Pbx vs Voip: Which one should you choose for your business?

If you had to choose between PBX vs. VoIP for an office phone system, how can you determine which one better suits your unique business requirements?

While both solutions offer all the features you need from a business phone solution, there are considerable differences in subscription cost, technical expertise, and similar maintenance requirements.

In this blog, we’ll give you a comprehensive breakdown of PBX vs. VoIP systems, including the pros and cons, integration feasibility, benefits analysis, and more. 

What is PBX?

Private Branch Exchange (PBX)

Businesses and enterprises that need multiple phone lines for their operations use PBX telephone system hardware to host their phone systems locally. 

A PBX system switches call between users on several local phone lines while authorizing all users to share a single external phone line. In the initial days, businesses installed local PBX systems to reduce the subscription cost of multiple telephone lines for each user. 

The traditional PBX systems were analog, but more modern systems use digital signals that are converted to analog signals once they leave the local system.

What is a VoIP system?

Voice over Internet Protocol (VoIP)

VoIP phones utilize the Internet rather than physical switches to route calls. VoIP technology switches the analog voice signals into digital packets which are then transmitted to the recipient caller via the internet. 

The VoIP phone system is used to communicate with users who use either IP or traditional phone systems. It has become the popular choice for customers and businesses with the rise of broadband and low-cost Internet with projected global revenue of $194.5 billion by 2024.

What are the factors to keep in mind when choosing between VoIP vs. PBX?

While both PBX and VoIP solutions offer all the features you need from a business phone solution, there are considerable differences in maintenance requirements, upfront costs, and required technical expertise.

We’ll give you a full breakdown of PBX vs. VoIP, including costs, sustenance, technological challenges, benefits analysis, and more for you to make the best choice for your business. 

PBX vs VoIP: Main differences

1. Initial Investment 

Installing on-site PBX is a massive project, and it incurs a significant upfront investment. With the mandatory need for continuous power supply, expensive routers, protocol gateways, configuration software, and essential hardware like telephones, headsets the setup cost can go up to thousands of dollars. However, with VoIP, businesses only need to invest in their IP phones, and by using the USB headsets, companies can further cut down their upfront costs. 

2.  Scalability

It’s not easy to scale up with PBX. Every time a business has to onboard a new agent, they must add additional phone lines and install new hardware. If the company is planning to shift its office space, it becomes a lot more tedious. They will have to set up a brand new PBX system – thus incurring extra setup charges. 

VoIP phone systems, on the other hand, are license-based. Upon adding the license to the system, it automatically takes care of the system features, existing & new users, voicemail boxes, etc. Also, scaling a VoIP network is convenient and hassle-free. If your business is looking to switch to a higher VoIP plan or planning to order more phones and add new users it can be done with just a few clicks. 

Even if there’s a need to switch the existing phones and routers to the latest edition, that wouldn’t be a problem. The same VoIP plan can be utilized. 

3. Size Limitations

Traditional PBX systems restrict the overall number of phone numbers and lines. If you add additional lines, the server space and hardware need to be extended, increasing the business expenditure. Also, the calls can only go through direct devices within the system, thus limiting the flexible call options.

With VoIP, solely bandwidth narrows the maximum quantity of numbers and users. Adding and removing agents can be done at ease, and the billing amount will be adjusted accordingly. Businesses can also use various local and international numbers on the same system.

4. Call quality

With PBX, the call quality depends on the hardware the routers and phone models. The calls travel through landlines; thus, it is essential to ensure the phone system is properly set up for high-quality calls. 

While the sound quality of VoIP systems heavily relies on strongly connected internet service, the introduction of fiber optic cables will completely eliminate any call quality issues.

5. Reliability and security

A PBX system is highly reliable and secure when installed properly. Since the PBX systems rely on a traditional PSTN (Public switched telephone network) over an internet connection, it is well shielded from hackers.

Additionally, with traditional PBX phones, power outages will not prove to be detrimental. Since the phones do not rely on electric power, they will keep operating despite power cuts. However, hardware failure is a serious factor to be considered. In case of an internal issue, the whole PBX system will require technical changes, leading to downtime. 

Meanwhile, VoIP technology depends on a power source, so every time there is a power outage, expect your system to shut down. Also, since the technology relies on having an internet connection, any dip in speed will significantly impact call quality.  

When it comes to protection from a security breach, while VoIP providers are continuously making their technology as secure as possible, it also depends on your organization’s security protocols to prevent hacking or breach attempts. Using secure passwords, call encryption, and a stable firewall is mandatory.

6. PBX vs VoIP – IT Responsibility

PBX systems require advanced IT expertise. You will need experts for the initial installation and also for periodic maintenance. In order to add extra lines to upgrade new features into the existing system, unless you have your own employees with prior knowledge on the PBX systems, hiring an external staff just for the process will be cost and time cumbersome. 

One of the major reasons for VoIP’s prevalence over PBX  is that you don’t need an external IT team to maintain it. Based on your company’s size, you may need a single person at the most to build and run this system. In case of service and troubleshooting issues, your service provider will resolve them for you. Most vendors will also provide knowledge base documents or tutorial videos during the initial purchase of VoIP systems to make the onboarding smooth for your agents. 

7. Team Mobility

On-premise PBX systems require an internal data network to connect their phone systems. It is not possible to use any phone or device outside the office. This might hinder the agents’ productivity since they will be forced to work out of the office.

Did you know?

Almost 92% of millennials prioritize flexibility when job hunting.

With VoIP systems, it’s possible to manage calls from your desktop and laptops or your handy mobile phones. Freshcaller offers native apps for iPhone, Android, and desktops. This enables the customer service and sales agents to handle calls out of the office, allowing your agents to work from home during emergencies. 

And another added advantage of VoIP systems over traditional PBX systems is that they’re very affordable. They also have flexible and changeable structures that can be expanded or downsized without incurring additional costs. 

8. Customization Options

PBX systems can be customized, but it’s a complicated process that requires new hardware and technical assistance. Adding to this, when the customization keeps changing from time to time, the maintenance cost of the PBX systems increases proportionally. 

With VoIP, without making any hardware changes, the VoIP plans can be directly customized. Agents can easily manage the needed parameters through their online dashboard. From managing the admin views to managing call queues, everything can be done with a button’s click. 

What are the different types of PBX phone systems? – Which one should you choose for your business?

1. Traditional PBX systems

A traditional PBX is set up at the physical location(s) of the business. The calls are routed through a conventional phone company. This means, if there is a power outage, your business can still make calls, and the communication will be uninterrupted. 

The primary investment is, however, expensive, but the monthly cost will be less overall. A Traditional PBX is also a good investment for your company if you have a dedicated IT team to make sure servers are up and running. You will have access to the technician if something goes wrong. Best of all, when the PBX is setup up initially, the in-house technicians can guide you on the top connection speed at your exact business location.

2. IP PBX system

An IP PBX, also known as Voice IP (VoIP) PBX system, takes complete advantage of existing internet connectivity that is readily available. Like a traditional PBX, there is a high start-up cost to purchase and install the network. Still, overall costs are more economical, and added features are available, thanks to VoIP calling. 

An IP PBX is also simpler to manage while delivering call stability and better sound quality. While Traditional PBX systems are restricted by the number of phone lines they have, an IP PBX is limited by the company’s internet bandwidth. Also, given the call data is consolidated into digital packets, every call takes up minimal space. An IP PBX is also suitable for businesses that want uninterrupted control over exactly how their PBX is configured in-house and wish to avoid the subscription fees affiliated with other PBX options.

Using SIP trunks for your on-site VoIP PBX system will help you to relinquish its full potential. The essential features include disaster recovery, advanced call routing, and call accounting.

3. Hybrid PBX System

A hybrid phone system utilizes VoIP technology and digital PBX to create a blended approach to connect to external phone numbers. This type of PBX is easier to administer because it’s set up on-site and can connect to remote offices to the phone system. Most of the Hybrid PBX systems support SIP trunks and thus have an exceptional voice quality. The Hybrid PBX system ideally suits businesses that cannot rely on the internet for their phone service; or if their staffs are primarily stationary. If your business operations take place right at the heart of your office, then look no further than the Hybrid PBX system for communications. 

4. Cloud-based PBX System

A cloud-based PBX system, also known as Virtual PBX, provides all PBX applications, system features, and calling services in the cloud. An Internet connection, a fitting call center software, and a web app create the network infrastructure. The entire bundle is billed monthly under a single invoice. The proprietors of your telecom service will render PBX maintenance, software updates, and warranties. 

The Cloud-based PBX system is the most cost-effective option, and some of the most valuable features are:

  1. Easier system management
  2. High flexibility & scalability
  3. Superior calling features
  4. Advanced disaster recovery
  5. Multi-office networking
  6. Budget-friendly pricing

Picking a phone infrastructure is one of the most significant decisions a company has to make and if you are looking to upgrade the phone system for your business, look no further! With a dedicated cloud system backed by Freshcaller, your hunt for a modern phone system ends today!

Illustration by Mahalakshmi Anantharaman


About Freshcaller

Freshcaller is a modern-day cloud phone system that can be used to set up a SaaS call center for customer support and sales. With its cloud-based architecture, Freshcaller brings together the best of legacy features like IVR and advanced call routing capabilities like Smart Escalations, Customizable Performance Reporting to help you set up state-of-the-art call center operations. Freshcaller offers phone numbers in 90+ countries, requires zero phone hardware, and is extremely easy to use.

Visit the Freshcaller website for more information.

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