VoIP vs PBX: Which Business Phone System Will Meet Your Needs?

Good communication and a reliable business phone system are critical to ensure seamless contact center conversations. In terms of the latter, many businesses choose to use either a PBX system or a VoIP system. But which is the right one for your business’s needs?

What Is PBX?

PBX systems are private branch exchange systems. Companies use them to connect all landline phones within the team, allowing contact center agents to direct internal calls to one another and communicate effortlessly with colleagues.

This system is usually subject to installation costs. The primary benefit of this system is that it doesn’t necessarily rely on a steady internet connection.

There are two major types of PBX:

1. Analog: This type of PBX uses dedicated on-site hardware to connect desk phones.
2. Internet protocol (IP): This phone system connects to the company’s internet system using ethernet hardware.

Which system a company installs depends on business needs. Just be aware that IP PBX requires less storage space for hardware.

What Is VoIP?

VoIP stands for voice over internet protocol. It’s a phone system that allows team members to make calls on an internet-enabled device from any location.

Such a service is usually subject to subscription/ongoing costs. Companies typically work with a SaaS company (software as a service) that hosts the system through their servers. This means that the vendor manages issues on the business’s behalf.

Yet arguably the significant benefit of this system is that it facilitates remote working. Home workers can access these systems on their desktops and even their smartphones, thanks to VoIP apps.

Comparing PBX and VoIP

Several factors determine which system a company opts for. Here are 11 key differences between these two business communication systems.

1. Cost

Cost is a significant factor for businesses when choosing their communications infrastructure.

PBX systems generally involve higher initial costs as they require expensive hardware and physical storage space. While they are usually free of subscription costs, they may also bring monthly calling bills, repair costs, and the cost of in-house IT support.

VoIP systems generally require a business to pay a subscription cost. However, they need no additional hardware and have a much lower installation cost.

Overall, VoIP systems are usually more cost-effective for businesses, especially those with little brick-and-mortar assets or a geographically diverse team.

2. International Calling

Using PBX to make international calls may be more reliable in areas with a poor internet connection. However, the costs can add up.

Since PBX systems hinge on landlines, businesses will pay standard international rates. For example, as of February 2022, Verizon lists its international rates per minute as $0.49.

By contrast, VOIP providers typically include overseas calls within a subscription plan.

3. Scalability

A growing business needs a communication system that can quickly scale up. To add new users to a VoIP system, all a company needs is to send a digital invitation to the user’s email inbox. Such an approach is often helpful when there has been a high level of new recruitment or before a call center training program.

PBX systems require extra hardware to expand a team’s usage. At the very least, a  company needs a new desk phone for every new user. In addition, it may need to invest in more hardware to connect new users to the system.

VoIP systems scale more seamlessly and faster with minimal intervention from IT services.

4. Service Providers

Unlike in previous years, there is now a higher proportion of VoIP/IP PBX service providers in the market than traditional PBX providers.

With more options for a virtual calling system, businesses are more likely to find a plan and provider that suits their specific needs than when using a PBX system.

5. Team Size

Both PBX and VoIP systems adapt to different team sizes.

PBX systems require companies to have a discreet piece of hardware (i.e., a desk phone) for each team member. In this respect, it’s relatively simple to account for any team size and manage any new additions.

VoIP providers are on the cutting edge of improving telecom customer experiences, meeting customer demands for more flexible options based on team size. Most providers offer plans with basic features and then provide additions to larger teams for an extra cost.

VoIP systems are a great way of keeping costs down for smaller teams. Larger teams may find that costs add up for both systems, although VoIP may offer a more flexible choice depending on existing hardware and team growth.