What Factors Affect the Cost of an Answering Service?

Samir Sampat

From accounting professionals to the legal and medical industries, lawn care to pet care, staffing firms to software development, getting customers to call the office is a critical goal. However, all too often, those calls go unanswered or potential customers are asked to hold for interminable amounts of time. 

The immediate effect? Most of those leads will go elsewhere.

Simply put, if your customers or clients cannot reach you by phone without jumping through multiple hoops, they will find someone else. Consider the following statistics:

  • Customer support influences 84% of purchase decisions. That includes initial phone calls from potential leads, as well as calls from existing customers or clients. (Zendesk)
  • 95% of Grand View’s survey respondents noted that their loyalty to a brand hinged on customer service. (Microsoft Dynamics 365)
  • 75% of survey respondents noted that they would rather speak to a human being rather than deal with an automated system. (PWC)
  • 92% of those surveyed stated they would stop patronizing a company after just three poor customer service experiences. (HubSpot)
  • 56% of people surveyed noted that the most frustrating part of a negative customer/client experience was dealing with an automated system that made it hard to reach a real person. (Zendesk)
  • 68% of people report being willing to spend more with a company in exchange for a better customer experience. (HubSpot)

For even more eye-opening statistics related to customer service and customer experience, explore the full infographic.

So, what is the solution? For more and more startups, small businesses, midsize firms, and even enterprise-level organizations, it’s hiring a live answering service. Of course, that comes at a cost, and understanding what factors affect what you’ll pay is a critical consideration.

Benefits of an answering service

Before we dive into the factors that affect the cost of an answering service, it’s important to understand why such a service matters in the first place. One reason should be obvious – without someone to answer customer calls, you will likely hemorrhage clients to your competitors. That means lost profit, decreased market share, and perhaps even damage to your brand. However, there are many positive impacts of an answering service on your business, that you may not have considered.


How much time does your staff spend on the phone with clients or customers? Chances are good that it’s a significant part of their day. And, while serving customers is certainly your top priority, your team members have other responsibilities. A professional answering service can drive up productivity by allowing your people to do what they do best.

Better customer service

How often do customer/client calls go unanswered? It happens for many reasons – employees are in meetings and cannot answer client calls, they’re already on the phone with another client or customer, or they are working with a customer in front of them and unable to serve a customer on the phone. With an answering service, every call is answered professionally and promptly, ensuring better customer service across the board.


One critical consideration in the customer experience is consistency from touchpoint to touchpoint. When you leave customer calls in the hands of your team, consistency can suffer. This is particularly true if your employees have little or no training in customer service. With an answering service, you get the benefit of fully trained customer service specialists, which ensures consistency and a positive customer experience.


Yes, an answering service will cost you money. However, it should ultimately drive profitability by ensuring a better customer experience and providing outstanding service. Imagine all your missed calls being answered, all those customers asked to hold being served immediately, and a consistent, positive experience across all customer/client touchpoints. The effect on your bottom line can be dramatic.

Ability to compete

How well do you stand out from your competitors? Chances are good that there are very few differentiators when you get right down to it. With an answering service, you have one of the most potent differentiators possible — outstanding customer service. If you need more information about why that matters, revisit the statistics we covered above. Simply put, an answering service helps you stand head and shoulders above your competitors. Ask yourself this — who would you rather do business with: The company that you can never get on the phone, or the one where your call is answered right away, every single time? 

Customer retention

According to Harvard Business Review, it can cost up to 25 times more to attract a new customer than to retain an existing one. While we are not arguing that you shouldn’t focus on customer/client attraction, retention is perhaps the more important. Not only are the costs lower, but HBR points out that increasing customer retention rates by 5% increases your profitability by 25% to 95%. 

That’s all well and good, you might be saying. But how much will it cost me to hire that answering service? Increasing profitability does little good if you’re just funneling that gain out to a call answering service provider. 

The truth is that there is no price set in stone. Every situation is unique and will be based on a broad range of factors. In the next section, we’ll delve into what those are and what you need to know about them.

Answering service price factors

Answering services provide vital solutions for business owners. However, it’s important to understand that they’re not all cut from the same cloth. Below, we’ll highlight some of the factors that affect price, as well as those that may be included, but not directly pegged to the cost you pay. 

Number of calls

Some call answering services charge you based on the number of calls answered. This is a convenient option that allows you to pay a lower amount per call based on volume pricing. You will often find this available in pricing tiers, with each successive tier affording more answered calls per month. For instance, at Smith.ai, we offer four choices: 30 calls per month, 60 calls per month, 150 calls per month, or a custom number.

Number of transfer destinations

Ultimately, calls should be answered, customer concerns addressed, and, when necessary, transferred to another party (that party is the “transfer destination”). The number of transfer destinations included in your monthly bill will affect the cost you pay. The more transfer destinations, the higher your per-month pricing will be. However, you’ll need to balance that increased cost against the benefit of having calls accurately directed where they need to go, plus the ability to ensure only select calls are transferred. For instance, when a live operator can answer a customer’s basic questions, there may be no need to transfer the call to another destination.

Number of call minutes

Some call answering services do not provide a set number of calls per month. Instead, they charge by call minutes. While this might initially seem like a lower rate, the truth is that it ultimately ends up being more expensive in many instances. In others, the answering service must keep calls to a specific duration, which can mean rushing your clients off the phone. Remember that the company you hire is representing your business – they should be willing to stay on the phone as long as necessary to satisfy the customer. Billing by the minute doesn’t lend itself to that.

Spam and wrong numbers

Every business receives spam calls. Wrong number calls are also a daily occurrence. Some call answering services will count those toward your monthly call quota or bill you for minutes spent on the call, even though it ultimately did not benefit your business. Make sure that the answering service you choose does not charge for or count these toward your quota. At Smith.ai, as long as the lines you forward to us pass caller ID, we do not count them against your monthly quota. 

Additional monthly fees

In some cases, the cost you pay for your answering service will also include additional monthly fees. This can be accounted for in several ways. For instance, suppose you pay for a set number of calls per month. However, you reach the end of your quota and the month is not over yet. Call answering services can handle the situation in several different ways — they can choose to charge by the minute for any additional calls beyond your quota, they can choose to charge individually by the call, or they can bump you to the next highest pricing tier. Yet other answering services may charge hidden fees, setup fees, cancellation fees, and more. Make sure you know how your service provider handles call overages.

Tiered pricing 

Tiered pricing is used across most industries as a way to help clients get the right services for the right price. It also plays a role in the answering service industry. At Smith.ai, we offer four distinct tiers. Each of these includes specific service offerings and a set number of calls per month for a specific price. 

What’s Included

Your call answering service should provide more than just a live person to answer the phone. Your business needs more than a “warm body” — you need a professional who will represent your business correctly, deliver a positive customer experience, and help solve the caller’s problems. This requires a wide range of services, all of which should be included in the cost of your plan. Some of the included services you should have access to include the following:

  • 24/7 live receptionists
  • Customized greetings
  • Knowledge of your business, as well as products/services
  • At least one transfer destination
  • Call pre-qualification and vetting
  • Multiple live transfer numbers
  • Individual call summary and daily volume summary
  • Client/customer call back for lost/interrupted calls
  • Call notifications by text message
  • New client booking
  • Answering customer text messages
  • Referrals to recommended business
  • Calls to clients for appointment reminders
  • Call disposition, including type and urgency

Of course, not all call answering services offer all of the features above. Some may not offer specific features at all, or they might relegate them to add-ons available only at an additional cost. Before choosing any call answering service, make sure you fully understand exactly what services are provided for the price, which will cost extra, and which ones are not available.

Contract-related costs

Many companies have been phasing out contracts for some time now, but you’ll find that some call answering services still require them. Understand that being required to sign a contract is usually not in your favor, as it locks you into a specific service provider for a long time. It also means that if you break the contract, you could be on the hook for additional costs. At Smith.ai, we never require a contract — just a simple monthly agreement. We also offer transparent pricing, so you always know exactly what you’re getting for the price you pay.

Add-on services 

The final component in the cost of your answering service is whether or not you choose to purchase any add-on services. These are valuable services not included with your regular fee. At Smith.ai, we use this to offer value-added services that some clients find useful, but that often does not apply across the board. For instance, we include complex call routing, appointment scheduling, payment collection, dedicated Spanish lines, conflict checks, and third party intake in our list of add-ons, and charge a per-call fee for each. However, some answering services may lure you in with low per-month pricing, but list most of their services as add-ons, leaving you with a barebones option that just doesn’t cut it.

Learn more about Smith.ai's answering service

As you can see, many factors go into the cost of an answering service. With the right service, you’ll have access to the necessary features to build a better customer experience, drive profitability, and enhance your brand.

Smith.ai offers 24/7 call answering, custom greetings, lead qualification, appointment scheduling, payment collection, outbound calling, and much more. To learn more about how Smith.ai can help your business and what features might be useful for you, view our pricing plans and sign up today! We also provide 30-minute consultations where our team will work with you to understand your company’s needs and match them with our services and solutions that support them. Our consultations are always free. Reach out to us or schedule your consultation today.

Samir Sampat

Samir Sampat is a Marketing and Events Associate with Smith.ai. He has experience working with businesses of all sizes focusing on marketing, communications, and business development.

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