Essential Guide to Answering Service Pricing

Post Update: Article updated June 16, 2020, and originally published on June 6, 2017, and has been completely revamped and updated for accuracy and comprehensiveness.

Our statistics have shown that having a phone answering service could increase your sales by 20%.

According to statistics provided by Nextiva, customers want what they want when they want it and want to speak to a live voice who will solve their problems or questions.

If your business is not ready to answer that call, that same customer will call another company.

This is one of the main reasons why having a telephone answering service is crucial to all businesses.

Hiring an answering service can help you boost your customer service quality and bring so many benefits to your business, such as:

• Boost staff productivity
• Helps control labor costs
• Eliminates the need to train new staff
• Maximized return on investment (ROI)
• Boosts profitability
• Increases reliability, consistency, and therefore customers’  loyalty
• Helps your business cope with the unexpected

Many owners have taken action and outsourced.

Do you dread getting your answering service bill? Are you overpaying for these services? 

Like most smart people, you want to know what you’re paying for on your bill.

If you’re a business manager or owner, you want to see if you’re getting a good ROI.

But understanding the charges on your bill isn’t always easy. It is uncommon for call center companies to create confusing, hard-to-decipher statements. That makes it hard for you to determine your real answering service cost per month. 

Below are three easy steps that can help you answer these questions:

• How much does an answering service cost
• What are the types of answering service rates
• How do I make an answering service pricing comparison

Step 1: Determine Your Preferred Pricing Model

Elizabeth Wasserman wrote for Inc.com, “One of the secrets to business success is pricing your products properly.”

The same goes for picking a service that meets your business needs.

The first step is to determine your preferred pricing model and what services it includes. Not all answering service plans are created equal. It may not cost as much as you think.

Many factors drive the cost of an answering service. The main factor is the needs of your business. If you need a service that just takes a message and passes on the details to a company contact, it has a specific cost, but if you need them to do more than that, the price may rise.

An answering service typically offers four types of pricing structures— which may include different charges depending on the provider:

Pay by the minute

Billing by the minute is typical. With this model, you pay only for what you use. With this model, the company bills you for any outbound and inbound call increments.

Some models include a base rate that offers a set number of minutes per billing cycle. Accrued time consists of any time an agent engages in some part of a call.

Make sure you know how the provider calculates call time. In case you don’t know, or it isn’t clear enough, ask how they calculate it.

Ask your provider if it rounds up your call time, and its overage fees are, which may vary depending on the allotted time. Often, they’re inversely correlated to the plan price.

Pay per call

With this model, you pay a flat rate for each call received. So, you’re billed not on how many minutes an agent is on the phone, but the sheer volume of inbound/outbound calls per billing cycle. Some models include a base rate of a specific number of calls per billing cycle.

With this model, clarify what constitutes a connection. Also, ask about charges for wrong numbers, disconnected calls, and what add-on fees accrue with this plan.

Be careful with this model. Providers try to keep calls under a minute to boost profits. That can detract from your brand’s customer service experience, costing your business.

Monthly fees

Many services opt for monthly billing, such as fees or subscriptions. Typically, this fee includes a set number of calling minutes per billing cycle. Plus, you pay a fixed rate for each additional minute used.

Flat rate pricing is tricky, however. It can be a cost-effective model or a budget breaker, depending on how steady your call volume is per month.

Providers may not charge overage fees with this model, but when you meet your plan’s threshold, they’ll bump you to the next plan up. If your provider is charging overage fees, you may genuinely have a pay-per-call or pay-per-minute model.

Providers may offer virtual receptionist services for call transfer or appointment scheduling using a subscription model. Review the monthly fee and compare how many phone calls or minutes are included in your plan before signing.

Tiered pricing

Providers offer tiered pricing for different levels of service. The higher the level, the more the cost. This approach usually varies with the provider offering the model.

A common approach is based on the number of minutes you use per month. Tier one might include zero to 50 minutes and grows as you go up.

This can be an excellent model to start with if you don’t know exactly how many minutes you will use each month. After a couple of months, you should have a good idea of what tier you will need to be in. You can then work with your answering service provider to get the right tier for your business.

Verify your plan and what additional charges you can expect.

Step 2: Compare Answering Service Rates

The second step is to identify if your answering service pricing is competitive.

Comparing prices from different providers helps. Just make sure you’re comparing apples to apples and not apples to oranges.

There’s a difference between low-cost and affordable answering services. So, find which one you want carefully. Your brand’s reputation is on the line, so look for the best value you can get.

Hiring the lowest cost answering service may seem like a good idea at the time, but it has its pitfalls that can come back to haunt you later. You may, for example, be sacrificing quality for cost, so tread lightly.

Below is the average pricing from provides for the answering service industry:

What you pay per minute isn’t the only consideration when it comes to pricing. Consider how are a provider’s agent to answer your calls. Are they just answering the call or managing it?

What about call agent quality? Are they well-trained?

If you’re a healthcare provider, for example, you will need a HIPAA compliant answering service and healthcare-trained agents that can use your practice’s software. Not every answering service offers this kind of quality.

Also, be careful of pricing that falls below the extremes of our chart.

If your pricing is too low compared to competitors, ask why? Is the provider offering a short-term promotion? Are there hidden fees on the bill? Is there be a drop in quality of service?

Customers want a fantastic experience every time they connect with you. If they don’t get that kind of service, they’ll leave you for your competitors. Sacrificing customer service for a lower answering service cost per month doesn’t always make sense.

Step 3: Make Sure You Understand Your Answering Service Cost Metrics

The third step in this process is what your metrics mean.

Many answering service providers are transparent when it comes to their monthly reports and invoices. Others hide additional charges in the numbers or group charges together to confuse you.

To learn if this is happening to you, get the complete reports, and understand the meaning of these metrics to your company.

Below are critical answering service metrics your provider may track with a brief description of what they mean:

• Secretarial Calls – These are calls live agents answer on your behalf. If your provider is billing you by the minute, verify how it calculates time. Some companies round up to the nearest half dollar or even full dollar! Make sure you’re paying only for the time you use.
• Check-in Calls – This metric reflects instances where employees need to call into the answering service, receive updates, get messages, or verify the information.
• Callouts – Agents must call out to complete a task according to your processes. A typical example is when an agent follows up with a patient to confirm that the hospital staff called them back.
• Patches – A patch is when a live agent transfers the call to another person.
• Outgoing Data Calls – This metric includes text messages, messages sent to pagers (alpha pages), faxes, emails, and other communications other than live phone conversations.
• Incoming Data Calls – As the name suggests, this metric refers to managing incoming data, not sending text messages, or other outgoing data.
• Non-live Calls – This metric refers to agents performing additional duties post-call, like sending out email messages. The time to complete this duty can appear under non-live calls.
• Account Updates – These charges include instances where you need to change your processes in the account. Most high-quality services don’t charge for minor changes.
• Client Maintenance – Like account updates, this metric refers to updating information in your account for agents to use.
• Agent Training – Depending on the level of service needed, agent training may be required to handle calls. Ask if the provider includes training in your pricing plan. If not, ask if it bills it on either a flat or an hourly rate.
• Connect/ Non-Connect – Be wary of connection charges. Some answering services will charge you even if the call doesn’t connect. Avoid these companies. They are trying to nickel and dime you.
• Time in Voicemail – This charge is another sign that a provider is trying to nickel and dime you. If your service is charging you for clients leaving voicemails, run from that service!
• Pre-Announcements – When you open your account, you may have the option to use a pre-announcement to introduce your company. Some providers charge for this service. Others include it free.
• Hold Time – Being charged for hold time isn’t a regular practice in the industry. But it happens. Avoid answering services that do it.

Answering service providers can have different names for these items above. So, review charges carefully.  Look for any rare charge and ask your provider to clarify them.

Also, question each line item you don’t understand. That way, you’ll know your real answering service cost per month.

Above all, make sure you’re comfortable with all the bill’s charges and have a clear understanding of what you’re paying for.

If you’re reviewing answering service providers, ask for a sample bill or a report to see what metrics it provides before hiring it.

Finally, every company’s answering service needs are different. Make sure the pricing model you select fits your budget and your needs. Otherwise, you’re throwing money away.

Follow this rule of thumb when considering answering service providers: An excellent answering service is a transparent answering service.