Moneysaving Strategy: Save $100’s per Year with Skype

After dozens of conversations about saving money with peers and colleagues who have home or small businesses negatively impacted by the global economic downturn, I always and immediately offer up strategies that I use which might benefit them also and here’s one I use to save money and engage in much richer and more meaningful communications.

One of the most expensive fixed costs home or small businesses have is telephony. While many people have thrown out landlines in favor of their mobile phones, a colleague I met with last week told me she pays $50 per month for a landline ($600 per year) in her home office. She keeps it since mobile phone quality is so much lower and she knows using only her mobile phone isn’t comfortable for her and annoys her clients as well.

This post isn’t a commercial for Skype and, frankly, I have some fundamental concerns about their closed, proprietary codebase, but this Skype thingy is one, great telephony option that works seamlessly, is amazingly powerful and is really inexpensive.

I’ve been realizing, however, that all of my geeky friends and tech-savvy nerd acquaintances get it…but the majority of people who could benefit from Skype are either overwhelmed (and Skype’s site is confusing) or intimated and nervous about replacing landline telephony with this techie solution.

Here’s my story about using Skype and why you might find it a great strategy to save money and communicate better too:

  • Skype-to-Skype: Download the software for free and you can call anyone else with Skype (often 14M+ people are logged on at any given time) anywhere on earth for free AND if you each have a webcam, you can see each other in the video window if you so desire
  • SkypeOut: You can “pay-as-you-go” by depositing as little as $10 in your account and use these for “SkypeOut minutes” that you can use to call any landline or mobile phone anywhere on earth for 1-4 cents per minute. That said, I have a monthly subscription and pay Skype $3 per month for their unlimited calling plan in North America (again, to any landline or mobile phone)
  • SkypeIn: I love this feature since someone on a landline can call my SkypeIn phone number and my computer rings (or voicemail kicks in if the computer is turned off). When you have that $3 monthly subscription, you get $30 off the purchase of a 12-month online number or $6 off the purchase of a 3-month online number. Without a subscription, you pay $60 for a full year of an online number or $18 for the 3-month online number.

But it gets better….

Here’s the biggest thing though: Skype samples the telephony signal at 16khz and the plain old telephone system does so at only 8khz. That’s right, Skype quality is twice as good as the landline phone you’re used to!

An analogy you might appreciate about the impact of higher quality audio is this: filmmakers learned a long time ago that if they lowered the audio of the dialogue slowly, while also slowly bringing the eerie music up making it louder, that the audience was tensing their muscles, leaning forward and then…..

…..ARGHH! The monster/killer/alien would grab the vulnerable character while we, the audience, would release that tension all at once!

The double quality of Skype bonus is that phone calls are less noisy. Even conference calls with all Skype participants are
much less noisy, more intimate, and therefore everyone on the call is
more likely to pay attention (though typing on a keyboard, breathing and
rustling of papers can be easily heard by everyone making the headset
mute button invaluable!).

You’d probably like a headset too (using your internal speakers and microphone in your computer is a drag and sounds bad also) and they range from $20-$100. If you bought one like I have (a $40 Logitech), your quality would be amazing and it materially changes your ability to make phone calls useful if you’re able to move around freely, take notes, or use your computer.

So instead of that $600 per year my colleague would be paying, how much would her first-year outlay be for replacing that landline with a Skype setup if she did the subscription and the SkypeIn phone number for one year? She’d pay $106 and save $494 in year one! In year two, she’d have the headset and would pay just $66.


Here are some use-case personal stories of mine that you might find interesting and why I’m so pumped up about Skype as a more-powerful-than-landline solution that is cheap to boot:

a) My office is 1.2 miles from my home, so I often go back-n-forth (e.g., when I need time to write, perform a webinar or record a phone interview, I do so from my home office). Skype works great for that since I just go home and log on to the software there and make calls (I have two headsets, one for the office and one for home).

b) When we went to Australia this past summer, we forwarded our direct lines and our home phone line to my SkypeIn phone number and let Skype capture all the voicemails! When we got back to the hotel we could listen to them, and return calls via Skype to the USA for under two cents per minute.

c) Since I’m reluctant to leave my computer on all the time, I became interested in seeking out solutions that I’d heard about to use “computer-less Skype”. I ended up buying two of these Philips VoIP 841 cordless phones (one for home and one for the office). The base station plugs into our internet router (and even has a port to stick a landline in it since it’s a two-line phone) and when it boots up you enter your Skype name/password (just the first time) and now you’re always on Skype and always available!

This is particularly useful with the SkypeIn phone number since Skype it then functions as a device that does, in fact, completely replace my direct phone line either at home or the office.

d) My neighbors across the street are a retired couple (he a former 3M executive) whose son is an SVP for a major foods company in Chicago. One Saturday I watched as they said goodbye to their son, daughter-in-law and two grandsons — one of whom was brand new — as they departed for a two year European stint launching a new division for that company.

My heart sank as I saw them embrace and realized that my neighbors would only see those boys occasionally over that next two years and little ones grow up so fast that they’d really miss out bonding and forging a relationship. I sent Marv an email about my happenstance in seeing them say goodbye (and by email since I wanted to include details and links) and suggested that he — a savvy computer user — could download the free Skype, get a webcam, get his son to do the same, and they’d be able to see each other and interact with their grandsons across a great distance.

My heart then sang two weeks later when Marv expressed his thanks and subsequently told me about how upon receipt of my email, he’d immediately convinced his brother in Tennessee to buy a webcam and download Skype so he could learn how to use it. I also smiled when he told me that their usual once-per-month phone call had turned into about an hour a day, much to both of their delight.

But the wonderful part was when Marv told me about connecting up with his son and family in London, and that they had set up a standing call every Sunday (and his wife even read stories to the grandsons over Skype video). It really helped them stay connected and, especially, Grandpa and Grandma with the boys.

e) Lastly, one experience a year and a half ago showed me the power of using this telephony/video technology in some new and interesting ways.

I assisted a friend in bring a speaker, live, from Sydney, Australia to Minneapolis. While this was certainly possible by buying satellite transponder like the major networks for thousands per hour — and coupling it with tens of thousands of dollars in broadcast quality gear — instead we used a Macbook Pro (on each end), a consumer video camera on my end (so I could pan the crowd and zoom in on someone asking questions and so the speaker would feel connected to the audience) and it was perfect!

f) For a site I run with three colleagues,, we do a once-per-week podcast with most of us (and usually our guests too) calling in via Skype.

Since the quality is so good, it obviates the need for high quality external boxes like radio stations use, since even calling people on landlines or mobile phones is decent.

So there you have it. Several ways to initially save money on your telephony costs that can also help you expand the sorts of rich communication you can do with others.

Food for thought…

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  1. Sumocat on February 22, 2009 at 5:02 pm

    I was seriously considering Skype for my home system, in addition to my mobile, but I have a big problem with their complete inability to control call quality. Their system is entirely P2P with no central support. That’s fine for their free calls, but I don’t agree with selling paid services under those conditions. That said, I’ve kept the option on the table, so I appreciate the data you’ve presented.

  2. Marc DeBrey on February 25, 2009 at 7:53 pm

    Steve, after reading your post and having had some Skype experience, I decided to give your proposed solution a try. However after getting everything setup I discovered that call quality was not sufficient to support a basic call. Callers simply could not hear me and continually had to ask me to repeat myself as words were being clipped and I was fading in and out.

    I’ve tried all the solutions discussed on various message boards and I’m using high speed Comcast, but no solution. So unfortunately I’m not sure this would really work for small business. Obviously you’ve had better luck. I’m interested to understand if you are doing something significantly different than me. Would still like this to work.

    Marc DeBrey

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About Steve Borsch

Strategist. Learner. Idea Guy. Salesman. Connector of Dots. Friend. Husband & Dad. CEO. Janitor. More here.

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Podcasting hit the mainstream in July of 2005 when Apple added podcast show support within iTunes. I'd seen this coming so started podcasting in May of 2005 and kept going until August of 2007. Unfortunately was never 'discovered' by national broadcasters, but made a delightfully large number of connections with people all over the world because of these shows. Click here to view the archive of my podcast posts.