How much does it cost to install a telephone system?

Reviewed by Cristina Miguelez remodeling expert. Written by Fixr.com.

With the advent of new technology and the prevalence of cell phones, many people today use other options for communication than an analog landline phone. Landlines are still available in some areas. However, those who still want a dedicated landline have other choices, like digital service and VoIP (Voice Over Internet Protocol). These options allow you to make calls from your home without using your cell phone or data. Because there are different types of systems and plans available for using them, there can be a wide range of associated costs.

The national average cost for adding new phone service to your home is between $50 and $265. Most people pay around $100 for new service and a new handset. At the low end of the spectrum, you can opt for a VoIP (voice over internet protocol) plan with a setup fee of $20. At the high end, you can pay up to $600 to have new cable strung throughout your home with two new jacks installed and a setup fee for new service.

Cost to Install a Telephone System

Phone System Prices by System

You can have a phone system inside your home in a few different ways. Setup costs vary between $20 to $600. Telephones cost between $20 and $250, depending on the system for which they are made. Most operate the same way, with a headset or receiver, while others can be used via the speakers and microphone on your computer without additional equipment. Each has its own cost for setup, equipment, and ongoing monthly fees. However, remember that sometimes the three types are used interchangeably in conversation, with many people referring to digital phones as landlines and VoIP as digital. A few differences between them influence how they work and how much you will pay.​​

A VoIP Phone System

VoIP systems cost between $20 to $50 to set up. You pay a monthly fee for the service after setup is complete. Monthly fees start at an affordable $6 but increase to $100 a month with extra features. A telephone capable of working with VoIP costs $20 to $100. Voice Over Internet Protocol phone systems are used through your cable or internet provider, your existing network with a downloaded app, or your own dedicated equipment. VoIP uses the internet to make calls, so if your internet goes down or the power goes out, you will lose phone service. However, because you need to already have internet for VoIP service, there is no installation cost, just the account setup, possible app download, and VoIP phone cost.

Landline Phone

The setup cost for a landline costs $20 to $265. Buying a telephone for landline service costs between $20 and $120. Many people today view any phone system inside the home that is not cellular service as a landline. This includes digital, which can use cable internet or fiber optics, or traditional twisted copper wire. If your home is wired with copper, you can get a monthly landline phone for as low as $13. If you need a new line and jack installed, you can expect startup costs of around $150 to $265, followed by a monthly charge from the telephone service provider. Some providers waive the installation fee if you sign up for a monthly plan. If you choose a digital option, you will have separate installation and setup costs with your internet or cable company.

Digital Phone System

If you need equipment for a digital phone system, it costs around $100. If you need cable run through your home to each jack, it costs as much as $600. A telephone for digital service costs between $50 and $250. True digital phone service is via your cable or internet company. They run the cable to the room or jack where you want your phone located. You plug right into the jack or into your cable modem. If you already have cable or internet, you can add phone service for an additional $30 per month.

Telephone System Cost by Part

Setting up a phone line in your home may require the installation of various components, especially if you live in an older home and need a new phone jack or require internet connection equipment like a router or modem. These components range from $10 for the phone jacks and cover plates to $300 for a new cable line. Some new homes are not built with traditional phone lines, so you may require new wiring even though your home is only a few years old. Other homes may need a cable drop or line of cable run to accommodate a digital phone line and connection to the internet. The company that installs your components will let you know which items you need to complete the installation.

Phone Jack

A phone jack costs between $10 and $25. You may score a less expensive installation if you ask your service provider to handle the installation in exchange for signing up for a service contract. Some experienced homeowners may install their own phone jacks, but it is usually easiest to let the professionals handle cable runs and complex installations. If you want to plug a phone directly into any room of your home, either for analog or digital phone service, you need a phone jack or a connection. You might want a phone in the kitchen or an extra line in your home office. Remember that if you do not have a wall where you have the line installed, the installer might need to get creative and run a line through the ceiling or under the floor.

Modem

When you choose VoIP for your phone service, you need an internet connection to support the line. You may need a modem that costs between $50 and $150. If you do not have an internet connection, one of the devices you need is a modem, which connects your devices to the internet in your home via a cable that connects to a jack in the wall. Some internet service providers (ISPs) provide modems at no charge or for a modest monthly fee when you sign up for their service.

Phone

Landlines, digital connections, and VoIP require a telephone, which you might need to purchase at the cost of $50 to $200. Traditional telephones were quite popular for over a hundred years, but they have fallen out of favor recently due to the ease of securing a cell phone. Phones run the gamut from simple analog devices to complex digital handsets. In the past, phones were rented from local telephone companies, but today homeowners simply buy their devices outright.

Router

Routers cost $80 to $120. If you select VoIP as your phone connection type, you need a router. A router takes the internet signal from the modem and broadcasts it around the home for wireless connectivity. Less expensive models are available, but their broadcast range does not always reach an entire home. You can also hardwire a phone connection into the device. Some ISPs rent out routers when they provide service, but it is usually less expensive in the long run to purchase your own router and connect it to the ISP-supplied modem. You can also buy both the modem and router yourself to save money over time.

Cabling Installation

If you choose a digital phone line, you often need a cable connection because digital phone service is a common feature of cable companies. If you do not have a cable connection in your home, you will pay between $200 and $300 for a cable “drop,” which is a length of cable that terminates at a wall jack. Modern installation uses a Cat6 cable, the most common cabling used in residential homes today. Older installations may feature Cat5 cable. Some homes may also have more expensive Cat7 cabling.

New Phone Cost by Type

Many phones can be used interchangeably. They can plug into a jack on a wall for analog or digital or a wire for digital. In either case, sometimes the phone has multiple handsets and can be used wirelessly, with only a charging base that plugs into your system. Using a computer-based service, you can use your computer’s microphone and speakers or purchase a separate headset. Below are some examples of different phones and their costs.

Analog Phone Line

If you still have an analog phone system and need a phone that works with it, most basic analog phones cost between $15 and $50. They can be wall-hung or sit on a counter. You might not even need to purchase a new analog phone. You might have one sitting in a box that was used decades ago and put away once the family upgraded their phones to digital handsets. The nice thing about analog phones is that the technology has not changed in many years, which means they are not an item you have to replace continuously, year after year, when new technology comes out.

USB Phone Headset

A USB phone costs between $15 and $50. If you plan on using a VoIP system that runs using your computer, you can use your computer’s built-in system or opt for a USB headset. This headset allows you to talk over the computer without additional equipment, so you can use a communication app like Skype. Bear in mind, however, that you may need to keep your computer on to use the phone line.

Digital Cordless Phone

Digital phones normally cost between $35 and $200. Basic phones are inexpensive. However, the more expensive options offer several features like having a single base connected to the wall and several handsets located conveniently around the house. Digital phones offer you more options in terms of services and how you use them. One benefit is the ability to plug a single base into the router or equipment and place a different handset in any room you want a phone. This is one of the least expensive options because it means you do not need to run a cable line or have a box inside every room. You just need one connection point, and you can run multiple cordless phones off that point. You can get a single digital phone for $30 or pay between $100 and $200 for multiple phones that run off one base.

Business Deskset

A business phone for your home office costs between $50 and $200. Suppose you need a new business phone for your office. In that case, you can get a desk set or desktop phone that contains additional features that businesses need, including the ability to make interoffice calls and distinct voicemails for each extension. You may find it useful to have an additional, dedicated line for your business that does not interfere with your family’s personal communications. Many of these sets are expandable, so you can continue to add on as your business grows.​

Smartphone

Modern smartphones usually cost between $200 and $1,500. However, getting discounts on smartphones when you sign up for service is possible. It is also possible to get used smartphones at a discounted price. It may sound contradictory to use a smartphone for home phone service, but it is an option some homeowners choose. Those who use a VoIP system in their home may use a smartphone for their service. The phone may be the same phone they use for their mobile calls or a dedicated smartphone kept in the house for the expressed purpose of home line communications.

Telephone System Installation Price

Depending on your system, telephone system installation costs range from just $20 for account setup to $600 or more when installation work and materials are required. Some services provide equipment with new service; the only installation required is to plug it in. Various systems may require wiring the home, adding new jacks, new cables, or new equipment. This means that for each type of telephone system, there can be a range of costs for installation from nothing at all to several hundred dollars.

VoIP Installation

VoIP costs from $20 to $600 but only works if you have an existing internet connection in your home because it runs over the internet. So, you may have no installation costs if you add a phone system to an existing internet. In that case, you will pay about $20 to set up the account and start the service. Or, you may need to have a new internet connection and equipment installed before using this service. If this is the case, your internet provider or an electrician will do the installation, with costs rising to a maximum of $600 for complex cabling jobs.

Landline (Analog) Installation

Installing a landline or an analog phone line costs between $100 and $300. Many places are doing away with analog landlines, but one can still be installed in many areas. You need to work with your telephone provider or an electrician to have the line run to your home and a jack or jacks installed. In cases where the home does not have a wall appropriate for running a phone line, the line might need to run under the floor or in the ceiling, pushing installation costs to the higher end. Keep in mind that landlines today can also mean digital phones, so your phone company may not provide an analog installation service.

Digital Phone Installation

Installation of a digital phone system costs between $100 and $600. Digital phones can be VoIP or have a dedicated line, depending on your provider. They often use the same internet or cable connection you already use, but with a separate line to power the phone. If you already have cable or internet, adding phone service is easy. There are no additional installation costs outside of a fee to set up the service. If you do not have cable or internet service, some providers install at no cost with a new plan. Others charge around $200 for setup. If you want to have digital phones hardwired into every room of your home, this costs $600 or more, depending on how many rooms you are wiring. You can contract with your cable provider or an electrician for this service.

Telephone Monthly Cost

No matter what system you have or what type of hand or headset you use, you will pay monthly fees to use the system. There are many different phone providers. Your telephone bill each month will vary by system, provider, options, and the plan you choose. There can be a wide range of costs associated, depending on the provider and what type of calls you typically make. Sometimes you may not need a new phone because many handsets work on multiple service types. Some of the more common providers and their monthly costs include:

Analog vs Digital Phone Line

Analog is available in some areas but is slowly disappearing as digital becomes more accessible and less expensive. Analog phone lines are usually cheaper for a basic phone but often do not include many other options like call waiting, voicemail, and three-way calling. Digital phone lines are more expensive, but they give you more options and allow you to bundle your home phone with your cable or internet.

Keep in mind that your digital phone will not work if the power goes out. The same applies to your internet. If it goes down, so does the digital phone. Analog phones often continue to work in these instances unless the phone lines are also down.

Phone Line Installation Cost Factors

Many factors impact the total cost of your project. The number of dedicated lines, such as having a separate phone number for a child or an in-home office, can be one expense. When you request an extra phone line during installation, costs may double, depending on the complexity of the installation. The line also incurs an extra monthly fee for service, which may cost from $2 to $50. Whether you have existing wiring or not influences the cost, and so can the system itself, whether you have installation and equipment included in your plan or whether the plan charges these separately.

How Much Does a Business Phone System Cost?

If you are setting up a business, you will have different costs than a home phone system installation. Businesses often need multiple lines or extensions and the ability to support more data. Businesses can use various services, including VoIP, digital, PBX, and KSU, which will all have their own associated costs.

VoIP starts at just $3.99 per month per user, and other costs. Dedicated digital lines cost around $39.99 per month per line for businesses and include things like voicemail and interoffice calling. PBX digital phones, which run via the internet, also have many business features such as holding, extensions, and voicemail. Current PBX phone system prices range from $20 to $200 per line per month, depending on the features and amount of use.

KSU or key systems are the most basic type of business phone system. They give dedicated lines and extensions and offer features like transferring, holding, and voicemail. Costs start between $40 and $200 per month, per line, depending on features and amount of use. You may find it beneficial to have features like holding, extensions, and multiple voicemail lines, even if your business is run out of a small home office. Business systems cost more overall than residential systems, so the price is a factor in business budgeting.

Enhancement and Improvement Costs

Phone Special Features

Nearly all digital and business phone systems today come with the ability to add special features such as call waiting, transferring, three-way calling, and voicemail. Providers commonly have different plans that offer one or all of these additional features. Basic plans may cost as little as $3 for basic service with zero frills to $100 for plans that include every feature the company offers. Monthly rates are usually per phone line. However, some plans include multiple lines in a bundled format, so it is worth shopping around for the plan that best suits your needs and budget.

Hotel Phone System

Hotel phone systems help hotels communicate with their guests, allow guests to make calls in and out of the hotel, and range from $750 to $1,250. Phones are an added expense of $100 to $500 each. Hotel systems help the front desk and others involved in customer service at the hotel interface with guests quickly and easily. Most hotel phone systems are PBX systems with hardware for the system stored in a cabinet or closet somewhere on the property. Some newer systems are completely digital PBX systems, sending data from calls over the hotel’s wireless internet. Hotel phone systems allow guests to check in and out of rooms, contact management, and leave messages.

Additional Considerations and Costs

• DIY. Some systems can be installed DIY. This is usually the case of a plug-and-play system that allows you to plug in the equipment to installed lines. Otherwise, it is best to contact a professional for assistance. However, the removal of the old phone system can be performed by the homeowner and does not require any technical experience.
• Plan sizes. Most phone companies offer different phone plan levels that increase in cost with added features. A basic plan may include a simple dial tone, but a higher tier may add features like call waiting, digital voicemail, and call forwarding.
• Digital phone add-ons. You may want to upgrade your telephone experience with accessories like wireless headsets that you can wear around the house rather than holding a phone up to your ear. You may also buy an additional router for increased signal reach.
• Maintenance & upkeep. Most telephone systems do not require any maintenance on your part beyond keeping the equipment clean and free of dust. Any maintenance outside the home is the responsibility of the provider.
• Keeping service when moving. If you purchase a new home, you can often use the same service provider without additional setup or connection charges. If you change providers, however, you may be subject to fees.
• New construction vs existing building. Running cable in an existing home is much more complicated than planning for it in a newly constructed home when the cabling is added before the drywall and finish. If you build a new home, consider installing your cables and lines, even if you do not know yet whether you want to use them.
• Discounts. You may receive an installation discount when you sign a contract with your chosen telephone service provider. Additional discounts may exist in your state if you qualify based on your income.
• Emergencies. You may want to consider a landline because a 911 operator may locate you more easily through a landline than a smartphone. Cell phone location accuracy is better than it once was, but it is not yet as accurate as a landline.