How Much Does a Phone Answering Service Cost?

According to a Ramsey study run in December 2023, 42% of small-business owners have experienced burnout in the past year.

And it shouldn’t come as a surprise given all their responsibilities.

Feeling overwhelmed too?

Hiring a phone answering service could help you alleviate some of the pressure by handling all your incoming calls for you.

But how much do these services cost? Are there ways to lighten the bill? Are there cheaper or better alternatives to phone answering services?

In this blog, we are going to cover everything you need to know about phone answering service costs, and will help you find the most cost-effective solutions for your business.

What is a phone answering service?

Let’s start with a quick definition.

In simple words, a phone answering service acts as a virtual receptionist for your business. 

When a call comes in, a trained professional answers it on your behalf. They can handle a variety of tasks, including:

• Greeting callers professionally
• Taking messages
• Answering frequently asked questions
• Scheduling appointments
• Transferring calls to the appropriate person
• Summarize your calls and transcribe them. 

Sounds great? 

Let’s jump on the benefits of having a 24/7 call answering service.

What are the benefits of a phone answering service?

There are numerous benefits associated with using a phone answering service, especially for small businesses:

• Improved Customer Service: Phone answering services ensure your customers always have a professional point of contact, leading to a more positive customer experience.
• Increased Efficiency: While the virtual receptionists are taking your calls, you can free yourself and your staff, allowing you to focus on core business activities.
• Enhanced Sales Opportunities: The answering services are able to capture every lead by ensuring all your calls get answered promptly.
• 24/7 Availability: For 24/7 services, they let your customers reach you anytime, day or night.

At this point you might be wondering, how much do these services will cost you?

How Much Do Answering Services Typically Cost?

Unfortunately, there's no one-size-fits-all answer to the question of phone answering service cost because the price can vary significantly depending on several factors, including:

• Number of Calls Received: The more calls you receive, the higher the cost will be.
• Industry: Some industries, like healthcare, may require additional features or compliance certifications (like HIPAA), impacting the cost.
• Features and Options: Services offering features like 24/7 availability, appointment scheduling, or voicemail transcription will typically cost more.
• Location: Pricing can vary slightly depending on your location and the service provider's operating costs.

Here's a rough estimate of the range you can expect to pay:

Low-Cost Answering Services ($35 - $125 per month)

At this price point, you're typically getting a basic service that covers the fundamentals of call answering and message taking. Expect:

• Minimal features: Don't expect advanced features like call forwarding, appointment scheduling, or call analytics.
• Potential quality variations: Service quality can vary, with potential issues like long hold times or less professional agents.

While these services can be a budget-friendly option for small businesses with low call volume and basic needs, it's essential to weigh the potential drawbacks against the cost savings.

Standard Answering Services ($125 - $300 per month)

Standard answering services offer a more comprehensive package, typically including:

• Extended hours of operation: Many providers offer 24/7 coverage or extended evening and weekend hours.
• Message delivery: SMS message delivery, often with customization capabilities.
• Additional features: Call forwarding, appointment scheduling, and call screening might be included.
• Improved call handling: More experienced agents and potentially shorter hold times.

If your business requires reliable call handling and a few extra features, a standard answering service could be a good fit.

Premium Answering Services ($300+ per month)

For businesses with high call volume, complex needs, or a strong focus on customer service, premium answering services offer a range of advanced features and benefits:

• 24/7 coverage: Guaranteed availability around the clock.
• Specialized services: Options for industries with specific requirements (e.g., healthcare, legal).
• Advanced features: Call analytics, CRM integration, multilingual support, and live call monitoring.
• Dedicated account management: Personalized support and tailored solutions.

While the cost is higher, premium services can deliver significant value by improving customer satisfaction, increasing efficiency, and generating more leads.

Keep in mind: These are just estimates, and the actual cost can be higher or lower depending on your specific needs.

Pro tip: When researching phone answering services, be sure to ask for transparent pricing models and avoid hidden fees.

What Pricing Models Are Used by Answering Services?

Most answering services offer different pricing packages with varying features and included minutes. 

We've analyzed leading services in the US, including AnswerConnect, ReceptionHQ, Patlive, and others, to provide a comprehensive overview. 

Here are some common pricing models:

• Per-Minute Billing: You're charged based on the total duration of your calls. This model can be cost-effective for businesses with short call volumes or those with a high percentage of brief inquiries. However, it can become expensive for businesses with longer call durations.
• Per-Call Billing: A flat fee is charged for each incoming call, regardless of call duration. This model is suitable for businesses with varying call lengths and a predictable call volume.
• Monthly Subscription: A fixed monthly fee covers a specific number of minutes or calls. Additional charges may apply for exceeding the included limits. This model offers predictability and often includes additional features.
• Hybrid Models: Some providers combine elements of different pricing models, offering flexibility to accommodate various business needs. For example, a hybrid model might include a base monthly fee plus per-minute charges for usage beyond a certain threshold.

To continue with the analysis, I am going to show you the different plans of the services mentioned on the above table. 

Take into account that pricing information is subject to change. It's recommended to visit the websites of these providers for the most up-to-date details. 

AnswerConnect

ReceptionHQ

Patlive

Choosing the right pricing model depends on your call volume and needs. Analyze your average call duration and monthly call volume to determine the most cost-effective option for you.

If you don’t know how to do this, we’re going to share the step-by-step process in the next section.

How to estimate the cost of an answering service for your business?

Determining the exact cost of an answering service for your business isn't straightforward.

It depends on several factors unique to your operations and customer service needs. Here's a step-by-step guide to help you estimate the cost.

1. Find out how many calls you get:

The first step is to figure out how many calls your business typically receives each month or per day. You can find this information by looking at your phone bills, call logs, or phone system analytics. If you don't have this information, estimate based on your business size and industry. For example, a small restaurant might experience a high number of calls during peak dining hours, while a home service business may have more consistent call volume throughout the day.

2. Calculate the average length of your calls

Understanding the average call duration will help you to determine the total minutes of service you’ll need. Review your call records to find the average talk time for each call. You can do this by adding up the total talk time for all calls in a month and dividing it by the number of calls. This will give you the average call duration. For example, if your business receives 100 calls in a month and the total talk time is 300 minutes, your average call duration is 3 minutes.Pro Tip: Consider the different types of calls you have like sales, customer service, appointments, they may have varying lengths. 

3. Choose the ideal pricing model 

As mentioned before, phone answering services offer different plans, like paying per minute or paying a flat monthly fee for a set number of minutes. For example, a business with a high volume of short calls might benefit from per-call billing, while a business with longer, more complex calls might prefer per-minute billing.Consider your call volume and average call length when picking a plan.

4. Get quotes from different providers 

Once you know your call volume and average call length, ask several answering services for quotes. Some providers have online calculators to give you an estimate, while others might need more details about your call history.

Pro Tip: Specify required features to clearly outline the services you need. For example, message taking, call forwarding, live transfers, etc. 

5. Consider additional costs

Besides the basic price, phone answering services might have additional cost for advanced features like transferring calls to your staff, custom messages, or call analytics.Be aware of these potential costs:

• Setup fees: Some providers like AnswerConnect charge a one-time fee to set up your account.
• Overage charges: Exceeding your limited minutes or calls may incur extra fees.
• Feature fees: Additional features like live transfers or call recording often have extra costs.
• Hidden fees: Carefully review contracts for any unexpected charges.

Cost-Saving Tips for answering services

While phone answering services offer valuable support, there are strategies to optimize costs and maximize your return on investment.

Optimize Your Website

• FAQ section: Answer common customer inquiries on your website to reduce call volume.
• Online contact forms: Offer customers an alternative to calling for less urgent matters.
• Live chat: Implement live chat support for real-time assistance and potential call deflection.

Leverage Technology

• Implement call screening: Use technology to filter out unwanted or irrelevant calls.
• Utilize voicemail: Encourage callers to leave detailed messages to avoid unnecessary callbacks.

Monitor and Adjust Your Service

• Track call volume and duration: Regularly analyze call data to identify trends and patterns.
• Evaluate service performance: Assess the effectiveness of the answering service in meeting your needs.
• Adjust your plan: Modify your service plan as your call volume and requirements change.

Consider Alternative Solutions

• Employee scheduling: Optimize staffing to handle peak call times internally.
• Self-service options: Offer customers options like online account management or self-service portals.
• AI answering service: A cheaper alternative that uses artificial intelligence to handle incoming calls, providing a 24/7 virtual receptionist.

Let’s deep dive into the last one, the AI-powered answering service. 

A cheaper alternative: AI answering service

Are answering services too expensive for your business?

What if you tried an AI answering service instead?

What is an AI answering service?

An AI answering service is like having a smart virtual receptionist available 24/7. It uses artificial intelligence to understand and respond to customer calls, offering an automated and more efficient experience.

The AI system understands, interprets, and provides accurate answers to a wide range of questions, offering instant and efficient customer support without the need for human intervention. 

It is not just a simple automated menu, you have a virtual assistant who can hold a conversation with callers, answer questions, and even schedule appointments.

But, how different can an AI answering service be from a traditional answering service?Let’s take a look.

Let’s see some examples to really understand the value. 

Scenario 1: Small Retail Business

• Business: A small boutique with moderate foot traffic and occasional customer inquiries.
• Call volume: Approximately 50 calls per week.

A traditional answering service would cost between $200 and $300 per month (based on per-minute or per-call pricing).

An AI answering service like Âllo would cost between $50 and $100 per month (based on a subscription model).

Scenario 2: Home Services Company

• Business: A plumbing or electrical service company with frequent customer calls and scheduling requests.
• Call volume: Approximately 100 calls per week.

A traditional telephone answering service would cost between $300 and $500 per month (based on per-minute or per-call pricing).

An AI answering service would charge between $100 and $200 per month (based on subscription model with potential add-ons for scheduling).

Feel excited? 

Here’s what an AI answering service can sound like from a customer point of view:

Let's recap what we found:

• Before selecting a phone answering service, carefully assess your business needs. Consider factors like call volume, average call duration, desired features, and budget. By understanding your requirements, you can choose the most suitable option.
• Be aware of potential additional costs. Some answering services may charge extra for features like live transfers, custom greetings, or call analytics. It's essential to review the contract terms carefully to avoid unexpected expenses.
• AI answering services often provide a more cost-effective solution for businesses compared to traditional phone answering services. While the specific costs vary based on call volume, required features, and chosen provider, AI-powered options often offer significant savings.