VoIP vs. PBS: Differences, Pros and Cons, and How to Choose

Streamlining external communications is a crucial consideration for any business, especially those that still rely on a business phone system. As such, many business owners struggle with choosing the right phone system for their needs.

Two of the most popular choices on the market are PBX and VoIP systems. Each of these systems offers its own set of advantages and disadvantages. To help business owners get a better idea of what each offer, this article provides a detailed comparison of a VOIP and a PBX phone system.

What Is VoIP?

VoIP stands for Voice over internet protocol. This technology allows one to make a call over the internet. It works by converting your voice into a signal capable of traveling to the target phone through an internet connection.

With VoIP phone systems, you can make the call direct from a computer, a traditional desk phone, an analog phone with an adaptor, or a special VoIP phone. You will also be able to use wireless ‘hot spots’ such as cafes, parks, and airports that allow connection to the internet. Another great thing about this system is that you can use VoIP wirelessly and even through dedicated VoIP apps like Skype.

Podium offers a VoIP system that allows you to easily organize and access caller details. Every messaging system gets routed to the same inbox to help keep you organized. Whether from social media, your website, or a phone call, customer details are stored in one location. This helps your business stay organized and ensures you don’t lose any revenue due to missed calls.

What is PBX?

PBX stands for Private Branch Exchange. The term refers to a telephone networking group that is private but allows users to speak with each other. A traditional PBX system typically involves different hardware components working together to provide connectivity. This is a system that works for internal networks, allowing multiple phone lines to seamlessly work together.

When setting this system up, a company deals with a system admin or several. A physical space is also needed for the system, such as a dedicated server room, closet, or office. This is to keep all the equipment organized and easily accessible.

With a PBX, you can use fewer phone lines and have phone extensions for those that work at the company. All these options make it easier to keep your business operating and organized.

These days, business owners also have the option to choose a hosted PBX system. This essentially works like a cloud-based phone system, as a service provider owns the equipment.  This may be the ideal choice for businesses with limited space to spare for a phone system.

What are the differences between PBX and VoIP systems?

Though VoIP solutions and PBX systems help streamline business communication, there are some fundamental differences between these tools. At the base of it, PBX systems don’t use data networks. With VoIP, the voice is converted to data, condensed, and transferred over the network.

Below are other key differences between VoIP technology and PBX systems.

1. Technology

PBX dashboards tend to work best with a limited number of phones and network hardware. These provide businesses with a private telephone network, so privacy and security may not be too much of a concern.

With VoIP, you have web security standards to consider. As such, you’ll have to integrate additional security technology such as call encryption, firewalls, and passwords to keep business data safe from hackers and breaches.

2. Infrastructure

Meanwhile, PBX solutions provide a private phone network for use within an organization or company. More recently, they can be cloud-based. Traditional PBX systems require a dedicated area to house the internal parts, including a switchboard for operators to connect outgoing and incoming calls. You will also need a computer/controller for data processing.

With VoIP, infrastructure refers to the bandwidth you are working with, the software, the connection, and the VoIP gateway that allows you to communicate over the internet.

3. Cost

Overall, the cost of a PBX system tends to be significantly more than that of VoIP phone systems. When you go with PBX, there is a larger investment upfront for more hardware, including a dedicated on-site power supply, routers, and switchboards for routing calls. PBX systems also have higher regular maintenance costs, which may include additional staff or a dedicated IT team.

VoIP systems tend to have more affordable pricing and smaller subscription fees. However, business owners must also consider investing in IP phones, computers, and headsets.

4. Scalability

When using a traditional PBX system, you will be required to add new telephone lines as well as more equipment when you scale up. You may even have to hire a technician or telephony specialist to expand the system’s capacity. However, scalability becomes less of a hassle if you opt for a cloud PBX system. These systems generally support an unlimited number of users.

Comparing PBX vs VoIP systems, expanding a VoIP system tends to be more convenient. You can add or remove lines easily as you need them. This makes it a simple solution for growing businesses or organizations where the call volume typically fluctuates.

5. Features and Flexibility

A VoIP service typically offers all the standard features that a PBX system offers, such as call forwarding, conference calls, call queues, ring groups, call analytics, and reporting. With a VoIP platform, you may also get some advanced features such as instant messaging, “Follow Me”, “Find Me”,”Remote Call Recording”, and “Team Chat”.

6. Geographical Flexibility

A VoIP system can provide endless flexibility as you can use your phone to make or receive a VoIP call anywhere you have access to the internet. With VoIP apps, you can even use your cell phone or other mobile devices for these calls.

On the other hand, an analog PBX system needs a space to work from, such as an office or a building, so there is little to no geographical flexibility.

7. Reliability

An on-premise PBX system usually offers high levels of security and reliability. This is thanks to their use of a public switched telephone network or PSTN instead of the internet. You don’t have the risk of internet hacking.

Typically, VoIP phones are more reliable than landlines as well as faster. This makes them a more popular choice for small businesses. You can also utilize their additional features, such as SMS and video calls.

8. Integration

A PBX service is not as flexible when it comes to integration as you will need to have call forwarding to use your number outside of your office space. Traditional PBX systems work with a central system that manages outgoing and incoming calls.

With VoIP, you can use your phone number and make voice calls with a mobile phone or a softphone, as long as you have access to the internet. Integrating business VoIP systems is easy as well. You can set it up to work with your CRM and it allows employees to multitask. You will also see increased efficiency as well as access to shared data.

9. Maintenance and Upgrades

You can expect an on-premise PBX system to last about a decade. You will need to regularly maintain it for approximately 25 hours of service each month. You will also need to perform periodic upgrades. All of these will cost some money, so careful budgeting is required.

When working with VoIP, you will need to discuss with your provider a regular schedule for upgrades and patches. If you don’t get regular updates, your business may suffer. These costs will run you anywhere between $20 and $30 monthly.

10. Call Quality and Bandwidth

Most VoIP technology can offer excellent call quality, and there tends to be little downtime. When you work with a VoIP, you should have at least a broadband connection with 100 kbps for uploads and downloads for each line. Such connections ensure enough bandwidth for the voice data generated by ten VoIP phones. You should have at least a megabyte of dedicated bandwidth for ten lines at the same time.

You can enjoy high-quality calls and unified communications with PBX tools as well. When working with cloud-based PBX, you can expect to need a similar amount of bandwidth as with VoIP.

VoIP vs. PBX: The Ultimate Comparison

One of the best ways to get a better idea if a PBX or a VoIP system is better is to carefully consider each system’s advantages and disadvantages. Below are some major pros and cons of each technology to help you get started with your research.

VoIP Pros

1. Cost Savings

When working with a VoIP system, you can save on costs. This makes them a better fit for small businesses You simply need access to the internet. You will also likely have a small monthly subscription fee.

2. Flexibility and Mobility

When you choose to work with VoIP, you will have tons of flexibility. You can use your VoIP anywhere you have access to the internet, so you can communicate with your team and your customers even when you’re out of the office.

3. Advanced Features

A VoIP system provides you with access to more communication channels as well as additional advanced features. These features include business text messaging, auto-dialers, busy call forwarding, automatic call distribution, and auto-attendant features.

4. Scalability and Easy Deployment

You will find VoIP is highly scalable. You can subtract and add lines as you need them. You can easily grow your business or operate a business that fluctuates. You get beyond call perks and advanced features.

VoIP Cons

1. Dependence on the internet

One of the drawbacks of working with a VoIP system is using the Iinternet. While it is true that you can use the system anywhere you have internet access, it is important to understand that the internet can pose connection trouble.

2. Emergency Calling Limitations

There are some limitations when you need to make emergency phone calls with a VoIP platform. With these services, your call cannot automatically go to your nearest emergency response center. There will be extra steps required.

3. Reliability

Another challenge of working with VoIP is reliability. Just like your internet connection can waver at times, so can the VoIP tool of your choice.

PBX Pros

1. Call quality

When working with an analog PBX, you can enjoy excellent call quality because the audio isn’t affected by the internet.

2. Security

With a PBX system, you will have better control over access to your system and you get a more secure means of business communication. There is no risk of being hacked since a PBX platform relies on a public switched telephone network instead of the internet. PBX phones don’t even rely on electric power, which can come in handy in case of power outages.

3. Integration with Traditional Phone Services

The learning curve is very simple for team members, especially if your budget allows you to hire a technician. Integration with a traditional phone service simply requires setting up the space and gaining access to the equipment.

4. Emergency Calling

In case of emergencies, a PBX system can transfer calls to the closest emergency services in real-time, without extra steps.

PBX Cons

1. Higher Cost

One of the disadvantages of using a PBX system is that there are high upfront costs. In addition to this, you will also have maintenance costs at any time. As the business owner, you’re responsible for maintaining and hosting the system.

2. Limited Scalability

You will find that the limited features of a PBX system can make it difficult to scale up. If you are working with a cloud-based PBX, however, scalability becomes easier.

3. Limited Advanced Features

You will find that a PBX system is not as advanced as VoIP tools that provide additional features such as messaging, call recording, call queueing, and number porting.

4. Geographical Limitations

With a PBX system, you are tied to the area where the system is physically installed. You can’t enjoy PBX telephony outside the office, which may make your business less accessible to customers.

Should I Choose VoIP or PBX?

With the freedom, flexibility, and savings these systems can provide, VoIP technology can offer a lot more value for your business. These are crucial benefits for any business looking to increase their bottom line while improving their availability to customers. With a VoIP system, customers can reach your business from nearly any device with an internet connection. This can go a long way in improving the customer experience and boosts trust in your brand.

However, that doesn’t mean all businesses benefit from this system. Businesses that prioritize 24/7 uptime and high-level security and need complete control over their communication channels may find that a premise-based PBX system is a better fit for their needs. These systems may also be better for enterprises that have the budget for maintaining hardware.

All that said, you will still need to carefully consider what your business’s specific needs are to make the best choice between these two systems.

The Best Phone System for Growing Businesses

Podium offers many advanced features through its VoIP system, including SMS messaging, call forwarding, and much more. All these features help business owners streamline communication with customers and allow reps to easily get in touch with leads. And with all customer data collected in one inbox, you can offer a more personalized customer experience and turn more customer calls into revenue.

VoIP vs. PBX FAQs

Q: Is VoIP better than PBX?

A: In many cases, VoIP works much better than PBX. VoIP systems are easier to set up for a small business and they offer scalability. These tools also tend to be more cost-effective. You will need to evaluate your business needs specifically before making a choice.

Q: Do I need PBX for VoIP?

A: A PBX system is not necessary to use VoIP technology. The only thing you need for VoIP is an internet connection in addition to a VoIP phone. You may also be able to get most PBX features if you ask your VoIP provider.

Q: What advantage does VoIP offer over PBX?

A: There are several advantages a VoIP has over a PBX, not the least of which is cost savings. With PBX, there are set-up fees and maintenance fees to deal with. VoIP systems tend to be more affordable to maintain.