Hosted VoIP PBX

Hosted VoIP PBX is a VoIP business telephone system that is managed, maintained, and upgraded - off-site - by a VoIP service provider.

With a managed VoIP PBX, you'll be able to focus on the aspects of your business that matter most - not on your communications systems. While a PBX system on its own can be costly, a hosted VoIP PBX is extremely cheap.

Today, Hosted VoIP PBX service is one of the most popular and versatile VoIP service types; notable hosted VoIP PBX service providers are Vonage Business Solutions and RingCentral.

What does the PBX mean in Hosted VoIP PBX?

PBX stands for Private Branch Exchange. Basically, a PBX is a phone system that connects internal phone lines with external phone lines.

Typically, a PBX refers to the computerized box that connects outbound public telephone lines to the local telephone system of a business or a school.

This PBX box can be extremely expensive: anywhere from $500 to $4000+. You also have to pay to have hardlines installed between the different phones between your business. In total cost, an IP PBX system can cost anywhere from $800 to $1,000 per user.

You also need to have someone trained and able to upgrade the VoIP system. That adds a technician - another cost.

Wait! I thought that VoIP was supposed to save me money?!

An IP PBX Business Phone System; sometimes referred to as a Virtual Business PBX can save businesses with many users (at least 20 to 25; probably more) lots of money; at a certain point, it can be cheaper to own a private IP PBX system.

However, hosted VoIP PBX will cost $50 a month per user - at most. Seriously, that is just about the highest point on the price threshold. Realistically, a hosted VoIP PBX will cost between $20 and $30 a month per user.

That's better. What is a hosted VoIP PBX?

A Hosted VoIP PBX is a "virtual" Private Branch Exchange. Instead of using a hardware box, the Hosted VoIP PBX is computer program software (usually). As I said earlier, it is managed, maintained, and upgraded by a VoIP Service Provider.

When you subscribe to a hosted VoIP PBX service, you are paying for access to the VoIP service provider's data network and hosted PBX software. You are also paying for their technical and customer service - since they own and operate the VoIP system that you are using.

(The data network keeps your calls secure and guarantees consistent call quality).

Additionally, you can access efficiency-creating and helpful features with a hosted VoIP PBX, like an auto attendant, which will ensure no caller ever gets a busy signal or rings off the hook (more on these features in a bit).

To get these features on an IP PBX, you have to install new software or hardware. Most hosted VoIP PBX providers offer an easy-to-use web-based user interface ... let me try that again: with hosted VoIP PBX, you can usually change and customize features online in an easy-to-understand way. You don't have to have any technical experience to make quite sophisticated changes.

For smaller businesses, hosted PBX is a better choice: hosted VoIP PBX is much cheaper and much easier, both to set up and to use.

Why is a hosted VoIP PBX better for smaller businesses?

See above. Here are the main reasons that a hosted VOIP PBX is a better choice for businesses with fewer than 20 users:

  • Hosted VoIP PBX is cheaper ($30/ user per month to $800/user, plus technician's salary and a monthly SIP trunking subscription fee).
  • Hosted VoIP PBX is easy to set up (it usually takes 15 minutes to set up your phone system; when it comes to hardware, all you have to do is plug in your IP phone to the Internet. All you need in addition to VoIP service is IP phones and a high speed connection to the Internet).
  • Hosted VoIP PBX is easy to use (you can usually make changes to your phone system in 15 minutes. Usually, though, you just need to make calls.

Hosted VoIP PBX Features

With Hosted PBX, your company can use all features of a PBX. Big businesses have been able to use these features for a long time - now it's your turn. Some of these features are:

  • Auto Attendant: An automated receptionist that greats callers with information about your business, presents them with extension and department options, or lets them leave a voicemail if all other lines are busy. An auto attendant cuts out busy signals, too.
  • Call Forwarding: Send calls to a coworker or to your cell phone.
  • Call Transfer: Transfer calls to another extension, before or after you have even answered the call.
  • Call Waiting: Receive a second call on the same line
  • Call Conferencing: Talk to three or more people at the same time.

Want to know what else a hosted PBX can do? Read our glossary of VoIP Features. Most of these features are possible and included with standard hosted VoIP PBX plans.

What do I need for Hosted VoIP PBX, besides the Hosted VoIP service?

You need to have a high-speed Internet Connection and an ATA or IP phone.

Test your connection speed with our VoIP Speed Test.

Some VoIP service providers provide ATAs (analog telephone adapters) to connect your business with hosted PBX with your current, non-IP phones; others offer to sell them. An ATA converts the sound passed on from your traditional phone into data so you can use VoIP.

IP Phones are phones designed to work with VoIP; for purposes of explanation, they're like a phone with an ATA inside.

ATAs and IP Phones can be expensive. Check our VoIP equipment page to compare prices and pick the right equipment for your hosted PBX system (some providers only allow you to use their own brand of IP phones).

Some Things to Consider Before Switching to Hosted PBX

  • How many employees are at your business?
  • How many minutes does your business need each month?
  • How does your business use those minutes? Outbound or inbound calls?
  • How willing are you to committing to a contract?

Why you should know how many employees are at your business...

Besides the obvious reasons (e.g. knowing if that person is an employee or a thief in the stockroom), knowing how many employees will need phones is important: Most Hosted PBX VoIP service providers charge for each user.

Have more than 25 employees who use phones regularly?

You should consider an IP PBX system rather than using hosted PBX, since your own system will save you money on monthly fees for extensions. Some Hosted VoIP PBX providers will also offer to help you set up an IP PBX system at a lower cost to you.

Fewer than 25 employees on the phone?

Hosted PBX is your best choice.

How often do you call? Where do you call?

Hosted PBX, and VoIP services in general, are worth more if you frequently call out, call long distance, or call internationally.

Using VoIP means that hosted PBX providers don't have to pay as much to route calls to specific destinations. The savings are passed on to you.

Most hosted PBX plans offer a large number of pooled minutes (typically 500-1000 for the lowest priced plans); many VoIP service providers offer unlimited minute plans.

Many plans offer unlimited inbound calling and a pool of minutes for outbound services. You will save with these plans if your business does not need to make many outbound calls. You also may want to consider a Virtual PBX system.

Make sure you check any unlimited plan for a fair use limit. Many VoIP providers have a fair use limit on their unlimited plans to protect their hosted PBX network from crashing if people use it more than they are expecting.

Do you want a Contract?

Most VoIP service providers can offer contracts that can last between 1 and 3 years for a substantial discount per month. Most VoIP service providers also offer month-to-month payment options.

You will pay more if you don't want a contract. Most of the offers advertised on this site and elsewhere on the web are contract offers.

Many VoIP providers also tie their contracts to discounted rates and free phones. We try to make it clear what you need to do to get certain offers and what you should look for in the fine print.