On Premise Vs Hosted PBX Phone Systems – What’s Right For Your Office?

The majority of small to medium-sized businesses that we help with their business phone system needs, are looking to get away from having old PBX phone equipment in their office, and instead move to a more streamlined phone system that is housed in the cloud.

However, there are some that still have an interest in an on-premise PBX phone system.

The purpose of this article is to help explain the differences between a hosted PBX phone service versus an onsite PBX phone service, while still using VoIP technology.

There’s a lot of geek terminology that can be used to explain the fine details of how an on-premise versus cloud phone system works, but for simplicity, we’ll stick to the basics.

There are two big questions you need to answer to determine which type of PBX is right for you.

• How many extensions does your office require
• Do you mind investing more upfront to save down the road

How Many Extensions

Hosted PBX most often is billed by the number of extensions you require. While the cost per extension almost always goes down as the quantity increases, there is still a cost associated with it.

This is because the service is being maintained and managed offsite by your provider.

With an on-premise PBX setup, adding another line doesn’t incur an additional monthly cost. Although it may require a fee to set up, depending on if you use a 3rd party provider to manage your on-premise setup for you.

If you are in the situation where you require 80, 100 or 200 extensions, the cost benefits of running an on-premise PBX system might outweigh that of a hosted PBX platform.

It’s important to understand if there are extension limits on the hosted or onsite system you’re considering. The Hosted and on-premise PBX systems we setup here at ClearlyCore do not have extension limitations.

Upfront Cost and Management

The setup of an on-premise PBX system requires the purchase of some hardware. The cost will most often be $4000 – $7000 initially to setup(this is just a range less and more expensive costs can be incurred). Also, the hardware and software is then set up at your location, so should something need to be changed either a staff member or 3rd party provider will need to make the change.

A hosted PBX has all of the software installed and managed at your provider’s location. There’s no server hardware installed at your office, and if changes need to be made you can log in to an easy graphical user interface (GUI) or contact your provider for assistance.

With an on-premise PBX you aren’t paying by the extension, as we explained above, so if you require a lot of extensions, the added upfront cost of new hardware and possible maintenance and management of the equipment and software isn’t such a big deal. You’ll be saving by not paying a per month fee per extension which, can mean even bigger savings once the initial equipment cost is recouped.

However, it should be said that Hosted systems receive upgrades automatically from your provider, while an onsite system tends to require periodic software upgrades (and hardware upgrades as older equipment wears out).

What’s the Right Decision For Your Business?

Here at ClearlyCore we help Canadian businesses setup both hosted and on-premise PBX phone systems. One of our co-founders even co-wrote the book on Asterisk, the most popular open source software platform powering on-premise PBX phone setups.

Scheduling a short discussion with one of our team members can often clear up any confusion you have on what is best for you. Give us a call today or schedule a phone conversion consult by submitting the form on this page.