The listings featured on this site are from companies from which this site receives compensation. This influences where, how and in what order such listings appear on this site.
Advertising Disclosure

VoIP vs. UCaaS: Understanding the Differences and Choosing the Right Solution for Your Business

Kathleen Christie bio
A woman wearing headphones trying to decide between VoIP and UCaaS.
Are you looking for a simple voice upgrade or a complete communication overhaul? Both VoIP and UCaaS (unified communications as a service) offer cloud-based solutions, but their functionalities differ significantly.

VoIP services, mainly used for voice calls, are on the rise, with the market set to hit over $102.5 billion by 2026. This growth shows how businesses are shifting towards flexible, cost-effective communication methods.

In line with this trend, UCaaS phone systems have emerged as a comprehensive solution. UCaaS phone systems offer an all-in-one platform for business communication. They combine various tools such as video calls, chat, and file sharing, making them ideal for remote teams.

Let me use my expertise in call center development and VoIP services to guide you through the strengths and weaknesses of VoIP and UCaaS. In this post, I'll highlight how each can benefit different aspects of your firm.

» Here are 10 gadgets your business can't survive without.

What's the Difference Between VoIP and UCaaS?

The main difference between VoIP and UCaaS lies in their scope: VoIP offers a single communication channel, whereas UCaaS consolidates multiple channels, including VoIP calling, into one unified dashboard.

VoIP, managed by a service provider, handles both inbound and outbound calls. This technology lets you make voice calls using a broadband internet connection instead of a regular phone line.

UCaaS encompasses all VoIP features and blends various collaboration tools. This integration makes UCaaS especially well-suited for call centers or businesses that need extensive collaboration tools and want all their communication systems integrated into one platform.

» Check out our top picks for the best VoIP contact center providers.

VoIP vs. UCaaS: Key Functionalities

VoIP Functionalities

VoIP systems allow you to:

  • Make calls using the internet instead of traditional telephone lines
  • Use features like call forwarding, waiting, and transferring
  • Convert voicemail messages into email format
  • View caller information and block unwanted calls
  • Direct calls to the appropriate departments with an automated attendant
  • Conduct basic conference calls
  • Send and receive faxes over the internet
  • Save costs, especially on long-distance calls, compared to traditional telephony
  • Integrate your systems, to a limited extent, with CRM or other business tools

UCaaS Functionalities

With UCaaS systems, you can:

  • Access all standard VoIP features for small businesses
  • Use advanced video and audio conferencing for remote work
  • Engage in instant messaging for real-time text communication within your organization
  • Check the availability status of employees (e.g., online, busy, away)
  • Enjoy seamless communication across different devices and locations
  • Use integrated collaboration tools like shared workspaces, file sharing, and real-time co-authoring
  • Integrate with a wide range of business applications, including CRM systems, email, social media, and other enterprise tools
  • Customize communication streams for more flexible workflows and processes

Choosing the Right Fit: Functional Strengths of VoIP and UCaaS

VoIP stands out for straightforward, cost-effective voice communication, particularly benefiting small businesses or startups focused primarily on voice calls.

Companies like Ooma and Vonage provide direct dial numbers, which can often be more economical than traditional phone lines. This affordability makes VoIP a suitable option for businesses looking to reduce costs while maintaining high-quality voice capabilities.

UCaaS, on the other hand, excels in more complex collaboration setups. It's ideal for businesses requiring a range of communication tools beyond voice calls. Companies that support remote work also often find UCaaS advantageous.

RingCentral, for instance, offers UCaaS solutions that allow employees to access your firm's network, manage emails and calls, and share files remotely in a unified system. This level of connectivity and seamless collaboration makes UCaaS a more preferred choice than VoIP in today's remote work-dominated environment.

VoIP vs. UCaaS: Comparing Costs for SMBs

VoIP typically costs between $10 to $30 per user per month, making it a cost-effective option for businesses focusing on phone-based operations.

For a small or medium-sized business (SMB), this can keep communication costs within a few thousand dollars a month, depending on the number of users.

UCaaS, however, generally ranges from $15 to $45 per user per month, appealing to companies seeking a more extensive communication platform. While more expensive than VoIP, UCaaS offers a comprehensive suite of services under one umbrella.

Winner: VoIP has a lower price range and ensures substantial average savings.

VoIP vs. UCaaS: Scalability

Scaling up with VoIP is simple: choose a provider, transfer your phone numbers, and add users as needed. This suits businesses that mainly use voice calls and need flexibility in growing or reducing their operations.

But expanding VoIP services, particularly when adding more advanced features or integrating with other systems, can get complex and pricey.

UCaaS provides greater adaptability, but costs vary based on the features you choose. This means you need to compare options to find the right fit.

Larger companies may prefer premium providers like Avaya or Cisco for their extensive features and support. Meanwhile, smaller businesses can choose from a variety of options that align with their budget and requirements.

Winner: UCaaS offers more scalability and a wider range of communication tools. This option is ideal for businesses anticipating rapid growth.

VoIP vs. UCaaS: Integration With Business Systems

VoIP is geared towards phone services, so its integration mainly focuses on enhancing phone system functionalities. These tools typically connect with basic office applications or customer relationship management (CRM) software, like Zoho or HubSpot, to streamline call processes and track customer interactions.

Conversely, UCaaS phone systems are designed to integrate smoothly with various third-party applications. For instance, platforms like Microsoft Teams or Slack can merge with tools like Salesforce for in-depth CRM functionality. They also link with project management tools like Asana or Trello to boost team collaboration.

Winner: UCaaS delivers more extensive integration capabilities with various third-party applications to enhance overall business efficiency.

VoIP vs. UCaaS: Customization Options

VoIP has limited customization options. It typically offers fundamental call management features like voicemail, call forwarding, and perhaps some integrations with CRM systems. Services like Skype or Google Voice also come with restricted personalization, mostly centered around call handling and basic settings.

In contrast, UCaaS phone systems are highly customizable. Providers like Nextiva and Dialpad tailor these tools to specific business needs, allowing seamless links with existing servers and infrastructure. This versatility makes UCaaS a superior choice, especially when compared to traditional PBX systems.

Winner: UCaaS provides more adaptable and tailored solutions that cater to specific business requirements.

VoIP vs. UCaaS: User Experience

VoIP is easy to use, much like making a regular phone call. It's ideal for small businesses that need basic tools without complex features. Plus, it usually doesn't require much training, which gives you more time to focus on core business activities.

On the other hand, UCaaS delivers more features but can be more complex. In sectors like pharmaceuticals, where confidentiality is crucial, UCaaS may require users to learn extra steps to manage direct lines and keep communications secure. This means your employees may need more training to transition to UCaaS.

Winner: VoIP is more user-friendly—ideal if you need straightforward, basic communication tools.

VoIP vs. UCaaS: Security and Compliance

Some 62% of organizations recognize data security as a top challenge they face. To counter these risks, reliable UCaaS providers like 8x8 implement strong security measures and certifications.

For both VoIP and UCaaS, network security is key, so having strong firewalls and enough bandwidth is important. Since VoIP focuses on voice communication data security, you need to implement protocols to prevent unauthorized access. Guard your data by conducting user checks and simulated phishing tests.

Winner: UCaaS tends to be more feature-rich and may offer more comprehensive security measures due to its broader range of services.

» Keep your communications private with these VoIP security best practices.

Choosing Between VoIP and UCaaS for the Future

The unified communications market is set to expand significantly at an annual growth rate of 17.4% from 2023 to 2030. Many organizations have already transitioned to UCaaS phone systems to boost revenue, reduce operating costs, and maintain strong customer relationships.

Yet, the choice between UCaaS and VoIP depends on the size of your business. Smaller businesses often find VoIP to be a more practical and cost-effective option. When deciding, think about your specific needs, available resources, and development plans.

» Learn how AI is transforming VoIP for better communication.

Kathleen Christie bio
Kathleen Christie, a Top10 writer, specializes in call center development and telephony operations. She's skilled in Avaya provisioning, IP Telephony, Modular Messaging, Microsoft Suite, and Telecom Expense Management, along with Training, Leadership, Customer Service, and Problem Resolution.