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IP PBX or Hosted PBX: Which Is Better for Your Business?

March 25, 2013

By Rajani Baburajan - Virtual PBX Contributor

With VoIP-based services like an IP PBX and a virtual PBX gaining popularity, analog telephony services will be a thing of the past in about five years, according to a prediction from the FCC.

VoIP services have already conquered the residential and business communications arena. Many landline subscribers are turning to VoIP to enjoy cost-effective local and international telephony.

In fact, many VoIP services offer PC-to-PC calls for free. International calls are also offered at a highly competitive rate. Businesses across the world are turning to IP-based communications like a PBX solution because it offers them access to several advanced features of telephony. helps businesses choose the right VoIP solution to meet their individual needs. According to the company, customers should consider three important factors before beginning to use VoIP.

First, they should have an idea how many simultaneous calls their business makes in a typical hour. With SIP trunking, the business is paying for simultaneous calls, whereas with a hosted PBX they are paying for extensions. A single SIP port allows one call at a time, meaning if a business needs to make 10 simultaneous calls they need to include 10 SIP ports at least. Some VoIP plans also come with unlimited SIP ports.

Typically a business that wants a large number of extensions would go with a SIP trunking offering. However, if a firm wants every extension to have outbound and inbound calling capabilities, a better option would be to select a hosted PBX. With a hosted PBX, every extension can make and receive its own calls. In other words, each hosted PBX extension has its own SIP trunking service at its disposal.

The second consideration for businesses opting for VoIP should be the cost. The monthly cost for an on-premises IP PBX – the SIP trunking plan – varies based on the number of ports the business wants. For a business VoIP plan with five ports, users may expect to pay $55/month. However, if they want unlimited ports, those plans typically cost $400/month.

Yet with hosted PBX in place, businesses need to pay anywhere between $35/month per user and $20/month per user. The monthly rate ultimately depends on the number of extensions the organization needs. The more extensions the business needs, the cheaper the monthly rate per user.

The third question VoIP users should consider is whether they can handle the maintenance themselves. On-premises IP PBXs demand dedicated staff to maintain and manage the service. Since virtual PBXs do not require any extra hardware to be installed other than the telephony equipment, there is no staff required to maintain the equipment. The business VoIP provider will take care of any problems that arise, and they will upgrade the PBX when necessary.   

Ultimately, the decision comes down to what your firm is in search of. Be sure to carefully weigh out the pros and cons of each solution before making your final decision.


Key Benefits

  Unlimited Calling & Faxing
  Number Portability
  Auto Attendant
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  HD Voice Quality