Business Phone System

A business phone system connects all of the phones in a business to each other, and to the public phone network. Many businesses today use a PBX or IP PBX and VoIP to power their business phone system because of the myriad advantages, both technological and fiscal.

When using a business phone system like VoIP or a hosted PBX through VoIP, a complex and often arcane system of switchboards can be left behind in favor of a more efficient and cost prohibitive computer controlled system.

Check out your options below, on the comparison table and in the article that follows.

Back in the olden days there were two types of phone system: key system and a PBX.

To a certain extent, both are used today. A key system requires users to manually select and connect lines to make a call; a PBX is a computer that selects the outgoing line automatically.

In every case, a PBX (which means private branch exchange) is much much better than a key system.

Private Branch Exchange (PBX): The Business's Telephone Network

A PBX handles circuit switching for local calls and in-network calls for a business. Did you not understand that? Neither did I.

Basically, a PBX means the same thing as a business phone system. A PBX connects all the phones in a office and a business together (via extensions); then the PBX connects internal phones to the outside world with VoIP or with traditional phone lines.

Having all the phones in your business connected together saves you money.

You don't pay for calls within the office. And you don't have to buy a line for every person in the office: you can bundle your phone lines together (this is called SIP trunking when it comes to VoIP).

Since the PBX is a computer, you can also use a bunch of excellent phone system features, like:

  • Call Management: Forwarding, holding and transferring calls.
  • Conference Calling: Talk to multiple people at once.
  • Auto attendant: An automated receptionist that greets and transfers inbound callers to the correct departments and people
  • Voicemail: Callers can leave a message instead of getting a busy signal.

These features are now standard with any business phone system - because of the PBX.

A PBX sounds like a great business phone system? Where do I sign up?

Hold on there, tiger. PBXs are expensive. The PBX itself can cost as little as $200, but usually it'll cost you around $1000 a user. Maybe more. And that's just the equipment cost.

Hosted PBX

The lower-cost solution for business is Hosted VoIP PBX; also known as a Virutal Business Phone SystemYou get the benefits of a business phone system but without high equipment costs: instead, you pay $20 to $30 per user.

Hosted PBX is great for small businesses; it can be quite expensive for larger businesses. Larger business will want a PBX.


An IP PBX can either be real hardware or a virtual PBX, which operates as software on a computer. It is the traditional PBX I described before I mentioned hosted PBX.

Most premise-based PBX phone systems (the ones that a large business might own) are IP PBXs. While the equipment cost is higher, an IP PBX allows large businesses to save money in the long run.

The future of Business Phone Systems

It has only been a decade since the rapid expansion and improvement of the standard business phone system. PBX has become more accessible to smaller businesses through Hosted PBX plans. Businesses with access to expensive PBX systems have made the move to the internet telephony with IP PBX.

SIP trunking allows these businesses to be more efficient and cost-effective in connecting to the publicly switched telephone network; with the rise of software-based phone programs like softphones, small businesses don't even need IP phones that are typically required for VoIP service!