What Is SIP Calling and How Much Should You Pay?

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SIP stands for Session Initiation Protocol, and it allows you to make phone calls over the internet instead of using traditional (PSTN) telephone lines. With all its flexibility and scalability, SIP calling can help homeowners and businesses alike slash costs and communicate better.

Instead of hooking up physical lines and hardware for every employee—which may come with high maintenance and setup fees—a business can give employees the ability to make video calls, chat, and message through their computers. Companies can even hook traditional infrastructure to SIP-enabled phones and devices to leverage this technology with existing infrastructure.

In this blog post, we’re going to break down the basics of SIP calling, hash out its benefits for businesses, and help you understand how much you should expect to pay for this service.

How SIP Calling Works

Let’s start with the basics. SIP is a signaling protocol that makes online communication possible. SIP calls utilize your existing internet connection to convert analog voice signals into digital packets and send them to a receiving party across the internet. This way, you can make video calls or even chat using your computer or smartphone using a softphone app.

Comparing SIP to the traditional phone system (PSTN) is like comparing old and new ways of communication. Unlike traditional PSTN phone systems, SIP calling doesn’t require expensive hardware or physical phone lines. You can also save significant money on long-distance and international calls, as SIP calling rates are often much lower than traditional phone rates.

Another benefit of SIP calling is its scalability. With traditional phone systems, adding or removing phone lines can be complicated and expensive, and phone lines and numbers are location-based.

However, with SIP calling, businesses can support remote workers and open virtual, location-independent offices because SIP phone systems run in the cloud.

SIP overview graphic from Nextiva.

Is SIP Calling the Same as WiFi Calling?

Not quite. SIP and WiFi calling may sound similar because you can call over the internet, but they have their differences. WiFi calling refers to talking over a wireless internet connection, usually within a limited area.

But with SIP calling, you can connect with a WiFi connection, an internet landline, or even a SIP-enabled phone. So, neither your physical location nor the type of internet connection comes into play.

Options to Enable SIP Calling

Okay, so we now understand that SIP calling works over the internet and can even give traditional PBX phone systems VoIP-like abilities. But how do you set up a virtual phone system?

To start using SIP calling, you must either link your PBX phones to a SIP system or buy a SIP-enabled VoIP phone. You’ll also need to choose between a self-hosted SIP server or a cloud-based host.

If you’re linking your traditional phone lines, you will set up something called SIP trunking. First, you’ll need to select a trunking provider and purchase a SIP trunk. The trunk is the virtual line connecting your phone system to the internet.

Next, you will configure your PBX to work with the SIP trunk. The setup process can be technical and complex and involves managing an on-premise server. That’s why this option only makes sense if you have a technician who can install and provide upgrades and maintenance on your SIP systems in the future.

The other, easier way to make SIP calls involves using a hosted phone system–or, in other words, a service that’s managed by someone else. For most small businesses and homeowners who have limited resources or don’t have a staff technician, a hosted solution could be the best solution.

Average Costs of SIP Calling

Now, let’s discuss the million-dollar question: How much does SIP calling cost? As you might imagine, the pricing depends on your service provider and the features you need.

For example, homeowners who want to take advantage of SIP calling won’t have to shell out much since most people already have an internet connection at home or work. There may be other upfront costs—for example, a VoIP phone and initial plan setup—but after that, you could expect to pay $10 to $50 per month, depending on the number of lines needed and which features you want.

Small businesses could expect to pay more as their basic setup fees and VoIP service plans will likely be for a company with multiple employees rather than a single family. First, there would be the SIP phone purchases, possibly a SIP server with trunking, and then setup fees. These costs vary based on the service provider and the hardware or software used.

Many VoIP service providers charge based on the number of phone lines or extensions needed, so naturally, more lines mean higher costs. However, a provider may offer a discount if you purchase in volume. 

Another variable to consider is your calling plan, which usually runs between $20 to $50 per line per month. Some plans charge by the minute, while others include unlimited calling. Lastly, call plan pricing varies based on the features you need, with some companies offering unlimited plans while others tout add-ons for extended flexibility.

Enterprises and organizations can take note of the above pricing structure and expect to err on the higher end. However, you can reduce your overhead by opting for hardware like SIP headsets instead of desk phones, especially in call centers. This choice will also give your employees more freedom and comfort while they work.

So, while there will be a few upfront costs for setting up your systems, the long-term savings and benefits of SIP calling far outweigh the initial investment.

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