PBX vs. VoIP: What are the Differences?
By Quinn Malloy
| 26. November 2020 |
PBX - Phone system
By Q. Malloy Quinn Malloy
| 26 Nov 2020 |
PBX - Phone system
    By Q. Malloy Quinn Malloy
    | 26 Nov 2020
    PBX - Phone system

    PBX vs. VoIP: What are the Differences?

    PBX vs. VoIP: what are the differences?

    PBX or VoIP, which should you choose for your office? Read on to find out what makes the systems different.

    Picking a phone infrastructure is one of the most significant decisions a company has to make. Even with several contact channels available today, a business phone is still a must-have. In previous years, companies simply picked a traditional landline phone as there was no other alternative. Now, the situation is a bit more complicated. 

    When setting up a company phone infrastructure, the decision usually boils down to choosing between:

    • PBX (private branch exchange)
    • VoIP network (voice over internet protocol) 

    What is the difference, and which one is a better option for your business?

    What Are PBX and VoIP?

    Let’s start by explaining what PBX and VoIP actually are since plenty of people use the terms interchangeably.

    PBX (Private Branch Exchange)

    • type of private telephone network for company use
    • this type of network allows company employees to communicate both internally (with other employees) and externally
    • besides allowing users to make and receive calls, a PBX network also has a couple of useful features that are not available on traditional phones, such as call transfers or an IVR menu
    • by using a PBX, a company can have many phones installed that are all connected to one network

    VoIP (voice over internet protocol)

    • works on a completely different principle, which is that calls are forwarded using the internet
    • whenever you make a call, your voice is transformed and compressed into data and then sent to the target phone
    • some years ago, the quality of VoIP calls was pretty low, so companies picked PBX as a more reliable option
    • nowadays, the quality of voice calls isn’t any different from a regular PBX call

    But while both the speed and quality of both networks might be similar, there are still plenty of differences between them. Below we highlight the most important differences when it comes to PBX vs. VoIP so that you can choose the best option for your business needs.

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    PBX vs. VoIP: main differences

    #1 Initial setup costs

    The biggest difference when it comes to installing PBX vs. VoIP networks is the cost. 

    Creating a PBX network for your company is pretty complicated and also expensive.Factors:

    • you need to pay upfront for a system power supply, routers, compatible phone sets, and headsets
    • the costs of installing and setting up the whole infrastructure are high too

    Adding it all up together, the overall cost can quickly get into thousands of dollars. Because of the initial costs that companies have to pay, only bigger companies with many employees can afford PBX networks.

    Setting up a VoIP network, meanwhile, is much cheaper. If you already have an existing internet connection, there’s no need to set up an entirely new system. You only need to invest in:

    • a router that can handle high-quality VoIP calls
    • phones that are compatible with IP technology
    • computer call software

    There’s no need to hire a technician to install VoIP, either. 

    #2 Monthly costs

    Another aspect that you need to bear in mind when picking between PBX and VoIP networks is the monthly costs of running and maintaining them. 

    With PBX, this is dependent on your setup. Generally, you need to add together the phone bills, system maintenance, and maintenance issues. You’ll also need to pay for software and phone licenses as well.

    VoIP, meanwhile, is typically a subscription service. Your monthly cost will depend on which calling tool and plan you use. For example, at CloudTalk, we have four pricing models, from a starter plan that costs as little as $15 per user a month to a tailor-made plan for enterprises.

    #3 Call quality

    Most of us probably remember the early days of VoIP services – the call quality left much to be desired then. To have high-quality calls, businesses chose PBX instead. Nowadays, the quality of calls using both technologies is similar, and HD voice calls have slowly become the norm.

    With PBX, the call quality depends mainly on the hardware, which includes the routers and phone models. If the system is appropriately set up and the phone models are high-quality, then so will the calls.

    With VoIP, the situation is a bit more complicated, as there can be several causes of low sound quality. One of the most common reasons is a slow or unstable internet connection. If the router isn’t configured correctly, this might also cause call delays and hiccups to the point of VoIP being unusable. The headset of your employees or the calling software might also impact the quality of calls. 

    #4 Scalability and ease of upgrading

    Upgrading or scaling a VoIP network isn’t the slightest problem. If you need to, you can easily switch to a higher VoIP plan, order more phones, or add new users. If you need another phone number (even an international one) in your company, you can add one in just a few minutes and use it straight away. The most you will need to do is to consider upgrading your internet plan. If you are thinking about switching your current router or phone to newer models, that’s not a problem either. You can even use the same VoIP plan in different offices! Also, you can just as easily remove phone numbers or move to a lower plan. 

    VoIP also comes with several features that are either not available for PBX phones or are very expensive to add. You can even ask your VoIP provider to add custom features that are needed by your company.

    Meanwhile, scaling a PBX system can be troublesome, not to mention costly. If you are moving to a new office, you have to build the PBX infrastructure from scratch. But even doing something as seemingly simple as adding more users to PBX is a challenge. It might turn out that you will first need new lines that require a different module, and said module requires far more capacity. For all of those things, you’ll need an experienced technician. And once you’ve already paid for new hardware or signed a long-term licensing contract, returning to previous settings is pretty much impossible. Same with adding new features. This might be costly and difficult to do, as you will need a knowledgeable IT technician.

    #5 Flexibility

    The lack of flexibility of PBX phones is another thing that can cause companies several issues. PBX phones are usually proprietary, which means they are either bound to a given system or vendor. Want to switch to a different phone model or vendor? In the worst-case scenario, you will have to replace your entire set of equipment, as your current models won’t be compatible.

    With this comes another problem, which is noticeable, especially during the current pandemic times. PBX phones can only be used inside your office and only with compatible phone models. That means remote calling is out of the question.   

    When it comes to VoIP systems, you have a lot more options:

    So no matter if they are stuck in a traffic jam or working in home-office mode, agents can answer the calls in the same way as if they were in the office.

    #6 Reliability and security

    If properly installed and maintained, a PBX system is highly reliable and secure. As they rely on a traditional PSTN (Public switched telephone network) rather than an internet connection, there’s no risk of hackers attacking. You don’t also have to fear power outages – traditional PBX phones don’t rely on electric power, so they will keep working even if the power is out. The only problem here is hardware failure. In case of an internal issue, the whole system might require a qualified PBX technician to visit, and that means downtime.

    VoIP technology, meanwhile, is dependent on a power source, so it’s immediately down when there’s an outage. But that’s not the only problem – since the technology is heavily reliant on having an internet connection, any problems or drops in speed will significantly impact call quality.  

    While VoIP providers are continuously making their technology as secure as possible, it also depends on your organization’s security practices to prevent hacking or breach attempts. Using call encryption, strong passwords, and a good firewall is simply a must. 


    Both PBX and VoIP have their advantages and disadvantages. 

    PBX is reliable, secure, and offers high call quality, but both the initial setup and maintaining the system is costly. 

    VoIP, meanwhile, is very flexible and scalable, plus the cost of maintaining the structure is much lower than with traditional lines. VoIP performance depends a lot on internet connection capabilities, though – if speeds drop, so does the quality of calls.   

    Already have a traditional PBX in place? Cloudtalk can help you move from your outdated PBX setup to VoIP, and get all the benefits of this technology.