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Is a Cloud Phone system cheaper than an OnPremise phone system?

This question does not have an obvious answer as there are pros and cons with regards to the costs for both options. To begin with its best to briefly cover what differentiates the two solutions from one another. The biggest difference between these two types of system is how they are deployed. Cloud-based telephony is hosted on and accessed through an internet connection whilst an On-premise solution is physical hardware installed locally on a company's own premises within a data cabinet or comms room. You can read more detail about a cloud solution here and an OnPremise solution here.

OnPremise Phone System

What do I need to budget for?

Let’s first talk about the pros and cons of implementing an OnPremise solution. The main components you will need are:

  • Telephone lines, usually ISDN2 or ISDN30 although some companies will now opt for SIP Trunks 
  • A Telephone System and handsets
  • CAT5 or CAT6 cabling
  • Network Switch / PoE Switch 
  • Support Contract in case anything goes wrong later down the line

The Pros of this type of solution are that you know the cost from the outset and this figure is a fixed amount. You will usually pay for this as either a one off payment, a deposit and balance or a monthly/quarterly payment if you opt to take out a lease purchase/rental to pay for the hardware. This cost is likely to be greater than that of the initial outlay for a cloud phone system due to the additional hardware needed on site however its operational costs tend to be lower over time, plus you own the equipment.

The Cons with regards to the costs of an OnPremise solution are that you have a much higher initial setup cost. You have to factor in the installation of telephone lines, implementing cabling if you don’t have this already. The hardware itself needs to be purchased, installed and you need training. Then there is the ongoing, usually annual, cost for a support contract for the event of any issues and the ongoing rental of the telephone lines and the costs of your phone calls to factor in too. You will find with a cloud solution that most of these costs will disappear as they are no longer needed.

Cloud SML-1
Cloud – What do I need to budget for?

One of the key positives of a cloud solution is its simplicity to deploy. You need far less equipment and a lot of the responsibility for the solution is taken out of your hands as it’s a ‘managed’ service. This means that a lot of the elements of cost you face with an OnPremise solution aren’t even factored into a cloud solution. The only things you need for a cloud solution to work are:

  • Internet connection - read our guide into what is the best business broadband here
  • Handset

It really is that simple! It means that when looking at the pros for the cost of a cloud solution it’s easier to see that there are far lower initial setup costs. You don’t need telephone lines like ISDN, these costs disappear. You often get local, national and mobile calls included in the package so again, these costs disappear. You also don’t need a support contract so no big annual bill to pay just for peace of mind – because this is all included!


For example, a 10 user 8x8 solution would cost you just £10 per user per month plus a FREE phone, thats just £100 per month! You can get more information about pricing and request a quotation for an 8x8 solution here


 FREE Polycom VVX 150* for ALL Users on the 8x8 Cloud Phone System

*8x8 free phone promotion ends September 30th 2019


If you wanted to look at a 10 user MiCloud solution then this would cost just £15.99 per user per month, again with a FREE phone. You can get more information about pricing and request a quotation for a MiCloud solution here.


FREE Mitel 6910 IP Phone* for first 12 months on a 36 month contract for ALL Mitel MiCloud USERS  

*Mitel free phone promotion ends December 31st 2019

The cons to a cloud solution in terms of price is simply that the costs aren’t fixed. You are signed into a contract period and after this time these costs could be liable to change. As long as you choose a reputable company to assist you with your purchase though you will usually find that they are keen to help with these sorts of costs when contracts come round for renewal to ensure you remain a happy customer, something Cranberry really prides themselves on.

When deciding which solution may be best for your business you may have to consider your existing lines and calls contract. If you still have a certain number of months/years left to run on this contract and want to move to cloud then you will need to factor in early termination fees for cancelling the lines and calls contract early. The good news is that Cranberry can include these figures in any comparisons we do so you can see what savings you can still make as usually you will still save money over the duration of the cloud contract despite having to pay the termination fee.

So how do I choose?

Cranberry offer a variety of cloud and OnPremise solutions and can put together pricing for both options that are bespoke to your business so you can do a direct comparison. If you can provide us with any existing phone bills and any existing costs for support contracts etc too then we can ensure you have a detailed breakdown of all the facts and figures so you can make an informed decision for what is best for your business. 

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World Class Phone Systems from Cranberry:

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8x8 Cloud Phone System

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Whether you are a small business or a global brand, Cranberry Communications help organisations achieve their business goals and reduce costs using our Communication Stack (Voice, Data, Wi-Fi & Internet). The dedicated team at Cranberry have a total commitment to your success. 
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