PBX Phone Systems: Definition, Cost, Features & Providers

A public branch exchange (PBX) phone system is hardware and software that receives incoming calls and routes them without human intervention via a voice menu of options. PBX can be free or as much as $1,000 depending on the system. They also provide access to calling features such as call transfers, call scheduling, and more.

A number of VoIP phone service providers offer a hosted PBX or may include many of the features you’d get from a PBX in their phone service plans. For example, our recommended best VoIP phone service provider, Nextiva, offers a Hosted PBX service.

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How PBX Phone Systems Work

There was a time where companies had dedicated offices staffed with human switchboard operators. If customers dialed the company’s main number, they would be put in touch with an operator who would physically wire a connection to the appropriate extension. This system, which was known as a private branch exchange (PBX), was later automated and replaced by the systems we have today.

Like switchboard operators, modern PBX systems receive incoming calls, but they route them based on configured rules within the system. This effectively means that someone can call your organization, be greeted with a range of options, and reach their desired extension without your staff having to intervene. Some PBX systems even offer the ability to schedule calls.

In addition, PBX phone system components have also evolved since the emergence of internet-based phone (VoIP) technology. Hosted and virtual PBX phone systems have made the need for physical hardware obsolete in many cases as the hardware becomes centralized and small businesses can access its benefits through the cloud. These systems are often used in businesses that range in size from small offices to call centers.

Illustrated view of how a PBX system works

Types of PBX Systems

There are four different types of PBX System available today. Those with traditional landline systems will want to go with a landline PBX. Those who have VoIP phone systems, however, will want to look at either an IP, hosted, or virtual PBX system.

Traditional PBX

Traditional PBX phone system technology is landline-based and uses a physical PBX hardware box. Phone lines enter your office where they are connected to the box, allowing calls to then be distributed to each desk in your office via a voice menu. They are also very expensive to set up. In addition to the cost of the PBX hardware ($1,000 and up), you will also have to install traditional analog phone lines within and outside of your office if you don’t already have them.

While most small businesses will want to go with a VoIP-based PBX due to lower costs, landlines still have their usefulness. For example, if your organization is located in an area that suffers frequent power outages, a traditional PBX may be the better option, as VoIP service is dependent on your internet connection. Landline phone systems are also easier to use for less tech-savvy workers because they have far fewer features than their VoIP counterparts.

IP PBX

An IP PBX is very similar to a traditional PBX phone system. The difference is it uses digital phone signals to send calls rather than analog-based landlines. The main advantage is an easier set up: you can use Ethernet cables to connect your phones instead of traditional phone ones. This negates the need for extensive rewiring.

However, an IP PBX is much more expensive than other types of VoIP-based PBX systems because you need to buy and install the hardware, which can cost $1,000 and up. That said, it can be a good option for larger businesses, since you generally don’t have to pay as much in monthly service fees compared to a hosted PBX.

Hosted PBX

A hosted PBX is a newer PBX phone system technology. It uses VoIP phone signals like an IP PBX, but you don’t have to purchase physical PBX hardware. Instead, the system is hosted in the cloud, which allows you to manage PBX features like call routing, transfers, auto-attendant, and voicemail from your internet browser or smartphone. Hosted PBX systems are more affordable and easier to set up than an IP or Traditional PBX.

Hosted PBX like Nextiva systems are generally going to be a better fit for most small businesses because they are extremely easy to set up and do not necessitate the cost of an expensive PBX box. These systems offer all of the phone features you’d expect for your business, but without the added hardware costs. All you need for these systems is high-speed internet.

Virtual PBX

A virtual PBX is a “light” version of a hosted PBX. It works the same way as a hosted PBX, but offers fewer features. They can only forward calls to an existing mobile, landline, or VoIP phone number. These systems can receive calls and route them based on predefined rules, such as forwarding calls to different departments or individual extensions. Setup time is virtually immediate.

They are more affordable upfront, but they still require you to have another business phone system in place so that you can receive these forwarded calls. However, they can be expensive in the long run since you will still need to pay your cell phone and landline bills on top of the PBX subscription. Virtual PBX systems are ideal for solopreneurs and freelancers who simply want a business line that they can add to their personal phone.

PBX Phone System Costs

PBX prices vary by type and can cost $1,000 for traditional systems or as little as $20 for hosted systems. Overall costs include things like hardware, such as a PBX box and handsets, as well as monthly service fees on a per user or per line basis.

Typical PBX-related costs include:

PBX Box

For traditional and IP PBX systems, you can expect to pay around $1,000. This includes the price of the box itself as well as the installation service you will need. You might have to pay for landline wiring to be installed in your building if it does not already have it. Hosted PBX and virtual systems do not require you to buy your own PBX box, and are much more affordable.

Handsets

Phones for both landline and VoIP systems and can range anywhere from $40.00 to as much as $500 depending on features like HD voice and video calling. Most hosted and virtual PBX systems can be used on existing cell phones, landlines, and desktop apps. This could be a massive cost saving for your organization.

Monthly Fees

No matter what type of phone system you adopt, there will be monthly charges for using the service. Virtual PBX systems usually cost far less, starting as low as $8.60 per line for systems like Grasshopper and ranging all the way up to $112 per line, as is the case with Verizon.

Prices vary widely between types of PBX systems, and even between providers of the same type of system. Most small organizations will not want to deal with the heavy costs involved in buying and installing their own PBX box, so we recommend most business customers consider a hosted or virtual PBX solution.

PBX Phone System Features

Any PBX system you adopt will allow you to make, receive, and manage calls. However, VoIP-based allow for more advanced features like video conferencing and the ability to take your work number on the go via a mobile app.

Common features found in all PBX systems include:

• Call forwarding: PBX systems allow you to redirect calls to another number.
• Call hold: This feature parks callers and ensures they are unable to listen in on your conversations for any length of time.
• Call waiting: Call waiting features allow you to answer a call while already engaged in another call.
• Call blocking: PBX systems allow you to ban specific numbers from calling your organization.
• Voicemail: When you are unavailable, callers can leave voicemail messages that you can later hear in your inbox.

In addition to these features, PBX systems also give your organization an auto-attendant. This essentially provides callers with an automated voice menu that can route them to the extension they are trying to reach. These systems are helpful to callers and give your company a more professional presence.

VoIP-based PBX systems are able to do a lot more than just receive and manage calls. Most VoIP services offer a mobile app that you can install on your personal smartphone. You can receive calls with your work number just like you would if you were at your desk. This makes these systems very popular with remote workers and employees who travel frequently. Other features include voicemail-to-email transcription, and the ability to connect data with CRMs.

PBX Phone System Providers

The providers available to you depend on the type of PBX system you want:

• Traditional PBX: In most cases, traditional PBX systems are sold through whichever company operates landline service in your area. This could be a major national company like Comcast or a provider that only operates in a small region.
• IP PBX: You can buy IP PBX systems through providers like Asterix, which offers its Switchvox PBX system with bundled with phone system software and handsets as well.
• Hosted PBX: Nextiva is one of the most popular hosted PBX systems on the market. Their service ranges anywhere from $19.99 to $27.95 per user, per month, depending on what features you need.
• Virtual PBX: If you want a virtual PBX system, Grasshopper is among the best providers around. Prices start at $26 per month for one number and three extensions and go up depending on how many numbers you need.

Frequently Asked Questions (FAQs)

What is the difference between a landline & VoIP phone system?

Landline systems transmit calls over the public network of copper wires that have been in place since before the days of the internet or cellular technology. A VoIP system, on the other hand, transmits calls as data over the internet. You can read more in our article on landline versus VoIP technology.

Do I need an internet connection for a PBX?

You do not need an internet connection to use a traditional PBX phone system. But if you are looking into an IP, hosted, or PBX phone system, then you will need a high-speed internet connection for those services to run on.

Can landline & VoIP phones call each other?

Yes. While they use different technology to transmit calls, you can call a VoIP phone from your landline, and vice versa.

Bottom Line: PBX Systems

A PBX system receives incoming call traffic and distributes those calls to the right employees based on a complex set of pre-configured rules. These systems are essential in handling all the calls that come through your network and connecting your customers efficiently.

A hosted PBX like Nextiva delivers a wealth of telephony features without having to invest in an expensive PBX box. It also offers advanced VoIP features like a mobile app and voicemail-to-email functionality. Get started with Nextiva today.

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