VoIP vs Virtual Phone Systems: Which Is Best for Your Business?
This article is part of a larger series on VoIP.
Virtual phone systems let users manage and route calls, while voice-over-internet-protocol (VoIP) platforms enable businesses to collaborate via chat or video through their unified communications capabilities. Virtual phone systems are less expensive than VoIP services. However, they lack advanced features like video conferencing and team chat. As a result, the best business use cases for VoIP vs virtual phone systems are:
- VoIP: Better for teams in need of a drop-in replacement for a traditional office phone line or a centralized business communications platform
- Virtual phone system: Better for small teams and solopreneurs looking for a portable business phone number at an affordable price
Learn more about how they stack up on pricing, features, and call quality to determine the best option for your business.
VoIP vs Virtual Phone Systems at a Glance
$15 to $60 per user, per month
$10 to $30 per user, per month
Requires an Existing Phone Line
Typically, inbound only
VoIP and virtual phone systems use the internet for business communications, from voice calling to texting. However, virtual phone number systems, such as Grasshopper, need an existing phone line, like a personal landline or cellular service, to make outgoing calls via a smartphone. VoIP services, on the other hand, do not.
VoIP also provides better call handling and management features, integrations, and collaboration tools. Because it’s a standalone system, you don’t need to maintain a secondary phone service to use it. This can make VoIP systems the less expensive option, even though virtual services appear to cost less, depending on the business.
You can learn more about top providers of both types of calling solutions and other aspects to consider about VoIP technology to consider in our guide on the best business phone systems.
Best for Cost-effectiveness: It Depends
On the surface, virtual services cost less than VoIP per user. For instance, the cost of five lines from Grasshopper—a virtual phone system—is $80 monthly with annual billing, whereas with a VoIP service like RingCentral, you’ll pay $99.95. As your team grows, you can add an unlimited number of user extensions to Grasshopper services, allowing employees to share phone lines without increasing your costs.
You’ll spend just $5 to $10 to add a sixth line to Grasshopper. In contrast, you’ll pay $19.99 to add additional lines or users to RingCentral. Like virtual phones, VoIP supports user extensions, but anyone making external calls must have a dedicated VoIP number requiring one license or subscription per user.
When you look at total operating costs, virtual phone systems are only less expensive if you, and those on your team, intend to make the majority of your business calls from a personal mobile device, mobile app, or an individual home office setup rather than from a centralized brick-and-mortar location. It is also worth noting that additional phone numbers, such as vanity numbers or toll-free numbers, can also increase your total cost as most systems only include a single phone number for free.
Want more details about what it takes to add a second phone number to your cell phone? Check out our guide on what is a virtual phone number.
Best for Call Quality: VoIP
Virtual public branch exchange (PBX) systems like Grasshopper don’t mention high-definition (HD) voice as a feature, whereas standalone services, such as RingCentral and 8×8, provide HD voice and video. HD voice uses wideband audio technology, offering a broader range of frequencies for more natural-sounding conversations. It’s typically available with cell phone service, so you’ll have HD voice if you’re making a virtual call from your mobile.
Virtual phone platforms are built to utilize your cell signal first and send outbound communications through your cellular or landline service. Like VoIP, softphone applications let you switch seamlessly between cellular and Wi-Fi calling to ensure a top-notch connection. However, whether you use a small business VoIP services or a virtual phone system, your overall call quality depends on the speed of your internet connection.
If you are not sure if your internet connection can support a VoIP service, you can test it using our internet speed test below. You can also learn more about your results in our more detailed VoIP speed test article.
Best for Call Handling & Management Features: VoIP
VoIP services have the edge over virtual phones as they have more call handling and management options. For instance, VoIP platforms offer a dial plan editor to route higher call volumes based on caller identification, skills, or agent talk time. You can also set up call queues, which are like waiting lines, with music and announcements. Many VoIP providers include a multilevel auto-attendant, allowing users to create multiple menus for different scenarios.
Virtual phones tend to have fewer call handling and management features, and solopreneurs and small teams will find many virtual phone systems capable of handling a low volume of calls. With Grasshopper, you can route calls according to business hours and set up extensions for different departments. Incoming calls ring multiple devices simultaneously, so your team can pick up the line from their preferred hardware.
Best for Advanced Features: VoIP
VoIP’s higher price tag includes advanced call routing features for companies with larger teams and call volumes. Video conferencing also is pretty standard with VoIP phone systems, and even entry-tier packages offer integrations with Google and Microsoft contacts.
Beyond base plans, VoIP provides customer relationship manager (CRM) integrations, artificial intelligence (AI)-based analytics, and recording options for calls and meetings. These tools help businesses gain visibility into communications and keep customer information updated in databases.
Likewise, VoIP phone features include things like call monitoring that allow supervisors to listen to calls, whisper suggestions to agents, and take over the line. Virtual phone systems don’t typically offer call monitoring unless you’re on a three-way call, and you can’t barge on a line. Instead, you’ll need to transfer it to another extension.
Most virtual phone platforms don’t include integrations, although they may work with third-party VoIP services. For instance, you can forward Google Voice or Skype calls to your Grasshopper virtual number. While you may find some unique features, like Grasshopper’s auto-text reply, virtual phone systems don’t come with sophisticated tools.
Best for Scalability: VoIP
VoIP is the clear winner in this category, giving users more options to expand the platform’s capabilities. For example, you can use an entry-tier plan for basic features and add call center agents or supervisors without switching phone providers or downloading a new application. Most VoIP systems also sell or lease hardware, allowing you to add desk phones and headsets as your company grows.
VoIP is also preferable if you already have existing hardware, as many VoIP services are compatible with different internet protocol (IP) devices. In contrast, platforms like Grasshopper are not the ideal solution if your business has already invested in a hardware system. Virtual phone number providers are recommended for those who have an existing cell plan or landline.
Standalone VoIP services support unified communications (UC) because the platform puts voice, video, chat, faxing, and text channels on a single application. This feature helps growing businesses manage multiple communication methods, whereas a virtual phone system doesn’t offer video conferencing or collaboration tools in most cases.
Best for Collaboration: VoIP
VoIP is a far better choice for companies wanting their onsite and remote teams to collaborate online. A VoIP UC platform places multiple communication channels in one spot, whereas virtual phones are usually limited to voice and text. VoIP systems include messaging channels similar to Microsoft Teams or Slack, letting users interact as a group or one-to-one. You can switch to a video meeting or voice call with one click.
In addition, VoIP provides engagement tools, such as meeting and chat polls, breakout rooms, and whiteboards. You can also manage projects and assign tasks through your softphone application. Teams can pull up a document during a meeting and annotate it in real time or pin files in chat rooms.
Virtual phone users can send a link to a file via text, but that’s the extent of it. You can’t share your screen during a meeting or use a virtual phone system as a virtual workspace.
Frequently Asked Questions (FAQs)
Is hosted PBX the same as VoIP?
VoIP refers to any phone call made over the internet, and services can have one line or 100 or more. Hosted or cloud-based PBX means your VoIP users can answer calls from several VoIP lines. Most VoIP services include PBX features.
Can you call internationally with a VoIP or virtual phone system?
Yes, you can use the virtual number that comes with your VoIP services to call internationally. You may need to enable this feature per user and add credits or a deposit to make calls worldwide. However, some VoIP providers also offer unlimited global calling plans, such as 8×8, GoTo Connect, and Vonage.
Will desk phones work with VoIP or virtual systems?
Many cloud-based or virtual phone systems will work with internet protocol (IP) phones. Your device must be connected to the internet and be configured for the VoIP server. Another option is to forward incoming VoIP calls to a landline number with an office phone device. Or you can add a VoIP gateway or analog telephone adapter (ATA) to use traditional hardware with your business phone system.
Solopreneurs and small teams with a handful of people who want a second number for their mobile phone may prefer cost-effective virtual phone solutions. However, growing businesses with higher call volumes will benefit more from a VoIP unified communications platform that supports multiple communication and collaboration channels.