In some form or another, Private Branch Exchange (PBX) phone systems have been around for more than a century. They’re familiar and look like the conventional, professional option for businesses.
Looking into how much a PBX phone system costs is only natural. Why wouldn’t you want the same telephone service as millions of businesses before you?
But what’s worked in the past doesn’t always make sense today. PBX solutions come with hidden and ongoing costs that aren’t immediately obvious — and can be especially taxing for small businesses.
In this article, we’ll break down the costs, highlight the factors that influence pricing, and help you decide if PBX is the right system for your business. And if it’s not, we’ll introduce you to a modern alternative: VoIP.
What impacts your PBX cost?
Your total PBX costs depend on several factors, including:
- The type of PBX system: With on-premises PBX systems, all calls are made through your internet connection, often using Ethernet cables. They usually need less hardware, setup, and maintenance than analog PBX systems. Analog PBX systems sometimes still rely on copper wiring to connect to the Public Switched Telephone Network (PSTN), which makes installation (and scaling) more time-consuming and expensive.
- Business size: More employees mean higher hardware costs for desk phones and extensions. For businesses with multiple locations, each office typically needs its own server, adding to setup and installation expenses.
- Features required: Adding features like call forwarding, voicemail, or conferencing can increase costs, as some may need extra hardware or software licenses.
- Installation and maintenance: Analog PBX systems are more expensive to install and maintain because they need specialized wiring, technical expertise, and frequent upkeep. On-premises PBX is easier to install but requires regular support, often from IT professionals.
- Location: If your building isn’t already set up with the right cables or wiring, installation costs will be higher. Businesses in rural areas might also face extra travel fees for installers.
Breakdown of PBX phone system costs
PBX business phone system costs typically start at around $4,700 for medium-sized businesses.
Here’s an overview of how much an on-premesis PBX system will cost for a five-person team:
| Expense | Cost |
|---|---|
| PBX server | $645 |
| Support package | $75/year |
| Desk phones | $525 (one-time) |
| Extended warranty | $52 (one-time) |
| Installation costs | $331 (per day’s work) |
| Equipment maintenance costs | $315/year |
| Labor maintenance costs | $331 (per day’s work) |
| Total | $1,222 (one-time)+$1,383 (per year)=$2,605 |
And here’s a cost breakdown for an analog PBX system for a team of five:
| Expense | Cost |
|---|---|
| PBX server | $995 |
| Telephony card | $1,162 |
| PBX server support | $75/year |
| Desk phones | $525 (one-time) |
| Line rental costs | $1668/year (Verizon) |
| Installation costs | $331 (per day’s work) |
| Equipment maintenance costs | $250/year |
| Labor maintenance costs | $331 (per day’s work) |
| Total | $2,682 (one-time)+$2,986 (per year)=$5,668 |
Of course, the best way to get an accurate quote is to reach out to providers. But let’s be real, that can get awkward fast. What if you can’t say no and end up stuck with a plan you don’t want?
To help you feel more prepared, here’s a more detailed overview of the costs you can expect:
Upfront costs
Unlike cloud-based business phone solutions like Voice over Internet Protocol (VoIP), PBX systems come with a variety of upfront expenses. The exact numbers vary based on factors like your location, provider, and specific requirements, but here are some estimates to start:
- Hardware costs: Each user typically needs a desk phone (anywhere from $50-$160 per phone on Amazon). PBX systems also require equipment like servers ($995 for the Sangoma PBXact UC Appliance 60, for example) and network switches. To connect to traditional phone lines, you also need to invest in a telephony card, which can cost over $1,000.
- Wiring and cabling: For on-premises PBX systems, installation may need fiber optic cabling (between $1-$6 per foot). Traditional PBX systems still rely on copper wiring to connect to landlines, which is more expensive to install and maintain.
- Installation and related labor fees: Depending on your location and requirements, you can expect to pay an average of $405 for PBX installation. For additional hours, PBX technicians charge around $41.38 per hour on average, which comes to about $331 for a full day of work.
- Warranties and support packages (optional): Some providers may offer extended warranties or one-time fees for initial support packages to cover setup assistance or troubleshooting during the first few months.
- Porting your number (optional): If you want to keep your current business or landline phone number, some providers charge a one-time fee to port them to your PBX system. Costs can vary, so check with your provider for exact pricing.
Ongoing costs
In addition to the high upfront costs, there are also ongoing PBX expenses to keep in mind:
- Repairs and maintenance costs: PBX systems need regular maintenance. And businesses have to foot the bill if anything goes wrong. As mentioned earlier, PBX technicians charge, on average, $41.38 per hour, but the exact rates can vary depending on your location and the complexity of the issue. Depending on your service agreement, you might get discounted rates or priority support for repairs.
- Ongoing support and updates: PBX systems need regular updates to stay secure and functional. Some providers offer service agreements, which you can pay monthly or annually, to cover tasks like software updates, troubleshooting, and maintenance. Without a service agreement, you may need to pay for support as needed, which can be more costly, especially in emergencies.
- Electricity: PBX systems, especially on-premises setups, consume more electricity than systems like VoIP because they require dedicated equipment that runs continuously.
- International calling rates: PBX systems often rely on traditional phone lines for international calls, so the rates are higher than VoIP costs. The exact cost varies by provider and destination, but they typically range from $0.05 to $0.50 per minute.
- Add-ons: Depending on your provider, you might pay extra monthly for features like call analytics, voicemail transcription, or advanced call routing. Premium options, like integrations with CRMs or phone menus, are often part of higher-tier plans or offered as paid extras.
Hidden costs
Here are some PBX solution expenses that don’t jump out at first glance:
- Downtime due to technical issues: Outages can disrupt your business and cost you money in lost revenue and emergency repair bills. Consider investing in a PBX monitoring solution (to keep on top of issues) or paying extra for quick-response support.
- Scalability challenges: Expanding a PBX system is expensive because you’ll need new hardware, installation, and potential cabling for every added user. Not to mention every new location. Before committing, ask your provider for a detailed breakdown of costs per additional user and office.
- Limited features: PBX systems often lack SMS, voicemail transcription, and CRM integrations, which VoIP systems include as standard. Adding these features to your PBX systems might require third-party solutions or costly upgrades. Check if your provider offers them natively or how much workarounds might cost.
- Taxes and location-based charges: Like anything else, PBX systems come with local, state, and federal telecom taxes and fees. These vary depending on your location, so ask your service provider for a breakdown of taxes in your contract. Some common charges include E911 taxes and fees, the High Cost Fund Surcharge, and the Municipal Franchise Fee.
- Long-term contracts: Unlike VoIP solutions, many PBX providers require long-term contracts, making it difficult and costly to switch providers. Breaking a contract often comes with hefty termination fees, so make sure the solution works for your business before committing.
VoIP: The modern alternative to PBX
VoIP gives small businesses a simpler, more flexible way to stay connected without the upfront costs of PBX systems.
Instead of buying expensive hardware, you pay a monthly fee per user (starting at $15 with OpenPhone), each team member downloads a VoIP app on their work computers or phones, and you’re good to go.
Most VoIP providers also include customer support in their base plans, so you don’t need to budget for technicians or an IT team.
That’s thousands of dollars saved right there. But it’s not just about saving money. (Though that’s pretty nice.)
VoIP phone systems aren’t tied to a desk or a physical location like landlines. Your team can call, text, and manage communications from anywhere.
Features like voicemail transcription, integrations with CRMs and email, and texting come standard, helping you save time and stay organized. And with automated phone system features like call routing and auto-attendants, you can focus on running your business instead of managing a phone system.
Miss a call? Automatically send a text message letting them know you’ll get back to them soon. Want to remind clients about upcoming appointments or overdue payments? Use tools like Zapier to send automated text reminders.
Is a PBX system for you?
PBX systems can work well for some businesses, but they’re not always the best fit. Here’s a simple table to help you assess if PBX is what you need:
| Business need | Best fit (PBX or VoIP) |
|---|---|
| You require a reliable system in areas with poor internet connectivity | PBX |
| Your team works remotely or needs access to a mobile-friendly communication system | VoIP |
| You require easy integration with tools like CRMs, email, and other business apps | VoIP |
| You want a system that comes with features like texting, call recordings, and analytics | VoIP |
| You want a system with dedicated hardware for control over call quality and security | PBX |
| You need a system with minimal ongoing maintenance | VoIP |
| You want predictable monthly costs with little upfront investment | VoIP |
If most of your needs fall under the PBX category, then it might be a suitable option for you. But if you need features like remote access, easy scalability, or integrations with tools you already use, VoIP might be the better choice.
Don’t settle — VoIP lets you do more at a fraction of the cost
PBX systems might work for some. But most businesses need flexibility, scalability, and modern features.
For example, with Quo, SMS, MMS, or making calls are all handled through the same app — on your phone, laptop, or wherever you work.
A unified inbox keeps your entire team on the same page, automations get rid of the repetitive tasks you don’t want to do, and features like voicemail transcription, call recording, and templated messages mean less time on admin work — and more on running your business.
Want to try Quo for yourself? Sign up for a free seven-day trial today!
FAQs
A Private Branch Exchange (PBX) phone system, sometimes called a private automatic branch exchange or PABX, is a network businesses use to make and manage calls. It lets employees make internal calls and share external phone lines for outgoing or incoming calls.
PBX systems can be analog (using landlines) or on-premises (using the internet).
PBX is a traditional phone system that operates through physical hardware, often connected to landlines or the internet using Ethernet cables. Voice over Internet Protocol (VoIP) uses the internet to make and receive calls and offers features like texting, call recording, integrations, and mobile access with lower setup and maintenance costs.
Comparing VoIP vs PBX, yes, VoIP is generally cheaper than PBX. That’s because VoIP eliminates the need for costly hardware and ongoing maintenance by operating through the cloud. You pay a predictable monthly fee per user, while PBX requires upfront investments and higher maintenance costs.
PBX systems are expensive to set up and maintain, require on-site hardware, can’t generally be used on the move, and aren’t easily scalable. They also lack features like texting, software integrations, and access across devices like mobile phones.
A PBX system might work for businesses that operate from a single location, don’t plan on scaling, and don’t want to rely on internet connectivity. But for most small to medium businesses, VoIP’s flexibility, scalability, advanced features, and lower costs make it a better fit.
