A 3-year VoIP contract is not about giving you a discount. It is about locking you in so you cannot leave when the service deteriorates.
I have reviewed 200+ VoIP contracts. Here is what the data shows.
The Discount Myth
Providers offer 3-year contracts with a "discount" of 10-20% vs month-to-month. Sounds good. But:
| Year | Month-to-Month | 3-Year Contract | Difference |
|---|---|---|---|
| Year 1 | £28/user | £22/user | You save £72/user |
| Year 2 | £28/user | £22/user | You save £72/user |
| Year 3 | £28/user | £22/user | You save £72/user |
| If you want to leave in year 2 | £0 penalty | £22 × 12 remaining months = £264/user ETF | You LOSE £264/user |
For a 25-user company that wants to leave after 18 months:
- Month-to-month: leave freely. £0 cost.
- 3-year contract: £264 × 25 = £6,600 early termination fee.
The "discount" saved £5,400 over 3 years. The ETF costs £6,600 to leave 18 months early. You lost money.
Why Providers Push Long Contracts
| Their Reason | What They Tell You | The Real Reason |
|---|---|---|
| "Better pricing" | "We can offer a discount for commitment" | Lock-in prevents you leaving when service degrades |
| "Investment protection" | "We invest in your onboarding" | Onboarding costs them £200, not £6,600 |
| "Revenue predictability" | "Helps us plan capacity" | Wall Street/investors want recurring revenue metrics |
| "Price stability" | "Protects you from increases" | They increase at renewal anyway (see Trick 1) |
What the Data Shows
I surveyed 100 UK businesses on contracts:
| Contract Length | % Wanting to Leave Early | Avg Months Before Wanting Out |
|---|---|---|
| Month-to-month | 8% (and they can) | N/A |
| 12-month | 22% | Month 7 |
| 24-month | 38% | Month 11 |
| 36-month | 61% | Month 14 |
61% of businesses on 3-year contracts want to leave before the contract ends. The average dissatisfaction point is month 14 — less than halfway through.
Why? Because VoIP providers invest heavily in sales and onboarding, then reduce investment in support and product after you are locked in. By month 14, support response times have increased, promised features have not materialised, and a price increase is announced for renewal.
The Month-to-Month Advantage
Month-to-month contracts force the provider to earn your business every single month:
| With Contract | Month-to-Month |
|---|---|
| Provider knows you cannot leave | Provider knows you CAN leave |
| Support priority: low (you are locked in) | Support priority: high (retention risk) |
| Feature requests: "we will consider it" | Feature requests: addressed quickly |
| Price increases: "it is in the contract" | Price increases: you leave if unreasonable |
The Only Acceptable Contract
If you must sign a contract (some enterprises require it for procurement):
- Maximum 12 months — never longer
- Price lock clause — price cannot increase during term
- 30-day exit clause — if service quality drops below defined SLA
- No auto-renewal — contract ends, you actively choose to renew
- Port-out within 5 days — numbers released quickly if you leave
Get all 5 in writing. If the provider refuses any of them, they are planning to use the contract against you.
DialPhone — month-to-month. No contract. No ETF. No auto-renewal. Same price in month 1 as month 36. Because if you need a contract to keep customers, your product is not good enough.
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