Traditional vs Virtual PBX: Leasing, Ownership and Investment Protection

Posted by Randy Kremlacek on Feb 20, 2012 3:32:00 PM

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With the surging popularity of PBX hosted solutions, they are increasingly considered as an alternative to the small business PBX.  This four part blog series will provide an in-depth look into the Virtual vs PBX debate.

Like the dilemma of leasing versus buying a car, the decision between Virtual PBX versus IP PBX can be vexing. In this edition, we'll be taking a look leasing vs. owning, paying now or paying later, investment protection and who actually controls your communication.

What are the arguments that favor hosted VoIP service or the VoIP premise PBX? How do you know what is right for your company? It’s not just solely about money, but also features, functionality, and control play a significant role in making the right choice.

So which is the best way to go?  Like choosing cat food, it depends greatly on your tastes, particular needs and budget. So, let's get tasting!

Teledynamic compare VOIP

Leasing Vs. Ownership

                         Virtual                                                                                          Premise PBX

Virtual PBX is akin to leasing. You do not own the PBX.  The equipment (with the exception of the telephones and router), resides at the remote hosted PBX site, not at your location. 

With a premise PBX, you purchase an asset.    The equipment is installed at your location and it needs to be maintained. You do not pay monthly for a service.


Pay Now Or Pay Later

                       Virtual                                                                                            Premise PBX

You pay for service on a monthly basis.  The upfront costs are limited to phones and router. Typically, hosted PBX providers charge like a wireless provider, billing a contracted monthly rate per user plus additional charges for added features.


With an IP PBX, the upfront cost is significant, typically about three times more than the upfront hosted setup costs.

However, the purchase can be financed which makes for monthly payments, typically lower than a hosted PBX monthly payment


Investment Protection

                        Virtual                                                                                           Premise PBX

Virtual means you are paying for a service and there is no investment but rather an ongoing expense.   However, the phones can be re-used in the future in a different environment and as such, they are an investment. 

You have purchased an asset that will serve your organization for many years. The phones can also be-used.



Who Controls Your Communications?

                          Virtual                                                                                        Premise PBX

By definition, hosted means that your provider maintains control and ownership of your communications.  However, for companies that do not have the resources to implement a premise-based PBX, hosted PBX may be the best way for them to get the benefits of VoIP.

Ownership equates control. Owning a PBX means there is a significant up-front commitment to install the system plus the ongoing costs of administration.  This should be factored into the total cost of ownership. The upside is that once the system is running smoothly, it should stay that way for a very long time.

In part II of our hosted PBX comparision we'll look at administration, PBX software features and Internet bandwidth requirements.


Bay Area Virtual PBX Solutions by TeleDynamic


About the Author

Randy Kremlacek

President | Head Chef

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Randy Kremlacek is president and Head Chef of TeleDynamic Communications and is a Digium Select Partner and 2013 Pinnacle Award winner. TeleDynamic Communications provides turnkey premises-based PBX and hosted PBX, SIP Trunking and Unified Communications. Randy Kremlacek prides himself on knowing the telecommunications industry as well as he knows his way around his own kitchen. READ MORE



Randy Kremlacek 

Topics: PBX, Virtual PBX