Answering Service Pricing: How to Compare Apples and Oranges
You think a minute is really just a minute? Nope. It would make sense that a call is just a call too, right? Not even close.
Now, please understand it’s not part of some grand conspiracy on the part of our industry to confuse and confound. Technology, company values, and historical reasons are all factors in the lack of uniformity in pricing for virtual receptionists and telephone answering services.
Download this checklist to help pick an answering service that will work best with you - since one size does not fit all.
How Much Does An Answering Service Cost?
If you came here to see about how much you'll spend when you hire an answering service, there are usually around five typical sizes of plans available for purchase:
100-150 Minute Plans
100-150 minute plans usually are a single monthly price between $150 and $300, plus extra for additional minutes or features. If you select a plan like this one, make sure you know how much additional minutes will cost!
200-250 Minute Plans
200-250 minute plans are the most popular and are usually slightly cheaper per minute than previous plans. You'll see prices between $250 and $500/month. Again, make sure you know how much additional minutes will cost.
500 Minute Plans
500-minute plans tend to be the most economical plan size you can purchase 'off the shelf', and vary in range from $525 and $1,050/month. Large price swings are usually due to other features aside from minutes, but may not be separable from the plan. Again, make sure you know how much additional minutes will cost.
Custom Quoted Plans
Custom quoted plans are usually created for any call volume exceeding 500 minutes, and pricing will vary based on the number of minutes needed, other features included, and other factors unique to your business.
Keep in mind that these are oversimplified breakdowns of answering service pricing - every plan and every company will be different, so be sure to perform your due diligence.
The goal of this article is to help you make an informed purchase decision. Read the following explanations on answering service pricing, and leave a comment if you have any questions.
Base-Rate vs. Usage Answering Service Pricing
Some answering services still charge a fixed monthly rate and nothing more. This works great for them if you don't receive large quantities of calls. But when companies DO receive a lot of calls, they end up losing money. In fact, answering services with this pricing model aren't profitable on half of their customers. The reality is that flat-rate services have no incentive to answer your calls because they earn the same amount of money either way.
Charging based on usage seems great for the customer, and to a certain extent, it is. But answering services need to charge a monthly base rate to make sure they have enough staff there to answer your calls and to keep their doors open. This is hard if they only charge usage because it’s just too difficult to plan. In fact, it’s such a challenge that very few answering services try this approach.
What about a combination of both? This is the most common billing strategy for answering services. The base rate helps them maintain staff and remain viable as a business. Usually, the base rate includes a fixed amount of usage at no additional charge.
However, there are two main variations for that fixed amount of usage. This is where things start to get tricky.
Per-Minute vs. Per-Call Answering Service Pricing
Both of these methods for billing for services are based on the amount of work that is performed. Most modern answering services have moved to time-based billing instead of the per-call pricing model.
Cost-Per-Call Answering Service
A per-call price might be easier to understand at first. If you know that you receive 50 calls a day, you can look for a plan that matches these needs as closely as possible.
The problem is that a ‘call’ is classified by call centers as many things you wouldn’t count as a call. For example, wrong numbers, hang-ups, and quick questions like “What time does the office open?” all get counted as a full ‘call’.
A call made might also include sending a text, email, or fax, as well as leaving a message in a voicemail. They may count it as a call made even if no one answers. Other possible units of work that could be considered a "call" might include taking or updating on-call information, when you forward your line, testing your number to make sure it’s working, and so forth.
Cost-Per-Minute Answering Service
Time-based pricing is as it sounds, based on the amount of time work is being performed on your behalf. At its heart, time-based billing is the fairer of the two options available. In short, you only pay for what you use.
This answering service pricing model tracks usage by the time spent actually working for each customer, such as answering a call, placing a call, looking up information, sending an email, and so forth. Some answering services only bill for the time spent on the phone (likely because that’s all their computer can track), but they have to charge a higher minute rate to make up for all the work they can’t track.
Let’s say that an average ‘take a message’ call takes 90 seconds to gather the name, phone number, and message. In this instance, you would only pay for one minute and a half.
With the per-call pricing model, you would pay the full per-call rate.
If you received a wrong-number call lasting only 20 seconds, time billing only counts as a single minute increment towards the minutes in your plan. Per call, pricing counts this call as a full ‘call’. Not ideal under any circumstance, right?
Hidden Answering Service Costs
In looking at common answering service rate plans you should be careful and know that some answering services charge additional fees beyond the typical base rate and usage charges.
Left unchecked they can turn a reasonable rate into a budget buster. Here are some common monthly reoccurring answering service charges to watch out for:
A Minute is Not 60 Seconds
In the real world, a minute is 60 seconds. In the answering service and call center world, a minute for the purpose of billing is generally broken up into increments.
It is important to ask what increment they are using. Some even have whole-minute increments. In this instance, if you received a call that lasted 1 minute and 1 second you would actually be billed for 2 minutes, as the increment would round up.
Some may also limit the amount of information they will take on your behalf such as only the caller’s name, phone number, and message. Throttling a customer service experience is never ideal. Some companies will count longer messages as 2 calls or charge multiple calls for tasks such as patching calls together.
When it comes to per-call pricing, the devil is in the details. It all comes down to the simple fact that companies need to cover their costs. They either throttle the service to you in some fashion (amount of information taken, service level, etc.) or figure out to charge for more calls for the tasks they perform in order to cover their costs.
Beware of the 13th Invoice
28-day billing, it’s an often-discussed topic at call center industry conferences and on email listserves. What it comes down to is this, it is a way to bill you the customer more.
You are charged for 13 monthly service plans per year instead of 12. In 2020, you actually received 14 invoices!! This method is a plain and simple way to send you an extra bill each year. Who needs it? We’re guessing you don’t!
Do you want your phone answered on major holidays? Some answering services charge you an extra fee if you do.
If you don’t pay it, they just let your phone ring. Seriously. They claim that since they have to pay their staff more to work on holidays, that you need to pay them more, too. Imagine if your grocer tried to do that.
Simultaneous or On-Hold Calls
Some answering services only answer one call at a time for each customer. If a second call comes in for that customer, the caller hears a busy signal. Or, they charge for keeping that second call on hold.
When customers complain about this, these answering services offer to answer multiple simultaneous calls, but they will charge an extra service fee to do so.
Other Common Answering Service Add-On Charges
Be sure to get clarification about what other fees, taxes, and other ‘revenue enhancers’ will be tacked on to your bill. Some common examples of these are:
- Per text charge.
- Outgoing call or 'Tracing' charges- which generally refers to when they call you on the phone. This is in addition to the per call or minute usage for the outgoing call.
- Per fax or email charge.
- Monthly charges to receive messages via email or fax.
- Additional charges for 24/7 coverage as opposed to business hours.
- ‘Semi-Annual’ line charges or some equally confusing and seemingly official-sounding term.
- Charging you for the time the caller is on hold.
So as you search for a telephone answering service partner, make sure that you have a comfort level with how you will be charged for services.
Ask for specifics about what goes into calculating your invoice. If you can’t get a straight answer from them, keep searching.