How Much Does an Answering Service Cost? All You Need To Know

Today’s busy business owners must juggle multiple tasks at the same time. Managing incoming calls efficiently is important to maintain customer satisfaction and business longevity. You might wonder if an answering service is the right fit for you.

As with any investment, understanding the costs of a phone system will help you make a more informed decision. This guide will help you know what to expect from a live answering service, so you can be prepared for the true costs associated with receiving calls, making outbound calls, accepting voicemails, call forwarding, and more.

What Is a Phone Answering Service?

A phone answering service is a professional service that manages incoming calls on behalf of a business. These services can range from basic message-taking to more sophisticated tasks like appointment scheduling, order processing, and customer support. Answering services are typically staffed by trained operators who respond based on scripts or guidelines provided by the client. This training ensures that all calls get the same treatment and the customer feels valued.

Why Would a Company Need One?

Companies ranging from service providers to e-commerce retailers—and everything in between—can benefit from using a phone answering service. Here are a few reasons why:

Improved Customer Service: Providing prompt and professional service can help businesses enhance their customer service experience, helping contribute to caller satisfaction and loyalty.

Increased Efficiency: Handling calls can be a time-suck. By outsourcing this area, business owners can empower their teams to focus on core activities that drive sales.

Cost Savings: Employing full-time receptionists or customer service representatives comes with a great cost. Answering services provide a cost-effective alternative, allowing businesses to pay only for what they need.

24/7 Availability: Ensuring calls are accepted at all times of the day and night is something many answering services offer with 24/7 service. This is a significant perk for businesses that operate in different time zones and/or have customers worldwide.

Factors Influencing Answering Service Costs

Several factors go into call answering service costs. Understanding these can help you find the right one:

Call Volume and Frequency

The number of calls your business makes is a major factor in the cost. Services typically charge based on the volume or the number of minutes their operators spend on the phone. Higher call volumes generally mean higher costs, though you can negotiate deals.

Service Features and Customization

The range of features and the level of customization inform cost. Basic services might include simple message-taking and call forwarding, while more advanced offerings allow you to handle appointment scheduling, order processing, customer support, and more. Customization options, such as personalized greetings or specialized scripts, can also drive up costs.

Industry-Specific Needs

Certain industries merit higher costs and considerations. For example, medical practices might necessitate HIPAA-compliant services to ensure patient confidentiality. Legal firms might require operators with knowledge of legal terminology. These specialized niches often come with higher costs.

Geographic Location

The location of your business and the answering service provider can be determining factors. Providers in regions with higher living costs may charge more to cover their expenses. Additionally, if your business operates in multiple regions or countries, you might need a provider that can handle calls in different time zones and languages, potentially driving up costs.

Types of Answering Service Pricing Models

Answering service providers typically make different pricing structures available, based on business needs and budgets. Understanding the nuances can help you choose the most cost-effective option.

Per-Minute Pricing

As the name suggests, you’re billed for the total time operators spend on calls. This model makes sense for businesses with fluctuating call volumes, as you only pay for the actual time used. However, costs can add up quickly if call durations are long or the volume picks up.

Per-Call Pricing

The per-call pricing model charges a fixed rate for each call handled by the service. This model presents advantages for operations with short, frequent calls, as costs are predictable and not dependent on call duration.

Flat-Rate Pricing

Flat-rate pricing is associated with a fixed monthly fee for a set number of calls or minutes. This model provides cost predictability. It’s ideal for businesses with consistent call volumes. However, exceeding the set limits may prove to be costly.

Package Pricing

Package pricing combines elements of per-minute and flat-rate models, offering bundled services at a discounted rate. This offering often includes a set number of minutes, calls, or additional features. Package pricing can mean flexibility and cost savings for businesses that need a combination of services.

How AI Can Automate Phone Answering

AI technology can mean phone answering is less complicated than before. Podium’s AI Employee, for instance, can handle a variety of tasks previously only managed by human operators. Here’s how AI can bring efficiency to phone answering:

24/7 availability: AI-powered systems can operate round-the-clock without the need for breaks, ensuring customers get prompt answers. Podium’s AI Employee can instantly respond to missed or after-hours calls via text. Consistent Performance: Using consistent responses, AI systems do their work based on predefined scripts and data. This means that all customers get the same experience.

Scalability: Using AI tools means you can handle slews of calls simultaneously, making it a viable option for businesses experiencing high call volumes or seasonal spikes.

Cost Efficiency: Removing the human element by using AI means that AI employees can significantly lower the operational costs associated with traditional phone answering services.

Integration with CRM: Seamlessly integrating AI with customer relationship management (CRM) software provides instant access to customer information and enables personalized interactions.

Phone Answering Service Pricing: Additional Costs

In addition to the base pricing, there are several additional costs to consider when evaluating a phone answering service.

Setup Fees

Many answering service providers charge an initial setup fee to cover initial costs. This fee can vary widely depending on how much groundwork needs to be done.

Overtime Charges

If your business requires answering services outside of regular hours or during peak times, you might encounter overtime charges. These costs can add up, especially if your business operates 24/7.

Add-On Services

Additional services such as bilingual support, appointment scheduling, order processing, and customer surveys can come with additional expenses. It’s important to evaluate these extras and weigh the benefits against the investment.

Contract Terms and Cancellation Fees

Many answering service providers require a contractual commitment, which can range from month-to-month to multi-year agreements. Familiarize yourself with the terms and penalties, as early termination of a contract may result in cancellation fees. These fees can be hefty, so it’s important to read the fine print.

Tips for Choosing the Right Answering Service Plan

Cost is just one factor in selecting the right answering service plan. Here are some tips to help you make an informed decision:

Assess Your Business Needs

Start by taking stock of your specific business requirements. Consider the volume and frequency of calls, the nature of calls, and the level of service you need. Determine whether you need basic message-taking or higher-level features like appointment scheduling and customer support.

Compare Pricing and Features

Once you know what model will suit your operation, compare different service providers’ offerings. Prioritize companies that offer flexible plans that can scale with your business while being mindful of miscellaneous costs.

Read Customer Reviews

Customer reviews can reveal a great deal about a service provider. Look for reviews from businesses similar to yours to make it easier to compare “apples to apples.” Positive reviews about customer support, reliability, clarity of calls, and responsiveness are encouraging.

Negotiate for Custom Packages

When in doubt, don’t be afraid to inquire about custom packages that better fit your business needs. Many providers are willing to make exceptions to attract new clients. Discuss your specific requirements and see if they’re willing to work within your constraints.

Connect Faster (and Easier) With Podium Phones

Trust your business communications to Podium Phones. Forget a phone answering service when you have a phone system that works as hard as you do. Missed calls can be untapped sources of leads when you have technology that supports follow-up. Podium Phones’ all-in-one inbox can help you manage and automate responses to missed calls.

Watch a demo and see how Podium Phones can support your team and fast-track your goals.