The primary choices when choosing a phone solution for business today come down to a traditional PBX (private branch exchange) and a hosted VoIP (voice over Internet protocol) system.

A cornerstone of the traditional PBX is that the all the system components are housed and maintained at the customer’s location.  Just locate the bulky equipment – complete with tangle of wires – on the wall of the computer room or cramped ‘telecom closet’ and you have found a traditional, or ‘on premise’ PBX.

With a hosted VoIP system, the phone system components are owned, maintained and managed by a service provider in their own datacenter.  The only thing you’ll find at the customer’s site are the phones and any equipment the customer would already need for their internal network and Internet connectivity.

When deciding between a traditional and hosted solution, dollars are always a concern.  A well-informed decision considers a variety of factors when it comes to costs.  Of course, you’ll not only want to think about startup costs, but the other things that impact the overall cost of the system.  Let’s take a look.

Startup Costs

The startup costs for a traditional PBX can be a lot more than you think.  For example, a short while ago, a local municipality in Reynwood’s area was about to put out over $200,000 for an on-site PBX.  After talking with Reynwood, the local administrator recognized the potential savings when the only upfront costs to our Hosted VoIP system were for the 140 IP handsets.  Potential savings were realized to the tune of nearly $180,000.  It would take years before they would even come close to that in monthly hosted service costs.

Growing Pains

When buying a traditional PBX system, a business must purchase equipment based on projected users.  Estimate too low and you’re in for a big upgrade expense down the road.  Too high and your essentially paying for capacity that you’re not using.  Hosted VoIP solutions are designed to grow simply and affordably as your business does.  This pay-as-you-go model ensures your capacity is always just right and can generate some tremendous cost savings.

Maintenance Costs

With Hosted VoIP your service provider relieves you of the headaches – and costs – of maintaining your phone system.  You won’t need additional in-house resources to manage continuing updates, upgrades, installation and support which is included in the cost of service.   Gone are the days of traditional PBX systems where you need to buy a separate service contract or pay $125 an hour when something goes wrong – or just too simply move a phone from one desk to another.

Usage Charges

Hosted VoIP delivers cost advantages over traditional PBX services when it comes to calling charges.  Most providers offer unlimited local and domestic long distance – as well as great rates on international calling.  If your business operates on a national or international level, there is the potential for some big savings in this area compared to your traditional PBX.

For most businesses, the much more affordable choice when all the costs are considered is a Hosted VoIP solution.