VoIP or PBX – Which One Is Best for Your Business?

Choosing the right phone system for a business is a crucial moment. The decision is followed by a significant investment in a system that supports business operations. Not only will the decision affect the longevity of the business, but also the overall return on the investment in phone systems.

There is no shortage of options to choose from too, but the two most popular ones are Voice over Internet Protocol (VoIP) and Private Branch Exchange (PBX). Which one is the right solution for your business? Let’s find out, shall we?

Physical vs. Digital

PBX systems have been around longer than VoIP, hence their reliance on copper wires and a central box. You essentially have devices linked to a control system and communications routed between them. Modern PBX systems can be connected to a bridge – usually SIP trunks – to allow different branches to connect with one another.

VoIP, on the other hand, is entirely digital. Yes, there are still network cables connecting multiple devices, but physical connections are not a requirement. Some offices now use wireless VoIP phone systems, while others turn to IP-based unified communications altogether. When comparing PBX vs. VoIP, this is perhaps the biggest difference.

Initial Investment

Since PBX requires the phone system – or at least a large portion of it – to be installed on the premise, the initial investment of a PBX system tends to be higher. A VoIP system, on the other hand, can work with virtually any device, including dedicated VoIP terminals and unified communications devices. The only requirement is a working internet connection.

In fact, cloud VoIP systems take a low initial investment to a whole new level. You don’t have to worry about setting up a data center for managing the VoIP system. Everything is being offered as a service with a fixed monthly fee and no initial investment at all.


With PBX systems, you have to be very careful when designing the phone network for your business. This is due to the fact that it is not easy to make big changes once the initial system is set up. Big changes also come with a hefty price tag.

VoIP systems are more flexible. As mentioned before, you can use any standard network, wired and wireless, to connect new terminals. Everything else is done on the software side, including the assignment of terminal ID and access management.


Lastly, we have reliability. Since PBX runs on its own network the majority of the time, you can expect PBX-based systems to be very reliable. The reliability of a VoIP system, on the other hand, depends highly on the reliability of the network you use and the internet backbone that supports it.

Which of these two systems is right for your business? If you have a rigid need and don’t handle large call volume on a regular basis, PBX can be a great investment to make, especially with technologies like SIP now available. If you want the extra flexibility or your business is expected to grow exponentially in the near future, VoIP phone systems are your best options.