PBX vs VoIP: Which Phone System Is Best for Your Business?

Before the days of Zoom calls and Slack messages, businesses relied on PBX (Private Branch Exchange) phone systems to keep their teams connected. A traditional PBX system sits physically in your office and comprises desk phones, switching equipment, and a central server that routes calls.

Internal calls are free, and it connects external calls through landlines. If your company has been around a while, there’s a good chance you’ve heard the familiar beep and click of a PBX in action.

While PBX systems are reliable and secure because they don’t depend on the internet, they require up-front hardware investment and ongoing maintenance to keep things running smoothly. If you need a new line, you’ll need professional IT assistance (or to brace yourself for a headache). Plus, if your office moves or expands, expect expensive upgrades.

In the real world, PBX systems can be a complicated addition. Imagine a small law firm using a PBX system, with its attorneys and assistants relying on their desk phones to communicate with clients and transfer calls internally. Everything works fine until they need to support remote workers or expand to a second location. Suddenly, their hardware-based system feels more like a roadblock than a solution – this is one of the most relevant downsides to this traditional method.

VoIP (Voice over Internet Protocol) moves business communication into the fast lane by routing calls over the internet instead of traditional phone lines. If you’ve ever made a call through Zoom, Skype, or WhatsApp, congrats! You’ve already used VoIP.

Unlike PBX, which ties you to physical hardware, virtual phone systems let you make and receive calls from anywhere, whether in the office, at home, or sipping a latte in your favorite cafe. All you need is a stable internet connection and a device (computer, smartphone, or VoIP-enabled desk phone). Plus, it’s cheaper to set up and scales easily as your business expands.

However, the catch is that it makes the internet centerstage – VoIP is only as good as your internet speed and reliability. If your connection is shaky, you can expect problems like dropped calls, lag, or poor audio quality. Businesses using VoIP often adjust their quality of service (QoS) settings to prioritize voice traffic over other internet activities (so your video streaming habit doesn’t sabotage your calls).

Plus, since the system is online, it can also be a target for hackers. Nonetheless, VoIP’s benefits go way beyond calls. Platforms often sync with your CRM, helpdesk, and collaboration cloud tools to keep conversations and customer interactions all in one place.

Unsure whether to stick with a traditional PBX or make the leap to VoIP? In the end, the choice comes down to your goals.

PBX runs on physical phone lines, which means hardware needs to be installed. VoIP, on the other hand, lives in the cloud. This means it’s a cloud phone system that requires no wires or bulky equipment. Because virtual phone systems depend fully on the internet, they rely on a steady connection, which can be an issue.

Want to add a new team member? With PBX, this means installing a new line and possibly upgrading hardware. With VoIP, it’s as easy as clicking a button and assigning a virtual number.

PBX systems require an IT team to manage repairs and updates (cue the extra costs). Business VoIP providers handle maintenance for you, remotely keeping your system updated without you lifting a finger.

PBX offers the basics: calling, voicemail, and extensions. VoIP providers take it further with call routing, AI-powered call analytics, and even video conferencing integrations.

PBX keeps your team tied to one office location, while VoIP lets employees take calls from anywhere, at any time.

If you need a traditional, reliable system and don’t mind the maintenance, PBX might be right for you. But if you’re a small business or an enterprise that wants savings, flexibility, and advanced features, VoIP comes out on top.

When it comes to business phone systems, the real question is: are you looking for a budget-friendly setup, or are you okay with spending more?

PBX requires physical hardware, which means considerable up-front costs for equipment and installation. With VoIP, you merely need a solid internet connection and some headsets, which are less hassle and cheaper.

With PBX, you pay for IT support, maintenance, and occasional system repairs. VoIP, on the other hand, is usually a monthly (or yearly) subscription with predictable pricing and fewer surprise costs. However, this also means a longer commitment, as you need to sign up for a plan, unlike with PBX.

PBX systems require you to fork out for new hardware with every expansion, while VoIP includes automatic cloud-based software upgrades without paying for extras.

For small businesses watching their budget, VoIP is the clear winner. It’s cheaper to set up, easier to maintain and scales up without breaking the bank. PBX still works for larger companies that prefer on-site control and no internet dependency. However, for most small businesses, VoIP keeps costs down and the calls flowing.

When your business is growing, the last thing you need is a phone system that holds you back.

A PBX system needs physical installation, wiring, and IT configuration before you make a call. VoIP, on the other hand, only requires you sign up, log in, and start talking. There are no technicians, no tangled cables, and no headaches.

Once the system is up and running, who handles support? PBX needs on-site IT staff to troubleshoot issues, while VoIP providers typically offer managed services, live chat, and step-by-step tutorials.

Expanding is another relevant theme. With PBX, that means running new wires and installing more hardware. VoIP lets you add users in minutes, making growth as easy as clicking ‘add.’

When it comes to future-proofing, PBX systems eventually require expensive hardware replacements. Since VoIP updates automatically, your system stays modern and packed with the latest features.

If you love flexibility, fast setup, and effortless scaling, VoIP is the way to go. PBX still has its place for businesses that want full on-premises control, but VoIP wins the race if you’d rather invest in growth than equipment.

Unsure whether PBX or VoIP is the best fit for your business? Making the right choice shouldn’t feel like solving a Rubik’s Cube, so here’s a checklist of what to consider:

• Budget: Can you afford the up-front cost of PBX hardware, or is a lower-cost VoIP subscription more appealing?
• Scalability: Do you anticipate rapid growth?
• Flexibility: Do you need remote work support and multi-location capabilities?
• IT Resources: Do you have an in-house IT team for PBX maintenance, or do you prefer a provider-managed VoIP system?
• Reliability: Is your internet reliable enough to support VoIP, or would a PBX system provide more stability?

Download a copy of the checklist here.

At the end of the day, the best phone system is the one that fits your business like a well-tailored suit. If you value on-premises control and don’t mind the up-front costs (or already have access to hardware), PBX might be for you. But if flexibility, scalability, and cost-effectiveness sound like music to your ears, VoIP is the way to go.

Before you make the call on which to choose, take a moment to evaluate the full spectrum of VoIP vs landlines. Keep in mind your needs, budget, and future growth plans. If you’re still on the fence but VoIP is calling your name, check out our Best VoIP Guide to find the perfect provider for your business. When it comes to communication, make sure you’re calling the shots!