There are pros and cons to each approach. There are some big differences that will affect the cost, scalability, and reliability. I’ve been installing, managing and customizing both hosted and On-site PBX systems for over 15 years, so I’ll go over what my suggestions are as well as teach some of the terms.
I’ll cut to the chase. If you have a small office with under 10 phones needed and don’t need any special features I think Hosted is more cost-effective. It’s also a good choice for a company that has multiple locations or employees that work remotely. If you have more than 10 employees, require special features not in a Hosted Option or need greater reliability/quality On-site is your best choice.
What is a PBX?
A PBX (private branch exchange) is a telephone system within a company. It’s what receives the call, plays a message like “Welcome to ACME, press 1 for sales, press 2 for support…”. It handles what to do after hours with phone calls, voicemail, call recording, ring groups, queues, etc. It’s the brains of the phone system.
What is a Service, Trunk or Channel Provider?
This is a company that provides you the phone lines. They provide the phone numbers and service to those numbers. Your phone service provider connects to the PBX. Comcast, AT&T and Logix are all traditional local providers that would run phone lines to your office. They can do this with old-school telephone lines, a PRI and now most offer On-site SIP connection option as well. If you use one of these type of providers an On-site PBX is your best option.
There are also hundreds of providers that offer those services over the internet. So instead of using Comcast or AT&T to give you phone numbers and have their equipment On-site, you could use one of these internet companies to provide your lines. This gives you a lot of flexibility and is typically cheaper in cost. But, depending on the quality of your internet connection and the connection to the provider could give you lower quality.
I personally prefer internet service providers in most cases for lower cost and greater flexibility. I prefer local providers like Comcast and AT&T if there are any internet or quality issues or there is a very large volume of calls needed. On-site SIP trunks from local provider provide the best reliability and flexibility. Also with any SIP service provider, you don’t need any extra hardware or cards for your PBX like a PRI or FXO card. Those type of cards can run 200-1500 and up depending on the number of FXO or PRI connections you need.
What is Hosted PBX?
This is basically a PBX (Phone System) where the guts of the phone system are on the internet in the cloud somewhere. There are two major types of Hosted PBX options:
- Complete PBX and Service Solution – They provide the PBX and phone service. So you basically would pay one bill for all phone communication.
- Hosted PBX only – This could be where you host your own PBX in the cloud or you have a provider that just provides the PBX. This would require you to also pick a service provider. So you would be paying for the PBX and Service separately. This doesn’t mean it’s more expensive, just that there are two parts to it.
Complete PBX with Service is probably the most common thing you’ll find on the web. The prices, features and options vary greatly. Bellow are the different type of billing options you’ll see out there.
- Set price per phone per month – You pay a set amount per month per phone.
- Price per channel – You pay to have a specific number of lines available. So if you pay for 2 channels, you could have 2 phone calls going on at any given time.
- Price per minute – These plans typically give you as many channels and as many phone connections as you need. They just charge per minute people are on the phone.
- Blended – Some combination of the above.
I typically prefer price per minute if it’s a good rate, or if it’s a smaller office price per phone. Keep growth in mind when choosing these options.
What is On-Site PBX?
This is the traditional approach and can be the best approach in some situations. It’s where you have some sort of PBX hardware/software On-site. You then also use some sort of service providers like Comcast/AT&T or an internet-based provider to provide phone service.
I prefer to use on-site PBX’s for offices that have more than 10 phones or if I need to use a local service provider for phone service like Comcast/AT&T. I also prefer the On-site options if there are any internet or phone quality related issues. On-site PBX’s, for the most part, can use local providers and/or hundreds of internet-based providers. This gives you the most flexible option.
One popular options for my customers is to have an On-site PBX that uses a local provider for local calls, then uses an online service provider for national or international calls to save money. You can also set one to failover to the other in emergencies. So it gives you more flexibility and redundancy.
There isn’t any one solution that’s perfect for everybody. Do your research and look at the costs, quality, upgradability, features, and flexibility of the solutions you’re evaluating. It’ll take a bit of work but it’ll pay off in the long run if you do it before you settle on a solution.