10 Hidden Costs of a Premises-Based (PBX) Phone System

Jun 2016

Many premises-based phone system (PBX) manufacturers claim that the 5 year costs of their systems are lower than an equivalent Cloud UCaaS alternative. What the premises guys don’t tell you about is all the extra little hidden costs that come as a result of the limitations of the hardware and software in their systems. This guide will provide you with useful questions to ask your PBX manufacturer to discern if you are getting the full picture on the cost of their system.

1. Flexibility

How can PBX systems cope with peaks and troughs in demand? They can’t. You have to buy capacity for the peak utilization which may only occur for a couple of weeks a year but is so critical to your business that you have to pay extra. With hosted you can just pay for the peaks as and when they occur.

Question to ask: Have you sized this system for my peak demand?

2. Redundancy

Adding site redundancy will add at least the cost of an extra system to your workup. Look at how the PBX system handles calls if you lose the equipment room due to flood, fire or electrical failure. Because hosted UCaaS is in the cloud, your business communications service is always available on multiple devices.

Question to ask: Have you factored in the cost of site redundancy?

3. Running out of capacity

On-premises systems rely on servers for features like call recording that have a finite disk capacity. When you run out of space, you cannot record any more calls. Not great if you have a regulated requirement that necessitates calls are recorded. With hosted UC, the recording capacity is delivered via cloud storage so you don’t need to worry about on-premises storage capacity.

Question to ask: How many hours of call recording have you quoted me? What is the maximum I can buy? How much will the maximum cost me?

4. The cost of obsolescence

The average lifespan of a premises-based system is about 7 years mainly due to the hardware going obsolete in that time. You may also discover features your business relies on that are no longer being upgraded, leaving you with a system that cannot meet your future business needs. Cloud UCaaS is an evergreen platform that continually adds new features that regularly improve your employee productivity.

Question to ask: How old is this product? When will the manufacturer stop developing features for it? Have they stopped already?

5. Mobility

Mobile integration with the PBX is often cumbersome and ends up with additional call charges on the PBX trunks with calls being hair pinned in and out of the system.

Question to ask: How is mobility supported on this system? Do calls route in an out of the PBX for call treatment? If they do how much extra will that cost me in trunk calls?

6. Fraud costs

Smaller PBX systems in particular are prone to fraud attacks that can leave huge bills to be paid by the business who is attacked. With cloud, your phone system is protected in a highly secure telecommunications data centers. It’s a bit like keeping your money under the mattress or putting it in the bank.

Question to ask: How many times has this type of system been hacked? Does the manufacturer release any data on such occurrences? What happens if I get hacked – do I have to pay all the costs?

7. Maintenance costs

With PBX systems you need to factor in maintenance costs of on-premises hardware. With cloud UC all the system hardware is located in the telco data center so you have no direct maintenance costs.

Question to ask: What are the annual maintenance costs of the hardware and software in this system? Will they rise as the system gets older?

8. Integration costs

Need to integrate with a CRM system? This is the most common requirement of a PBX and normally costs you extra to get a system integrator to perform what can be a complex task. With cloud based systems the integration is already done and can be switched on at a moment’s notice.

Question to ask: Which third party systems have you integrated this PBX with? How much will it cost?

9. Performance

The more features you switch on in a premises-based system the more likely it is that your system will need an upgrade to the processor board. Rarely factored in at the time of purchase. That can end up costing you thousands because you are in effect replacing the entire core of the system. With cloud your performance never changes with virtually limitless amounts of processor capacity available in the telco cloud.

Question to ask: What happens if the system slows down due to switching on extra features? Do I have to pay for another upgrade? If so how much will it cost me?

10. Management


System management can be costly and is often overlooked. Phone systems need to be maintained. That can cost a lot especially if integrated with other applications/IT services. Outsourced management to a third party will incur charges for a minimum number of service calls per year regardless of use. With cloud all your management is performed simply via web interfaces. All remote sites can be easily managed from a central location without a large number of field personnel.

Question to ask: How many man hours per week would it cost to manage my system? How much will it cost to hire an engineer to support this?

About Altus


Altus is the premier choice for cloud-based communications solutions, providing businesses with flexible and secure technologies that help employees and customers stay connected more easily. Whether looking for basic voice service, comprehensive unified communications, or contact center, business executives trust Altus to deliver the latest features and functionality without costly capital spending programs. Altus offers enterprise-grade performance across its secure, geo-redundant carrier platform. Start communicating better with Altus. For more information, visit www.altusuc.com or call toll free 866.922.4001.

« ALTUS CALEA Compliance Policy & Statement Can Your Business Support the New Workplace Reality? »