with a car, leasing allows for brand new equipment with all the bells and whistles. If your business and employees expect and rely on the latest phone technologies and features, leasing can help make it affordable. Leasing also makes phone upgrades, repairs and expansions a cinch, and possibly included every few years in your contract.

Pro 3: Regular bill, tax deductible

For leasing, the cost is aligned with each month of business operations and revenue, ensuring positive cash flow. Although both leasing and buying are tax deductible, leasing is tax deductible each quarter and its cost is regular and expected.

Buying a Phone System

Pro 1: More options

Many companies and providers of leased phone systems only offer cloud based VoIP packages, which is a total reliance on the cloud where all communication is handled over an Ethernet connection.

The reasons for this, are cloud based VoIP has a low installation cost already and maintenance is carefree, maximizing profits for the VoIP provider.

However, cloud based VoIP isn’t always the best option for every business. Many businesses rely on traditional phone lines for security, reliability, a current office setup, call quality or just as a backup to outages. Buying a phone system gives you access to all setups and many more c2mtech partners. Would you lease a car if the only option was a Toyota Corolla?

Pro 2: Flexible payment

Buying a phone system does carry a steep upfront cost, but payment will not continue indefinitely like in a leasing contract. In addition, leasing providers frequently charge monthly per user or phone handset. For a mid-size and enterprise business, paying per employee each month is not an affordable option and would actually increase overhead.

The cost to purchase a phone system goes towards the equipment depending on the setup (PBX, PRI, server or cabinets, phone handsets, wiring) and labor for installation. Many phone installation providers do offer ongoing support, upgrades, training and repair services as an additional cost.

Pro 3: Added autonomy

In certain industries such as finance and healthcare, self-reliance is not only expected, but required. Owning a phone system and using an internal IT department for support, repairs and upgrades can be safer and more secure. Since most leasing options require cloud based VoIP, servers and data is remote and off site. A reliance on the VoIP provider for customer support can be an additional hassle and it’s possible your business isn’t their biggest priority.

Buying a Phone System with Financing

A third option is to buy a phone system from a provider that offers financing. This eliminates the high cost outlay of phone equipment, plus setup, and includes regularly scheduled payments until the debt is fully paid. Interest is often negotiable, depending on how much principle is paid up front.

A better option than leasing, owning the system and paying a small fee in interest is a lower long term cost than paying for equipment and service indefinitely.

Buying Used Phone System Equipment

A fourth option is to buy used and refurbished. Get a great deal on new equipment that has had some form of defect in the past and save 10 – 20% on the total cost. Older equipment can also be available at an even lower cost, yet it likely won’t offer many features expected by employees.

c2mtech offers a variety of used phones from many brands as an option for more budget conscious customers. Used phones can also be a great solution for a small branch or when employees don’t need advanced phone functionality. Used and new handsets and phone system cabinets can be mixed and matched to meet any budget.

Which Option is Best for Businesses?

A phone system is a significant capital investment, but it doesn’t have to be… There are a variety of options for owning and paying for an office phone setup. Which option is best, depends on factors specific to your business: number of employees, number of offices, growth expected, features required by employees for good customer service and more.

Do speak with a provider that offers all setups and options, otherwise you will receive a biased recommendation. At c2mtech, we are the leading provider of telecommunications equipment, services and related technologies in Dallas Fort-Worth, Waco and Houston. c2mtech offers all financing options to customers and deploys all setups: on premise VoIP, hosted VoIP, hybrid VoIP, traditional phone lines, digital phone lines, analog and more!