A VoIP phone system can use VoIP technology to switch phone calls over local lines. 

An IP PBX can be set up using hardware or be entirely software-based, whether between a VoIP user and a landline user or between traditional users. 

Another option is cloud-based hosted PBX solutions, which are provided by VoIP service providers for businesses. A hosted PBX system provides identical features but eliminates the need for intricate hardware setup at the location. 

Difference Between VoIP and PBX 

The VoIP system (Voice over Internet Protocol) relies on the internet to send voice calls by converting analog voice signals into digital packets and sending them across internet networks. 

The PBX system relies on traditional phone systems using physical devices, such as PBX equipment, to route calls over conventional phone lines. 

VoIP benefits from the existing IP network infrastructure, such as the internet or local area network (LAN), and require compatible devices like IP phones or software phones. 

PBX requires dedicated devices, such as PBX servers, physical phone lines, and may include additional equipment like office phones. 

VoIP have lower upfront costs as they rely on existing infrastructure, but ongoing costs depend on factors such as internet connectivity and service provider fees. 

PBX requires higher upfront costs due to the need for physical hardware, along with maintenance, upgrades, and phone line costs, raising the total cost. 

VoIP route calls over the internet or local network and can connect to other VoIP systems directly or to traditional phone networks using gateways. 

PBX route calls over physical phone lines connected to the public switched telephone network (PSTN), using extensions and internal routing to direct calls within the organization. 

VoIP systems are highly scalable, where adding or removing users requires software configuration changes, making it easy to scale according to business needs. 

Expanding a PBX system requires adding more physical devices, which can be more complex and costly. 

Why is VoIP Better Than Traditional PBX? 

VoIP solutions are generally less expensive compared to fixed-line systems. Setting up a fixed-line phone system requires fixed charges, while setting up SIP trunking for VoIP systems incurs minimal or no cost. 

Monthly service fees and call rates are much lower for IP PBX users, as calls are transmitted over the IP network. Internal calls can be reduced to near-zero cost, while international and mobile calls are more affordable. 

Traditional PBX systems offer limited basic features, whereas IP PBX systems provide a range of advanced features like IVR, call queues, voicemail, call recording, and more. Some systems may be license-free depending on the service provider. 

VoIP systems enable unified communications, allowing businesses to take advantage of multiple communication channels like video conferencing, instant messaging, presence, CRM integration, and more. This is a significant step toward digital transformation for any company. 

Traditional PBX systems have limited phone compatibility and typically require proprietary phones from the same vendor. In contrast, IP PBX providers offer highly compatible phone systems, allowing you to connect and use most IP phones, as well as using analog phones through VoIP gateways. Additionally, providers also offer solutions for turning web browsers, mobile phones, and computers into SIP endpoints. 

How to Choose the Right System for You? 

When selecting a phone system for your organization, you need to consider several factors, such as the size of the company, the IT team's resources, and functional requirements. 

Review the following points to discover which system best fits your company: 

Most modern phone systems, which have a secure future, use VoIP, which requires a fast and stable internet connection. This is the first point you should ensure before purchasing any IP PBX system. However, in areas with limited phone lines or SIP connection restrictions, a VoIP GSM/3G/4G gateway may be a better alternative for business communications. 

The answer to this question significantly affects your choice between an on-premises IP PBX system or a cloud PBX. If you have an experienced technical team and prefer complete control over your phone system, an on-premises IP PBX is an excellent option. For small or startup businesses lacking resources in IT, choosing a cloud PBX will save a lot of effort, as the service provider will manage the system. 

Traditional PBX systems are more costly and difficult when adding new lines and users, while VoIP systems are much easier to scale. Cloud PBX systems are more flexible for businesses experiencing growth in employee numbers during system usage. You can add or remove extensions and only pay for what you need, which is especially useful for seasonal businesses requiring flexible communication solutions or startups experiencing rapid growth. 

Cloud PBX makes it easier to connect headquarters, branches, and remote employees under the same phone system. Some local PBX providers offer multi-location solutions, such as VPN services from cities. 

Conclusion 

Choosing the right phone system depends on several factors, such as network stability, company size, and available technical resources. 

You should be aware of the features and capabilities offered by each system to ensure improved communication efficiency within your company, whether you choose a traditional PBX system or an advanced VoIP system.