Upgrading the phone system is an important decision for a business. That’s when you hear terms like ‘on-premises PBX’ and ‘hosted PBX’. Understanding the differences between the two can help you decide which system is the best option for your business. To help you with that, here’s everything you need to compare on-premises PBX vs hosted PBX.

What is a PBX?

A PBX or Private Branch Exchange phone system is installed in offices to manage a high volume of calls. It can direct calls to desk or mobile phones, ensuring that the callers don’t get a busy signal. PBX systems also come with several business-friendly tools for better communication and collaboration.

What is ‘on-premises’ PBX??

On-premise PBX is a system that’s deployed on the premises of the business that uses it. The business would need the right infrastructure that includes servers, devices and a network to facilitate on-premises PBX.

Since these are expensive systems to install and maintain, on-premises PBXs are usually used by large enterprises with big teams and a large number of phone calls. Some sectors that value confidentiality and security also prefer on-premises PBX.

What is ‘hosted’ PBX?

In hosted PBX, also known as cloud PBX, the system is hosted by the provider at their location. They manage the required technology and infrastructure. The phone lines are connected to a router that directs the calls, features and signalling to the provider to manage.

To use a hosted PBX, the business has to pay a monthly fee, which would also include the system’s maintenance charges. Considering its cost-effectiveness, hosted PBX is preferred by small businesses and startups.

On-premises vs hosted PBX: Pros and cons

Pros of on-premises PBX

Since the system is in your location, on-premises PBX gives you better control over its usage and management.
You can continue using your existing phone carrier when you deploy on-premises PBX.
It can integrate with VoIP to reduce calling and operational costs.
You don’t have to rely on an external party for simple tasks like adding extensions.
After the initial investments, costs can be reduced over time.
Easier to add and remove users once the infrastructure is deployed.

Cons of on-premises PBX

The system requires high initial investments.
You will be responsible for its maintenance.
It requires skilled IT professionals to maintain the system.
Any failure or disruption will bring down the whole system.

Pros of hosted PBX

Since hosted PBX doesn’t require any hardware or infrastructure, the initial costs will be very low.
The service provider will take charge of updating the software with new features.
You can easily move the phone system since there’s no hardware involved.
You can effortlessly add virtual numbers as your team grows.
Unlike on-premises PBX, you have greater flexibility in choosing providers.
You get superior tools like auto-attendant, call queuing, voicemail transcription, team chat and video conferencing at affordable rates as part of your subscription plan.
You can track and manage your communication, which will help you improve areas like customer service and lead generation.
Hosted PBX is more future-ready as you can expand your system according to your business needs.

Cons of hosted PBX

Any disruption to the internet connection will lead to dropped calls.
Some providers have contracts that might lock you in for a longer period.

How to choose between on-premises and hosted PBX

If you’re comparing on-premises PBX with hosted PBX, the following parameters will help you make the right decision.

You should opt for on-premises PBX if you:

Are ready to invest substantially to set up the infrastructure.
Can spend on the hardware and devices.
Have trained staff who can handle small tasks and maintain the system.
Don’t have a steady internet connection.

You should opt for hosted PBX if you:

Don’t want to invest heavily in the infrastructure.
Have a remote or hybrid team.
Frequently work away from your office or workspace.
Want additional features at a low cost.
Have a reliable internet connection.

Chalkboard: The obvious business growth tool

Whether you’re comparing on-premises PBX with hosted PBX or PBX vs VoIP, one thing is clear: you’re looking for a modern, flexible, affordable and business-friendly solution. That’s precisely how Chalkboard has been built.

You don’t have to worry about hardware, infrastructure, or network. Just download the app and you can get your new second number. With Chalkboard you get a world of advanced features: