As you searched for the best option for your business’s next phone system, you undoubtedly came across cloud-hosted phone solutions. 
Also referred to as UCaaS (Unified Communications as a Service), cloud-hosted platforms are an increasingly popular choice for businesses looking for a flexible and reliable way to communicate.
And if you’re reading this, you’re at least intrigued by the various benefits UCaaS offers, such as not requiring additional physical infrastructure and the ability to make calls anywhere with an internet connection.
However, the price is one of the most alluring aspects of a cloud-hosted calling system.
When you sign up for UCaaS, you can expect a lower upfront cost than a traditional, on-premises deployment. Plus, monthly fees are predictable.
How much you’ll spend on those recurring charges varies, but you can typically expect to pay between $16 and $65 per user per month. Here are some of the factors impacting the range:
- Licensing agreement
- Calling plan
- Devices for calling
- The amount of implementation assistance you require
You’ll find information for some of the leading UCaaS providers – Cisco Webex, Microsoft, Nextiva, and Ring Central. You’ll only find these four options in this article because they are the vendors The KR Group has the most experience working with. However, there are other vendors not represented in this article.
Cost of Cloud-Hosted Calling Licenses
UCaaS providers understand that one size does not fit all when it comes to calling licenses. So, they offer a variety of plans to meet the needs of different types and sizes of companies; even organizational structure can play a role in determining the right license type (or types) for your business.
Of course, these tiers come at different price points based on the number of features included.
The best way to find the ideal licenses for your users is to work with a UCaaS value-added reseller, but the following information will give you a high-level overview of what each vendor includes in their license tiers.
Cisco Webex license options
If you’re already familiar with Cisco or Webex’s business phone solutions, continuing to use them as a vendor means you can keep using a system you’re already familiar with.
You’ll have all the tools you need to effectively communicate internally and externally via multiple mediums.
Cisco Webex breaks up its phone licenses into two categories:
Option 1: Webex Calling Enterprise Agreement
If you use other Cisco services, such as Cisco DNA, data center, and security, a Cisco Enterprise Agreement is likely the best option.Â
It consolidates your other subscriptions and renewal dates into a single agreement, so you don’t have to worry about keeping track of subscriptions for every part of your IT environment.
This option does come with a 250-seat minimum purchase, so you’ll still have to pay for that number of users even if you only have 50 or fewer employees.
Along with the license fee, you’ll pay $2.50 per user per month for an outbound calling plan, $0.0329 per phone number per day for Cisco to host them, and $43 per month per location for E911 configuration. If you choose the calling and meeting bundle (as opposed to calling only), you’ll also pay an additional $8.50 per user per month.
Per User Per Month Cost: Starting at $13.25
Option 2: Webex Calling Named User
If you’re a small- or medium-sized organization that doesn’t need 250 or more calling licenses, your other option from Webex is the named user agreements.
There are two types of named user licenses, ranging in price from $7.50 to $12.50 per user per month.
For your users, you’ll generally select Named User Professional licenses. For an additional $17.75 per user per month, you can add meeting capabilities. Â
Per Seat Per Month Cost: $12.50
Alternatively, Named User Places or Workspace licenses are meant for lobby phones, workshop floor lines, or other phones that are exclusively meant for calling. That’s because this is the only feature this license includes.
Per User Per Month Cost: $7.50
For both tiers, you’ll also pay $3.50 per seat per month for an outbound calling plan, $0.0329 per phone number per day for Cisco to host, and $43 per month per location for E911 configuration.
Microsoft 365 & Office 365 license options
Microsoft and Office license options give you varying degrees of access to productivity apps (Word, Excel, PowerPoint, etc.), email, calendar, scheduling, meetings, calling, chat, analytics, and security. But we’re only focusing on the calling options in this article, and you can learn more on Microsoft’s website.
Additionally, this article includes the most popular license options for UCaaS, but there are several other packages Microsoft offers.
Option 1: Microsoft 365 E3
This license type includes many of the features you’ll need for a cloud-hosted collaboration deployment, including Microsoft Teams, online meetings, screen sharing, etc. Audio conferencing is available via a no-cost add-on license, which includes unlimited toll dial-in, 60 minutes/user/month dial-out, and Operator Connect Conferencing. However, you will need to include the Teams Phone add-on in your deployment of this license to make outgoing calls.
Per User Per Month Cost: $36
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Option 2: Microsoft 365 E5
With this option, you’ll have all the same features as the Microsoft 365 E3 license (option 1). Plus, advanced security, compliance, voice, and analytical capabilities.
As it relates to voice, Microsoft 365 E5 licenses include Teams Phone, and audio conferencing is available for unlimited toll dial-in and 60 minutes per user per month dial-out to Zone A countries and Operator Connect Conferencing.
Per User Per Month Cost: $57
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Option 3: Microsoft 365 F3
This license offers a pared-down feature set compared to the Microsoft E-series licenses (options 1 and 2). Microsoft markets the 365 F3 licenses for frontline workers, giving them the necessary tools without the extra bells and whistles for a competitive price.
For voice features, Microsoft 365 F3 licenses give users access to Teams, unlimited chat, online meetings, screen sharing, custom backgrounds, meeting recordings, and priority notifications.
Like the Microsoft 365 E3 license, audio conferencing is available via a no-cost add-on license, which includes unlimited toll dial-in, 60 minutes/user/month dial-out, and Operator Connect Conferencing. However, you will need to include the Teams Phone add-on in your deployment of this license to make outgoing calls.
Per User Per Month Cost: $8
Option 4: Office 365 E3
Office 365 licenses have fewer security and management features compared to their Microsoft 365 license. When it comes to UCaaS abilities, Office 365 E3 licenses offer the same features as Microsoft 365 E3 licenses. However, the omission of some of the other features means these licenses have a lower price.
Per User Per Month Cost: $23
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Option 5: Office 365 E5
Like the previous options, Office 365 E5 license offers the same UCaaS features as Microsoft 365 E5 licenses (option 3), sans the security and management options. Compared to Office 365 E3 licenses (option 4), you’ll have access to Teams Phone.
Per User Per Month Cost: $38
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Nextiva license options
If you’re looking for a straightforward, easily implemented solution, Nextiva is one of the options your IT consultant may bring to your attention.Â
Most notably, the company prides themselves on 99.999% uptime, which equates to just over 5 minutes of downtime per year. Other essential elements of Nextiva’s UCaaS solution include an emphasis on monitoring and security.Â
Nextiva breaks its UCaaS licenses into three tiers, giving you options to find the best fit for your needs.
Option 1: Essential License
As the name suggests, this option gives you the essentials for cloud calling, which includes unlimited calling in the U.S. and Canada, Outlook and Google contact integration, and faxing.
Per User Per Month Cost: $18.95
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Option 2: Professional License
The next tier for Nextiva’s UCaaS licenses is the professional options. This includes all the features of essential licenses and adds unlimited conferencing, screen sharing, mobile app access, and SMS.
Per User Per Month Cost: $22.95
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Option 3: Enterprise License
The highest tier Nextiva offers is their enterprise license, this includes all the features of professional licenses plus unlimited conference participants, conference recording, Microsoft Teams Integration, and single sign-on (SSO).
Per User Per Month Cost: $32.95
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Ring Central license options
Another option you have for a straightforward UCaaS deployment is Ring Central. The company highlights how their product is ideal for mobile workforces, easily scalable, and integrates with dozens of other applications.Â
With Ring Central, you have four choices for license types, and you’ll find an ideal option to meet your budget and collaboration requirements.
Option 1: Essentials
The entry-level for Ring Central’s UCaaS licenses offer the basic features needed for calling, including unlimited U.S. and Canada calling, SMS, mobile apps, and faxing.
Per User Per Month Cost: $19.99
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Option 2: Standard License
The next option is a standard license, which includes the fundamental features of essential licenses and adds video capability, unlimited audio conferencing, Microsoft 365/Google/Slack integration, 24×7 support, and meeting rooms.
Per User Per Month Cost: $27.99
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Option 3: Premium License
The third choice, premium licenses, includes even more features, such as single sign-on, hot desking, CRM integration, and analytics. Of course, this is in addition to the features of standard licenses.
Per User Per Month Cost: $34.99
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Option 4: Ultimate License
This is the option you’ll choose if you want all of Ring Central’s available features. Most notably, this adds device alerting and reporting and unlimited storage to the feature set of premium licenses.
Per User Per Month Cost: $49.99
Cost of UCaaS Calling Plans
Your licenses will likely only be one line item in your total cost of cloud-hosted collaboration.
They’ll give you and your users access to the feature set you choose. However, since your cloud-hosted phone solution isn’t routed to a traditional phone network (PTSN), you’ll need to pay for a third-party solution to make that connection.
If you choose a Webex or Microsoft license, you’ll have two options for dial tone:
Direct Routing
With this choice, you’ll choose a telephony provider and implement a session border controller (SBC) and SIP Trunks to connect your cloud-hosted platform to dial tone.
You’ll have a good deal of control, can research the different options for each component, and make decisions based on what you know will work for your IT environment.
Often, this is the preferred option for organizations wanting a high level of control or if you’re locked into a phone service contract. However, if you’re a larger organization, you could save money by paying the one-time fee for a SIP trunk or PRI instead of recurring per-user per-month fees.
You’ll pay between $250 to $450 per month for a SIP trunk direct voice traffic to your UCaaS vendor. However, the cost could increase if you want to purchase a gateway to route calls from your offices instead of directly from a provider.
Calling Plans/Bundled PTSN
If you’re moving to a cloud-hosted collaboration solution to simplify your phone system, you likely don’t want to make another decision on a vendor to use.
With a calling plan, your UCaaS provider has a verified integration with a telephony provider, and they’ll connect your phone solution via that provider.
You don’t need an SBC or SIP Trunk because your cloud-hosted collaboration vendor’s telephony provider handles it.
Ideal candidates for calling plans include those who want to avoid managing additional infrastructure or smaller-sized businesses with capital expense limitations.
Calling plans cost between $2.50 and $8 per user per month depending on which vendor and license you choose.
Separate charges for dial tone don’t exist with Nextiva and Ring Central because they provide you with connection via their numerous partners. Additionally, this means if an outage occurs with the PTSN provider they’re routing your UCaaS calls through, they can switch you to one of their other partner providers for redundancy.
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Cost of Phones for UCaaS Deployment
Another cost you’ll need to consider when implementing a cloud-hosted calling system – or any call system– is the phones you’ll use to make calls.
Your company has a few choices when it comes to this area of your cloud collaboration system:
You can forgo physical phones
One of the benefits of cloud-hosted calling is you can use an app on your desktop or smartphone.
This means you can leverage the existing technology you have and avoid what is oftentimes the most expensive portion of a cloud-hosted calling deployment.
It also gives your users the ability to take their business phones with them anywhere.
For the best audio quality using this option, we recommend you look into reliable headsets for between $100 and $400, which are still less expensive than desk phones.
You can purchase desk phones
The traditional option of desk phones is still a popular option for many businesses, and each UCaaS platform has its own list of compatible phones.
Webex Calling, for example, currently allows 7800 and 8800 series phones. The most basic desk phone, a single-line handset, starts at around $150, and the price can quickly increase to $1,000 or more for a phone with call monitoring, video, and Bluetooth capabilities.
Different UCaaS providers may be compatibility with Cisco, Poly, Yealink, or other devices, and they’re all similarly priced based on feature sets.
You can purchase video phones
If you want to enable your users to make video calls from designated video phones, there are many options with varying degrees of expense. Video-enabled desk phones range between $400 and $600. Meanwhile, external monitor video phones cost around $12,000.
For video conferencing, you might consider a camera kit to provide video for an entire meeting space. These options start at around $12,000 and can scale all the way up to $80,000.
Cost of Labor for UCaaS Deployment
With UCaaS, deployment is less extensive than an on-premises alternative, but there is still some labor involved. 
With an on-premises solution, you can expect at least 60 hours of labor for a workforce of 50 to 100 users, but for your IT consulting company to deploy a cloud-hosted solution, it will take less than half the time.
However, UCaaS primarily uses labor to set up users and devices and provide training. Since generally there is no server or gateway infrastructure to set up, you can save some time and money when it comes to labor.
The cost of labor will vary depending on who is doing the deployment, but since there is less labor involved, in general, you can expect 50 to 75% savings compared to an on-premises deployment.
With IT consulting rates ranging from $150 to $390 per hour, you can expect to pay at least $4,500 for the labor portion of your UCaaS deployment for 250 seats and up. (These fees are most often associated with Webex and Microsoft phone system deployments.)
This estimate is for UCaaS environments without Contact Center, mass notification/IP paging system, and other major integrations. Each of these would require additional time for planning, deploying, and training – as a result, increasing labor costs.
Cost Expectations for UCaaS
If you’ve kept a calculator handy while reading through this article, you can crunch the numbers and anticipate spending between $16 and $65 per user per month for a UCaaS license with dial tone (via a calling plan or direct routing).
Additionally, you might need to pay initial setup fees if you require an IT consultant to set up your UCaaS system. For an organization of 250 users, you can expect a minimum of 30 hours of labor, approximately $4,500 to $11,700. If you require additional hardware, you’ll also need to add that to the price tag.
While we did our best in this article to give you an idea of how much you might spend on a UCaaS system, the best way to find how much you will spend is to work with an IT consultant.
Let us know you’re interested in a cloud-hosted phone system by filling out this form. One of our technology experts will start looking up ideal options for you and then reach out to you to schedule a meeting to review pricing options.