Running a business means making an endless series of decisions, many of which don’t have a clear-cut answer. The question of whether you should go with a VoIP or PBX, thankfully, is pretty straightforward: a VoIP setup is going to be a better fit than a traditional PBX for most companies. Most business VoIP solutions are going to give you everything a PBX would and then some. Plus, VoIP is much easier to set up and manage, and far less costly to scale.
The Difference Between PBX Vs. VoIP
While both PBX and VoIP technology do essentially the same thing––route phone calls––they have several key differences.
A PBX, or Private Branch Exchange, is a hardware-based private telephone network set up just for your company. These types of systems work via a private server that’s installed onsite and are attached to multiple phone lines. They include baseline features such as automatic call forwarding and transfers, voicemail, and an auto attendant self-service menu.
VoIP, or Voice Over Internet Protocol, does essentially the same thing, minus the hardware. While a PBX requires an onsite server with multiple physical phone lines connected to it, a VoIP system uses cloud-based portals to make calls over the internet. Users’ voices are converted into digital data, and that data is sent over the internet and converted back into an audio format on the other end. It works and sounds just like an old landline call—but at a fraction of the price, and with the option for added features.
- Require hardware on the premises that needs to be maintained
- Include common features like internal and external calling, call forwarding and internal transfers, voicemail, call queuing, and an auto-attendant
- Extremely reliable connectivity
- Requires expert setup and maintenance, which makes it more expensive both at installation and over time
- Exceptional security
- Calls can only be made from one location
- Do not require hardware that needs to be maintained
- Include both common features as well as advanced features like voice-to-text transcription, voicemail to email, video calls, and call analytics
- Good connectivity as long as the internet’s working
- Quick and easy setup, no expert required
- Strong security when used with good cybersecurity practices
- Calls can be made from anywhere
You can get a thorough breakdown of VoIP systems vs. landlines in our in-depth comparison guide.
Advantages of VoIP Vs. PBX
VoIP is less expensive
VoIP systems work using the internet instead of a physical phone exchange, so you can use one as long as you have a phone and an internet connection. Since there’s no complicated equipment to install, most companies can get a VoIP system up and running with no external support. This means less initial wait time for installation, plus less maintenance down the road.
Additionally, most VoIP systems run on cheap, monthly subscription models. The only other expense you’ll have to consider here is paying for an internet connection, but most companies are paying for that anyway.
The bottom line? We’ve run the numbers on what VoIP systems cost and found that VoIP saves money over time for most companies.
VoIP is easier to scale
With a PBX system, you have to install new phone lines every time you want to scale. But with a VoIP system, all you have to do is add a user. This also means that VoIP systems are more flexible, because you can easily add and remove users from your plan as needed. This even applies in more complicated scenarios, like if you need to add in a series of international numbers. Most providers can take care of that in a matter of minutes.
On the other hand, with a PBX system, even something as seemingly simple as adding another line can lead you down a rabbit hole of system upgrades and days of downtime while technicians install the new lines.
VoIP is easier to secure
With VoIP, your provider is responsible for making sure that your network is secure and all the tech is up to date. As long as you follow basic security protocols like using strong passwords, managing user IDs, installing firewalls or using VPNs, and avoiding public internet connections, you’re good to go. This is much easier than ensuring the security of a PBX system, which requires you to make sure that all the hardware is installed and configured correctly, plus keep on top of firmware updates on your network devices.
VoIP is easier to maintain
As you’re probably tracking by now, PBX systems can become complicated quickly. If one component of that system breaks down, you can potentially be in for a big bill.
On the flip side, VoIP systems are much easier to maintain, since they’re hosted phone systems. This means that most of the maintenance is taken care of by your provider—all you have to do is make sure that your software is up to date.
There’s no need for ongoing maintenance like with a PBX system, and you don’t have to be afraid that a major hardware failure is going to take out your ability to make calls. Plus, with a few button clicks, VoIP systems are quick and easy to upgrade, while PBX upgrades typically involve sourcing parts and scheduling downtime.
VoIP travels with you
You can take your VoIP system with you wherever you are. Most business VoIP solutions work via an app, so as long as you have the app on your mobile device, you can be “in the office” no matter where you’re at.
In fact, your customers won’t even know you’re not in the office, since your VoIP provider makes the number you’re dialing from look the same, no matter where you are. This is physically impossible with a PBX system, since it only works based on the hardware that’s installed at your company. The only way to create the same kind of effect with a traditional PBX is by using call forwarding, but that comes with the potential for dropped calls, and it’s not nearly as convenient.
VoIP lets you better serve your customers
A VoIP system can do anything a traditional PBX can do and then some. Most offer features like voice-to-text transcription, voicemail to email, video calls, and call analytics. This lets you take a more proactive approach to your customer service and sales, since your employees have a broader range of tools at their disposal. It also makes it easier to track call monitoring and customer satisfaction, which allows you to make more informed decisions about your approach to customer care.
Advantages of PBX Vs. VoIP
PBX traffic isn’t mixed with data
Calls made with a PBX system stay separate from all other data, while calls made with a VoIP system get mixed in with the rest of your internet traffic. While this normally isn’t a problem as long as your internet connection is solid and you’re not making a crazy high volume of calls, it can potentially cause problems with call quality and dropped calls. Since PBX calls aren’t reliant upon your internet connection, they tend to be more dependable.
PBX systems can be more secure
With a PBX, your calls only pass through your private exchange, so they tend to be extremely secure. They’re not as prone to hacking in the same way a VoIP system can be, and the biggest risk to their functionality is an equipment failure. That being said, you do have to make sure that everything is installed and maintained correctly, or you open yourself up to security breaches.
PBX systems can be better for very rural areas
While a VoIP system is almost always going to be the better bet, a PBX may be your only choice if your company is located in an area with very limited or unstable internet access. VoIP calls are reliant on internet availability and speed for their quality, so if you’re located in an area with a poor internet connection, it might not be worth it.
It is worth noting that the quality of VoIP calls has increased dramatically over the past decade, even with moderately poor internet, so unless you’re stuck somewhere with extremely slow speeds, a VoIP is probably still going to work just fine.
Ready to get started with a VoIP solution? We’ve reviewed a range of business VoIPs, and created a list of the best business VoIP software to help you find the right VoIP for you.