sip service provider

Understanding the Cost of using an SIP Service Provider

You have decided that it is time to invest in a SIP service provider, but what about the cost? Have you weighed the cost against the business benefits?

Most SIP trunking solutions cost less than 50% of traditional analog phone providers. To maximize your savings, it’s important to get specific pricing information from each of the SIP service vendors you may be considering.

Here’s a quick guide to analyzing SIP service provider costs.

One Time Costs (OTCs)

Many SIP service providers charge one-time, upfront fees to start your service. Calculated them into your investment to get a better picture of the ROI per vendor.

Some of the one-time costs are service-based; others are hardware-related.

Set-up Fees

Some vendors charge an initial set-up fee to start your service. Other vendors may hide the charge as part of their monthly service charge. These fees can often be negotiated, so ask your sales rep if these can be waived or reduced.

Number Porting Fees

Both residential and commercial customers can take their phone numbers with them when they move or change service providers based on a provision in the Telecom Act of 1996.

Porting can be very time-consuming. Depending on how many numbers your business is porting, the process may take several days.

Most providers charge to port numbers. Many of them will provide a discount on the port fee per line based on the volume of numbers that your business is porting.

Phone Lines

If your organization has grown, you may decide that you need additional ten-digit phone numbers (DIDs).

Service providers will charge you a one-time fee to secure each number.

Before you purchase more DIDs, evaluate if each employee will need their own phone number. Some employees may need just an internal extension based on their function.

Consider your network design when setting up your SIP trunking service. Make sure to design a system that is the most efficient, reliable, and cost-efficient for your business.


Each user will need a handset. Depending on the type of handset and the vendor, costs per handset will vary.

Feature capability also impacts handset cost. A basic phone with only one or two lines will be far less expensive than a conference room model that is feature-heavy.

Consider the need for the following features when selecting user equipment:

  • 3-Way Calling
  • Automatic Call Back
  • Call Hold
  • Call Forwarding
  • Call Transfer
  • Call Waiting
  • Intercom
  • Inside/Outside Ringing
  • Speed Dial

Handsets will range from $200 to over $1000.

PBX Reconfiguration

If your organization has a key system or PBX for your old PSDN network, you will need to update it to become SIP compatible.

Purchasing a gateway or IAD (Integrated Access Device) will allow you to connect your PBX to the new IP-based phone system.

If your PBX is IP-enabled, you won’t need to buy an IAD.

Monthly Recurring Charges (MRCs)

The key to comparing different SIP Service Providers is analyzing the differences in your monthly fees.

Many providers don’t charge set-up or other one time fees, but they will often roll those costs into your MRCs.

SIP Trunking Fees

Monthly SIP trunking fees will depend on the number of SIP trunk groups you have and the number of channels that you’ve activated on those trunks.

A quick review of SIP technology may be needed to get a better understanding of SIP pricing models.

The SIP trunk is a pipe. Depending on the provider, that pipe will hold a certain number of channels or lines. Some SIP trunks come with 24 channels while others may come with more or less.

Each line or channel allows for one concurrent call.

Depending on your call volume, you’ll select the number of trunks and the number of channels.

A traditional ratio of users to channels for companies of 100 employees or more is 3:1.

This ratio breaks down for organizations with less than 50 employees. The smaller the office, the more likely people will be on the phone at the same time.

Most SIP service providers will only charge you for the channels you use. So if your provider offers trunks with 24 channels, but your business only needs 16 of those channels, you won’t pay for the extra unused eight channels.

Think about your monthly SIP trunking fees as paying for access or capacity of your voice network.

Calling Plans

SIP trunking fees cover the cost of access or capacity of the trunks. Calling plans cover the actual cost of the traffic you send through those trunks. You’ll need to decide what type of calling plan will work best for your organization.

There are two primary types of calling plans available:

  • Metered Plans – These plans allow you to pay by the minute for all inbound and outbound calls. Businesses that need more flexibility in their week to week calling benefit from metered plans.
  • Channelized Plans – Also known as “unlimited” plans, these offer the most consistent monthly bills. While they often cost more than metered plans, some providers bundle in benefits to these plans, like free and unlimited calling to the U.S. and Mexico.

Internet Connection

SIP Trunking transmits your voice volume over the internet. Because of the way in which it places calls, your company may need more bandwidth to handle the increase in usage.

Here’s a simple equation to estimate the amount of bandwidth you’ll need:

Number of concurrent calls during peak business hours X 85 Kbps = Bandwidth needed in Mbps to handle the traffic

You may incur some additional costs to increase your bandwidth. However, it’s important that your business has the proper speeds and capacity to function efficiently.

Overall Costs of a SIP Service Provider

It’s important to review both the one-time charges and monthly-recurring fees each vendor charges. Other factors, such as available features, should also be considered.

Quality of service is critical. While it may not have a price tag associated with it, QoS should be weighted equally when choosing a SIP service provider.

We’d love to talk with you about providing high quality, low-cost SIP service, so get in touch with us today to learn more.

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