The True Cost of Video Conferencing in 2020: Software, Equipment and ROI

by in Trends, Meeting Room

When it comes to adopting video conferencing in the workplace, there are two types of people: those who intuitively “get it,” and those who need some convincing. For people in the first camp, the inherent usefulness and value of a video conferencing system is self-apparent; to quote one CEO and heavy Lifesize user, “I don’t cost-justify the use of our phones or computers, so why cost-justify the use of video conferencing?” But to people in the second camp, video conferencing represents a change to the status quo, and as such, requires additional cost-justification before it can be fully embraced and adopted across the organization. 

Calculating ROI and TCO for Video Conferencing

How much does video conferencing cost?

Today, most organizations are adopting cloud-based video conferencing services. Pricing for these services typically starts with a free trial or ‘freemium’ offering with limited functionality and scales to enterprise pricing designed for larger organizations with hundreds or thousands of users. Most, but not all, cloud video conferencing vendors (including Lifesize) charge based on a ‘per host’ model, meaning usage is billed based on those actively scheduling and facilitating meetings whereas meeting attendees and guests are typically able to join for no cost.

Organizations just starting with video conferencing generally should budget $13 to $20 per host per month — or $150 to $250 per year when billed annually. For many organizations, this is less than the cost of legacy audio-only or web conferencing contracts, and one common cost justification is to simply replace a legacy audio conferencing plan with a modern video conferencing solution that includes audio calling and screen sharing as well. 

The cost of video conferencing equipment can range from basic $100 webcam setups to $2,000 DIY kits of off-the-shelf consumer hardware, and all the way up to $10-20,000 or more for integrated telepresence solutions. Meeting room equipment is typically sold as a one-time, upfront purchase, but can also be leased or financed ‘as a service’ with costs spread out over multiple years. In the latter scenario, organizations should budget $100 to $300 per room per month (or ~$1,200 to $3,600 paid annually) to enable your teams with reliable, business-class video conferencing. (Note, like computers, smartphones or any other technology, the expected lifecycle for video conferencing equipment varies greatly by provider. Organizations should consider the life expectancy of video conferencing equipment before purchasing to fully understand the total cost of ownership over a 5-10 year period).

If you don't know where to start, you can check out our list of best video conferencing equipment

Cost of video conferencing software/service

A cloud video conferencing software service is all that is required to enable video conferencing on personal devices like laptops and phones. Small teams and remote teams without conference rooms may not need meeting room equipment and can opt for a software-only solution. Free video conferencing apps are available but typically restrict usage by number of participants or max call length limits. Encrypted and reliable business-class video conferencing services average between $13 and $20 per host per month.

  • Lifesize: Starting at $12.95 host/month (View pricing)
  • WebEx: Starting at $13.50 host/month
  • GoToMeeting: Starting at $14.00 host/month
  • Zoom: Starting at $14.99 host/month
  • BlueJeans: Starting at $16.65 host/month

Hidden Costs to Look Out For

Subscription list prices will fluctuate throughout the year as features are released and packages are reconfigured, but there are two main add-ons that buyers should be aware of:

Per-minute PSTN audio conferencing fees

Audio conferencing is a common add-on that enables a toll-free dial-in option for participants joining a meeting via a standard phone line. Many Zoom customers have to pick up an additional bill just for audio calling, based on their published regional audio conferencing rates. And when fees are billed per participant per minute, the extra charges can add up quickly.

For example, a 10-way audio (PSTN) conference with participants in the UK is billed at a rate of $0.87 per minute ($0.087 per participant in the call), or $52.20 per hour. The same call run on a weekly basis would cost $2,714.40 in annual usage fees for just one recurring meeting. 

SIP/H.323 interoperability

Another costly add-on is conference room connectors that are required to enable SIP/H.323 interoperability. For many software-only solution providers, the ability to add conference room calling support comes at a per-room annual fee averaging $500 per room per year. Without it, your meeting participants won’t be able to join from their standards-based conference room systems and will instead be forced to join from the provider’s software application instead.

Cost of video conferencing equipment

The cost of technology to conduct a video conference has dropped dramatically in the last three to five years. The availability of high-speed networks and HD cameras have led to all-in-one huddle room and conference room solutions that cost a tenth of what similar solutions sold for less than a decade ago. DIY video conferencing kits of off-the-shelf USB devices can be assembled for about $2,000 and all-in-one devices can be deployed for as little as $99 per room per month.

  • Lifesize Icon 300: Starting at $99 room/month or $1,999 (View pricing)
  • Logitech Tap Kit for Zoom Rooms: Starting at $2,899 (CDW)
  • WebEx Room Kit Mini: Starting at $4,946.99 (CDW)
  • Zoom, BlueJeans, GoToMeeting: Require custom quote and/or yearly $500 room connector fee (hardware not included)

CapEx vs. OpEx

Today, businesses have options in how they choose to purchase or lease video conferencing camera systems for their meeting rooms. While video systems are traditionally CapEx-heavy investments, rooms-as-a-service models provide an OpEx option for securing meeting room hardware at a flat monthly or annual rate.

Video Conferencing Total Cost of Ownership (TCO) Calculator

TCO factors in the direct and indirect costs of a product and includes more than just what’s on the price tag. Additional costs like per-minute audio conferencing fees, SIP/H323 interoperability charges and any potential infrastructure improvements required to support a solution can add up. Here are the top five factors that contribute to the total cost of ownership:

  1. Subscription/License Fees – Contracted per-host subscription costs, including any add-ons like webinars, recording or integration packages
  2. Bandwidth/Audio Calling Fees – Video conferencing can increase a company’s internet bandwidth usage, and many solutions charge an additional per-minute fee for audio calling
  3. Infrastructure – Costs to outfit conference rooms with additional displays or ethernet drops
  4. IT Troubleshooting – IT time and resources to maintain equipment and manage vendor relationships
  5. End-User Troubleshooting – User time and resources to learn a new solution

Video Conferencing TCO Calculator Button - Click to Calculate Savings

Our video conferencing TCO calculator lets you compare vendors based on simple user and usage inputs and provides a detailed output of the pros and cons of each solution.


Calculate savings


Video Conferencing ROI Formulas

While many of the more social benefits of video conferencing are difficult to calculate, it’s still important to evaluate the ROI of any technology before making an investment. Understanding the value obtained by implementing video conferencing helps business decision makers understand why video conferencing should be viewed as a necessity, not just a nicety. Here are three ways to calculate your video conferencing ROI:

Travel Savings

Look at the travel costs for the sites your employees usually travel to and from. What percentage of those travel dollars can be displaced using video conferencing? Calculate an average annual travel budget and apply a reasonable percentage that can be substituted by video conferencing. 


[Average Trip Expense] x [# of Traveling Employees] x [# of Meetings Requiring Travel]
x [% Video Conferencing Displacement]

Compare the output of this calculation against the cost of a video conferencing service. It can help give you a rough estimate of how long it will take to pay back your initial investment.


[$1,000 Average Trip Expense] x [50 Traveling Employees] x [20 Meetings]
= $1,000,000 travel budget

If only half of those meetings occurred over video conferencing, you could use that $500,000 to video-enable your entire organization and outfit 100 meeting rooms with 4K video conferencing systems. And with high-quality, HD video conferencing, you don't lose any of the details of real-life, face-to-face interactions.

In addition to the physical price of airfare and lodging, there are also productive hours lost to travel. Traveling to and from airports, going through security and waiting to board planes are all ways that productivity is hampered. On average, eight hours are wasted in an average trip. Don’t forget to include the cost of hours wasted each trip in your average trip expense. 

Increased Meeting Productivity

The average employee is scheduled for nearly 60 meetings every month. With one out of three minutes of every workday spent in meetings, it’s important to maximize meeting productivity to make the most of your time. 

At Lifesize, our average meeting time continues to clock in at about 18 minutes — well under the 30 or 60 minutes your calendar would suggest. By reducing the time it takes to ask “Who just joined?” ten times a video call and removing nonverbal miscommunications, you’re able to get right into the meeting at hand. It may seem like a minor contribution to ROI, but even 5 minutes a meeting saved over 60 meetings nets you 5 extra hours a month.


[Monthly Average # of Meetings] x [Average Minutes Saved]

Multiply that by the salaries in the meeting room, and you’ll quickly find a return on your investment.

Technology Displacement

A third ROI consideration takes the form of technology displacement. Typically, video conferencing is deployed as a replacement for an outdated web conferencing or audio conferencing solution. Take the money that would be used on traditional conferencing and apply it to an all-in-one solution that covers audio, web and video conferencing. You may be able to justify the cost of a modern cloud-hosted solution just by retiring an outdated and underutilized service.


[New Video Conferencing Subscription] – [Retired Conferencing Subscription]

Of course, the real ROI of video conferencing is the value placed on the technology by the users. If users perceive a benefit to video conferencing and find it easy to use, they will use it and the technology will quickly be seen as a business-critical component of their daily work.

Comparing Costs: Which Video Conferencing Solution Is Best for Your Business

Pricing chart comparing video conferencing providers including Lifesize, Zoom, BlueJeans, WebEx and GotoMeeting

See full comparison chart

 


With seemingly endless options for video conferencing solutions in today’s workplace, including offerings from a bevy of brands like Microsoft, Cisco, Google and more, we want to make it easy to navigate potential vendors and choose the best video conferencing for your needs and your budget, whether you're a huge corporation or a small business. Our guide to Selecting a Video Conferencing Solution is a great starting place for questions to ask and features to look for when evaluating your needs. And armed with the right information, our TCO Calculator will give you a side-by-side cost comparison of many of the most popular video conferencing vendors.