Buying VS Leasing Business Phone Equipment

While Voice over Internet Protocol (VoIP) phone systems are extremely cost-effective when compared to their landline counterparts, VoIP equipment can add a financial burden to businesses. Fortunately, you do have several choices when it comes to buying your VoIP equipment.

In this post, we’re going to break down renting, leasing, and purchasing VoIP equipment, as well as some alternatives if none of these options fit the bill.

And if you haven’t switched to VoIP yet, what are you waiting for? Upgrade to one of the best VoIP phone systems and see how VoIP can benefit your business.

Types Of VoIP Equipment To Buy Or Lease

One of the biggest costs of a VoIP system is equipment. You can buy, lease, or rent many types of VoIP equipment. This includes:

• IP phones, including corded, cordless, and conference room models
• Adapters for analog phones
• Speakers and intercoms
• Video conferencing monitors
• Modems and routers
• Hands-fee headsets

Pros & Cons Of Buying VoIP Equipment

Here’s what to consider before buying your VoIP equipment.

If you opt to buy your VoIP equipment, there are several benefits. The first is that you will own your equipment outright. You don’t have to worry about making monthly payments — it’s simply yours to keep.

Buying your equipment also comes with a lower overall cost of ownership. When you buy your equipment outright, you’ll see significant savings when compared to paying monthly rental fees.

If you buy your own equipment, you’ll have a larger selection. You’ll be able to purchase from your provider, a retailer, online marketplaces, or anywhere that new or used phone and equipment are sold. You’ll be able to compare pricing, shop different brands and models, and find the right options for your business.

On the flip side, the initial cost when purchasing is much higher — although keep in mind that the overall cost of ownership can be significantly lower.

If you’re not in a position to pay a large amount of money upfront, renting may be a better option.

You also won’t be able to upgrade unless you purchase new equipment. If you rent or lease, some carriers and retailers allow you to trade in your old equipment and upgrade at no cost (or for a low upfront fee).

Pros & Cons Of Leasing VoIP Equipment

Keep these benefits and drawbacks in mind if you’re thinking about renting or leading VoIP equipment.

One of the biggest benefits of leasing or renting your equipment is that there are low upfront costs. In some cases, you may not have to pay anything at all until you receive your monthly bill. This is especially useful for businesses that have to purchase a lot of equipment but don’t have the funds to purchase outright.

Depending on where you rent or lease your equipment, you may be able to trade in your equipment later for upgraded models, similar to how you can trade in your old cell phone. Note that not all lessors offer this option, so make sure to ask.

Unlike other types of financing, it’s usually easy to get approved for an equipment lease. This is especially helpful for businesses with low credit scores or other challenges. However, if you have good credit and an established business, you may be able to qualify for more affordable funding options (more on that later).

While renting or leasing seems like the better deal initially, the overall cost is typically much higher than simply purchasing your equipment outright. You could potentially pay hundreds of dollars more, as we’ll see later in an example.

You’ll also have a more limited selection, as not all retailers and VoIP providers offer leases and rentals. You’ll have to choose from the options offered by your chosen lessor.

Finally, you’ll potentially be locked into a long-term contract. This could be especially troublesome if you encounter problems with your provider and are looking to switch.

The Cost Of Buying VS Leasing VoIP Equipment

While it’s easy to simply focus on the upfront costs of buying versus leasing or renting equipment, it’s important to look at the overall costs incurred.

Let’s take a look at an example using top-rated VoIP provider RingCentral. Note that this pricing applies as of August 2024 and is subject to change.

The Poly CCX 700 model IP phone has a list price of $676. The phone is currently on sale for $636.

The rental price of this phone is $26.50/month. Per RingCentral’s rental agreement, you can purchase the phone at a discount after making your monthly payments for at least 12 months. The longer you’ve rented the phone, the bigger the discount. For the purposes of this example, we’ll use the following:

• After 12 months, purchase price is 70% of the list price
• After 24 months, purchase price is 60% of the list price

If you rent the phone for 12 months at $26.50/month, you pay $318 in rental fees. To purchase the phone, you must pay 70% of the list price of $676. This amounts to $473.20. Add this to the rental fees you’ve paid, and the total cost of ownership is $791.20.

If you rent the phone for 24 months at $26.50/month, you will pay $636 in rental fees. When you purchase at 60% of the list price, you will pay an additional $4o5.60. Add the rental fees and the purchase cost together, and the total cost of ownership is $1,041.60.

Compared to the sale price, you can see that renting results in a significantly high cost of ownership, especially if you rent for a longer period of time before purchasing the equipment outright.

Additionally, this does not include taxes, $25 restocking charges if you return the equipment, the cost of shipping and returning the equipment if you decide to no longer rent, and any other fees.

Should You Buy Or Lease VoIP Equipment?

Whether you should buy or lease your VoIP equipment depends on the unique needs of your business.

Consider buying VoIP equipment if …

Consider leasing VoIP equipment if …

Alternatives To Buying & Leasing VoIP Equipment

Buying, leasing, or renting equipment may not be the right solution for your business. Instead, consider one an alternative.

If you have analog phones from your old phone system, you can save money by purchasing analog telephone adapters (ATAs). For less than $50, you can use these adapters to use analog phones with VoIP systems.

If your business doesn’t rely heavily on a phone system, you may not have to purchase equipment at all. Instead, you can download apps from your VoIP provider to make and receive calls, use other communication tools, and manage your phone system from your smartphone, tablet, laptop, or desktop computer.

Finally, you could consider another form of financing. Equipment financing is easy to qualify for and may offer better pricing and repayment terms than renting your equipment.

You can also explore the best small business loans to find better rates and terms — especially if you operate an established, profitable business and have a solid credit rating.