September 3, 2022

What’s the Difference Between On-prem and Cloud PBX?

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Learn the main differences between on-premise or on-site and cloud PBX and how their features can impact the quality of customer service a contact center provides.

The debate between on-premise and cloud PBX phone setups has been going on for as long as they’ve both been available. With the phasing out of PSTN (Public Switchboard Telephone Networks) over the last decade, companies have turned to PBX phone systems that function by transferring voice data over the Internet. There are two main PBX phone systems, and business owners must consider the needs of their companies when considering which type of PBX system to implement into their contact centers. 

  1. A cloud PBX system, also referred to as a hosted or virtual PBX, is a phone system that is located on the cloud. Cloud PBX systems don’t require equipment on-site except for VoIP phones, unless a company opts to use softphones. 
  2. An on-premise PBX system is a closed-off network of phones within a business that has all equipment on-site. All wiring and hardware, such as the PBX server, are located within the company building.

Several key differences exist between the two setups. Here we will take an in-depth look at the main differences and how those factors impact the overall functioning of the PBX system

There are two main PBX phone systems, and business owners must consider the needs of their companies when considering which type of PBX system to implement into their contact centers.
  •  Maintenance: With an on-premise PBX system, all critical hardware and equipment is housed on-site, which means that companies must take care of all repair and upgrade costs. Some IT staff may be knowledgeable about PBX setups, but many times a repair technician experienced with your particular PBX company can be the only person who could troubleshoot. This can pose a problem in a few different ways. If an on-premise setup malfunctions, there is no way of knowing if the right tech would be available to fix it at that moment. That could result in excessive downtime. Outside repair can also be quite costly. Depending on how long it takes to fix your on-site PBX, repair and troubleshooting could end up costing a company thousands of dollars. Cloud PBX systems are much more hands-off. Since a provider hosts the entire PBX setup virtually, they are the ones responsible for troubleshooting. Contact centers don’t need to worry about maintaining or fixing any hardware. The maintenance is covered by a fee the hosted PBX provider charges a company each month.
  • Cost: Upfront costs vary between the two PBX setups. On-premise installation is usually quite expensive, especially since hardware must be purchased or leased. For a small company, you can expect to pay anywhere from $800 to $1000 per employee for an on-premise installation. With a larger company comes more complexity, and those initial costs can reach hundreds of thousands of dollars. In addition to upfront costs are the monthly fees associated with the on-site PBX such as phone lines and, if relevant, hardware lease payments. Contact centers can expect to pay around $1500 a month. 

Cloud PBX systems are overall much less expensive. No server or complicated wiring is required on-site, so installation costs are generally only the cost of the VoIP phones. If a contact center already has VoIP phones, they can use those instead of purchasing new ones. VoIP phones can cost as little as $5 per user per month if companies decide to use softphones. Physical VoIP phones vary in price because of the different features they offer, so the cost can be anywhere from $50 to over $100 per phone. Cloud PBX monthly fees usually range between $20 to $30 per user. 

  • Remote Access: On-premise PBX systems do not provide users with remote access. Their networks are designed to function only from where the equipment and wiring is located. Cloud PBX systems have the upper-hand in this scenario; users can make calls from anywhere they have Internet access. As most people know, the work environment has changed drastically over the last 2 years. Working from home has become standard for a large percentage of the workforce, so businesses have adapted to this change by ensuring that their operations can still function off-site. Cloud PBX systems are the best solution for contact centers to continue to perform at optimal levels as agents make and receive calls from home. 
  • Scalability: Cloud PBX phone systems are easy to expand. This makes it an easy choice for growing businesses. Scaling could be as simple as having the provider add extra lines, and if needed, companies would add extra phones. Scalability is much more difficult with an on-site PBX system. Specialized PBX techs are usually required to help with expansion. Depending on how large the project is, the cost can sky-rocket well into the 5-figure range. This is a risky investment; purchasing all the equipment is already really expensive, and owners could be left with significant losses and debt if the on-site phone provider company. This is because many times the hardware is designed to only work with the provider’s network setup.

Cloud PBX and VoIP

Now that we’ve covered some of the most important differences between on-premise and cloud PBX, it’s necessary to go into more detail about VoIP. The terms can be confusing for some, especially since “Cloud PBX ” and “VoIP” are sometimes used interchangeably. VoIP, which stands for Voice-over Internet Protocol, is a way to make calls over the Internet. VoIP transforms analog data into digital voice data so that it could travel over the Internet instead of through traditional phone lines. Cloud PBX is a phone system located on the cloud (or hosted/virtual). Cloud PBX providers use VoIP to make and receive calls. 

Cloud PBX uses VoIP to make and receive calls.

Cloud PBX providers

Cloud PBX providers like LiveVox offer complete solutions that easily integrate within a contact center’s already-functioning operations. Our all-in-one PBX solution offers cloud-based VoIP, rapid installation, easy expansion, and the ability to unify all operational systems to provide a seamless customer experience. 

Cloud PBX for cloud-based call management

With more than 20 years of experience, LiveVox has developed a cloud-based PBX and VoIP offering to allow contact centers to efficiently manage all calling operations. Their unified CRM platform designed for call center efficiency seamlessly integrates with numerous tools LiveVox offers to boost agent productivity and customer satisfaction. Companies shopping for a new PBX solution will save time and money while enhancing the customer and agent experience by choosing a cloud-based solution.

Hosted PBX vs onsite PBX: Cost advantages of a cloud-based PBX phone system

A cloud-based PBX phone system can offer significant cost advantages over a traditional on-premises PBX system. For businesses that make a lot of calls, or that have complex call routing requirements, a cloud-based system can be much cheaper to operate than an on-premises system. There are two main ways in which cloud PBX solutions save more money:

No need to buy and maintain expensive on-site equipment.

With a PBX cloud-based system, all the equipment is housed off-site in a secure data center. This means that you don’t need to worry about maintaining or upgrading your own PBX equipment. And if something does go wrong with the system, it’s the responsibility of the service provider to fix it, not yours.

Pay only for the features and capacity you need.

With a cloud-based system, you only pay for the features and capacity you actually use. There’s no need to pay for expensive features that you’ll never use, or for more capacity than you need. And if your needs change over time, it’s easy to add or remove features, or increase or decrease capacity, as required.

How to choose the right cloud PBX provider for your call center

When choosing a cloud PBX provider for your call center, there are a few things to consider:

  1. Make sure that the provider can offer the features and capacity you need.
  2. Select a provider that is reliable and has a good reputation. To find a reputable and reliable cloud PBX provider, you can ask for recommendations from other businesses, or search online for reviews.
  3. Check that the provider offers competitive pricing that’s within your budget.
  4. Once you’ve found a few providers that meet your needs, compare their features and prices before making a decision.

The cost advantages of a cloud-based PBX phone system can be significant, especially if your contact center makes a lot of calls or has complex call routing requirements. 

What is a cloud PBX?

Cloud PBX is a virtual phone system that does not require any hardware since all calls are made over the Internet. A provider hosts the PBX on a cloud. There is no need for a server or complex wiring on-site except for the phones a company decides to use.

What’s the difference between on-premises and Cloud PBX?

A cloud PBX system is a virtual phone system hosted on a cloud. Cloud PBX systems don’t require equipment on-site except for VoIP phones. An on-premise PBX system is a closed-off network of phones within a business that has all equipment on-site. All wiring and hardware, such as the PBX server, are located within the company building.

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About LiveVox

LiveVox (Nasdaq: LVOX) is a next generation contact center platform that powers more than 14 billion omnichannel interactions a year. By seamlessly unifying blended omnichannel communications, CRM, AI, and WEM capabilities, the Company’s technology delivers exceptional agent and customer experiences, while helping to mitigate compliance risk. With 20 years of cloud experience and expertise, LiveVox’s CCaaS 2.0 platform is at the forefront of cloud contact center innovation. The Company has more than 650 global employees and is headquartered in San Francisco, with offices in Atlanta; Columbus; Denver; St. Louis; Medellin, Colombia; and Bangalore, India. To stay up to date with everything LiveVox, follow us at @LiveVox or visit

To stay up to date with everything LiveVox, follow us at @LiveVox, visit or call one of our specialists at (844) 207-6663.

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