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For decades, businesses installed Private Branch Exchanges (PBX) in their business to communicate internally between phone extensions and connect to the phone company. As VoIP (Voice over Internet Protocol) became more popular, PBX could replace the local phone company by connecting calls through the Internet.

Today, cloud-based switching offers more flexibility, scalability, and significantly less capital investment.

An on-premises PBX system can cost tens of thousands of dollars. If a business has multiple locations, the costs can rise even higher. However, that is just the beginning. There are hidden costs for on-site PBX users that proividers may not tell you about.


10 Hidden Costs of a Premise-Based Business Phone Service - LOGIX

Hidden Costs of a Premise-Based Business Phone Service

Here are the top 10 hidden costs you need to know about when making decisions about your business phone service.


On-premises systems are usually overprovisioned, in order to handle potential future growth or peak calling times. Businesses are paying for capacity that they may never use or need.

With cloud-hosted PBX and VoIP, businesses only pay for the capacity and services they need right now, with the ability to scale up or down on demand.

Limited Capacity

An on-site PBX has a finite limit to capacity. An on-premises business phone service relies on servers for data and features such as call recording. When the system is full, it will no longer be able to record calls.

A cloud-hosted business phone service stores call recordings and data in the cloud, so capacity is not an issue.

Aging Hardware

With an on-site PBX, when businesses buy hardware, they are purchasing the technology that exists at that time. It could become obsolete quickly or be challenging to upgrade. Some manufacturers may no longer support hardware after introducing newer models. These challenges can leave businesses with expensive upgrade or replacement costs.

With a cloud-hosted PBX, business phone service providers have a competitive interest in maintaining the latest technology. The provider, not the customer, handles upgrades and maintenance.

Maintenance Costs

Businesses with an on-site PBX system need to consider ongoing maintenance costs. Server hardware can fail. But when a business phone service is delivered via the cloud, it’s the business phone service provider that is responsible for maintenance and replacement costs. There are no direct costs to businesses.


If a natural disaster such as a flood or fire occurs, your on-site business phone service may not be accessible. Your phone service may not be available if your power goes out. Customers may no longer be able to reach you.

A cloud-based business phone system can reroute calls to mobile devices or other locations easily, so your business does not miss calls in case of an emergency.


Integrating mobility on a traditional business phone service can be complicated and expensive. It may mean additional upgrades to the system, and there may be additional call charges on PBX trunks as calls move in and out of the system.

A hosted system is designed to handle mobility. Integrating mobile applications with a business phone service enables you to manage calls from any smartphone or mobile device using your business phone number.


If you want to integrate your on-premises business phone service with other software, such as CRM (Customer Relationship Management) software, you may find that it’s a difficult task. There could be additional charges, with outside vendors brought in to handle the integration.

Cloud-based business phone systems are designed to integrate with other software. An online dashboard enables connections quickly and easily.

Connecting Multiple Locations

With traditional PBX systems, businesses with multiple locations require more complex hardware, and numerous sets of equipment. Depending on the age of installed equipment, there may be additional costs for integration and compatibility. These complications can drive up the cost of a business phone system considerably.

In the cloud, the location of an employee and the number of offices do not matter. All businesses need is an internet connection. Remote employees can have a local dialing extension. Calls can be routed to mobile phones. Cloud-based voice systems help employees do business wherever they are.


For on-premises phone systems, adding in advanced calling features such as conference calls, video conferences, auto-attendant or smart routing means adding on new systems or paying extra for features. Some business phone service providers may also tack on additional per-use fees.

Technology is always evolving. Cloud-based business phone systems have these advanced features built-in, and continue to add services as they become available. Business phone service providers have a competitive need to offer the latest services and can amortize costs, rather than forcing each business to pay separately.


Additional features or demands on an on-premises business phone service can become taxing. It may become necessary to replace processors to upgrade speed and throughput to handle this growing demand.

Cloud business phone service providers can maintain optimal performance levels no matter how many add-ons businesses need.

LOGIX is Built for Business

LOGIX is a Texas-based business phone service provider connecting more than 10,000 customers and 3,000 enterprise buildings on more than 265,000 installed fiber miles. LOGIX offers robust, reliable cloud-hosted PBX and VoIP business phone services on a fully monitored fiber network.

Is your business in Texas?

Contact LOGIX to learn how a fiber cloud-based business phone service can help your business grow.

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