What is a Hosted VOIP PBX Phone System?

What is a Hosted PBX Phone System?

Advanced technologies are starting to influence the market for business phone systems. Traditional landline phones are quickly becoming outdated, and hosted VOIP PBX phone systems are gaining popularity. First of all, they have become equal or better in quality to traditional landlines. Secondly, they add tons of high-tech communication features. Third, they allow businesses to “go digital” and save money at the same time. If you’re still using a landline phone, it’s a good idea to look why hosted PBX systems are one of the best business phone systems!

A hosted VOIP PBX phone system uses a new-and-improved version of an On-Premise Private Branch Exchange (PBX) system. It conveniently allows employees to communicate both at work and away from work. They are designed so that companies can enjoy having one “business line” with connections to individual extensions for each employee. Additionally, a hosted PBX allows companies to route calls using their Internet network they already have and use.

They’re also appealing because they allow businesses to cut down on hardware needs, which saves them money and space. With a hosted PBX system, the business will pay less for hardware for each employee. At the same time, each employee can choose what kind of hardware they prefer to use – whether it’s a desktop phone, personal mobile phone, laptop computer, or another device. Plus, hosted PBX systems are easy to scale to the business’s needs. For instance, if the company needs to add lines down the road, it’s simple. They also don’t need to designate as much space to the physical server.

How does it work?

In general, hosted PBX systems use a physical server to operate. This can be located either at the business location (“hosting” or “on-premise” PBX system) or off-site a the provider’s location (“hosted PBX”). Once the server is set up, employees enjoy the benefits of taking calls at OR away from their desk by connecting to the Internet. Plus, hosted phone systems offer a slew of other communication features to choose from!

Note: This is a bit different than cloud-based phone systems, which do not require a physical server to operate. At the same time, because the server is scaled to fit the business’s needs, the telecom features, storage, and usage patterns are uniform company-wide.

What’s the Difference Between Hosting On-Site and Hosting Off-Site?

Hosting on-site basically means your business chooses to take responsibility of housing the hardware and having technical control over the phone system. For this option, your business would need the equipment and software to host the server. Oftentimes, this means hardware upfront, so it can be a costly start-up expense. From then on, your company will have ownership and control over the way you want to utilize the phone system. You’re able to scale the system to fit your business whenever you need to. Plus, you can handle technical issues in-house, rather than waiting for the provider’s technical team to get to it when they can.

Sometimes, you might see “hosted PBX system” referring to to both “hosting on-site and “off-site.” But they’re actually slightly different, and it’s important to know the difference!

Hosting off-site, on the other hand, means you’re choosing a business phone provider to host your server. They take care of the equipment and hardware required to host the server. Then, your business connects to it via Internet connection. Instead of covering the expensive costs of purchasing the server and equipment, you simply pay the provider a small “start up” fee. This cost is much smaller compared to a traditional landline phone service! Then, you pay ongoing monthly subscription fees moving forward. Your subscription with the provider usually covers maintenance, tech support, and basic features. Then you can add on features and scale up from there.

What are the Pros and Cons of a Hosted VOIP PBX Business Phone System?

There are so many different types of business phone systems to choose from these days. That’s why it’s important to weigh the pros and cons of a hosted PBX system before deciding it’s the right option for your business.


  • Flexibility with equipment. Whether you host the PBX system on-site or off-site, you can choose which hardware your team prefers to use. Since a hosted PBX system is Internet-based, you can route calls through your personal mobile device, desktop phone, desktop or laptop computer, tablet, or whatever you prefer! 
  • Cost savings. This is probably the biggest advantage to hosted PBX systems! Compared to a traditional phone system, businesses who use a hosted PBX system save about 50-75% on operational business costs and phone bills. Plus, they don’t sacrifice quality or features whatsoever. Hosted PBX start up costs are significantly cheaper than start up costs for a traditional phone service.
  • Mobility. Hosted PBX systems aren’t necessarily intended to be completely mobile in nature compared to cloud-based systems. But luckily you do have the option to “go mobile” if you have on-the-go workdays, you’re working remotely, or traveling. Most systems have mobile apps and other mobile options, so you don’t have to worry about missing calls to your business line when you’re away.
  • Digital communication features. There’s probably not another business phone system that offers more advanced digital tech features than a hosted PBX system! Hosted systems offer anything from call rerouting, auto attendants, voicemail to email, SMS and video messaging, and more. If you prefer to keep it uncomplicated, you can enjoy the benefits of a 5G network, which is 100x faster than traditional landlines and 4G networks. PLUS, you can streamline all your work communication in one convenient place, instead of having to turn to multiple platforms to access your messages. 


  • Depends on bandwidth. Because hosted PBX systems depend on Internet connectivity to operate, you will experience the best results when using strong bandwidth. If your business is located in a rural area with poor Internet signal, or your business experiences poor signal from time to time, you may experience inconsistent voice quality when using your phone system.
  • Must secure tech support. Whether you host your system on-site or use a service provider, you will want to secure a tech support option. As you know, Internet signals can “go down” from time to time. Hosted PBX systems typically come with many features that require intermittent maintenance. If you choose to host on-site, make sure you have an IT team that can step in and help. If you choose to have a provider host, remember that you will rely on provider’s tech support from time to time.
  • Requires electricity. Traditional phone lines don’t necessarily depend on a power supply to operate. But you will need electricity for your hosted PBX system to work. This means that if the power goes out, your phone line will go down as well.

Which Features Can be Added with a Hosted VOIP PBX Phone System?

Hosted PBX systems are appealing because of the wide variety of digital communication features they offer. These features can be inexpensively added to your subscription plan. Plus, they help streamline and manage your business communications more efficiently. When considering hosted PBX systems for your company, these are the top digital features to consider adding:

  • Conferencing and video conferencing. Hosted PBX systems allow you to easily conference multiple lines at a time and/or use a video conferencing option to communicate with multiple people at once.
  • Voicemail to email transcription. Conveniently, your phone system can transcribe your voicemail messages and forward them to your email inbox. This way, you can access them easily and respond promptly. Especially if you’re away from your desk, this feature lets you stay in the loop and get back to co-workers and clients quickly.
  • Auto attendant. Work in a busy or call-heavy environment and can’t always direct calls to the correct department? The auto attendant can save time by directing calls to the right place automatically. 
  • Unified messaging: In addition to video and voicemail to email options, many hosted PBX systems have mobile or desktop-friendly apps. These let you streamline all your messages and access work essentials like your CRM, Live Chat/SMS messaging, analytics, email, etc.
  • Call forwarding and “Find Me, Follow Me“. Many hosted PBX systems include an option to forward calls to connected devices of your choice. Connect your phone number to a separate device, and the calls are forwarded depending on the settings you select.
  • Call recording/business analytics. This feature allows you to record important phone calls and access metrics involving your communications. With this feature, your team can learn about communication patterns and how to improve operations moving forward.

Which Types of Business Would Benefit the Most from a Hosted System?

Hosted PBX business phone systems stand out as an advantageous option for many businesses right off the bat. But it’s important to make sure it’s the best fit for your company before making the move! Once you’ve read through the pros and cons of using an Internet-based service, you’ll want to decide whether a hosted PBX system or a cloud-based system is the best fit.

Here are the types of businesses that are most likely to benefit from a hosted PBX phone system:

  • Small businesses planning on growing, hiring more employees, or moving locations in the known future. Hosted PBX systems are extremely easy and inexpensive to upgrade and scale. If you’re working in a start-up or a business that’s growing quickly, you should consider this phone system to maximize your revenue. 
  • Businesses that want to maximize the value and reach of their communication. Hosted PBX systems are by far the best way to upgrade the quality of business communications. You will have dozens of advanced tech features and you can streamline your communications in one convenient place. Across the board, your company will operate more uniformly, effectively, and quickly.
  • Businesses that work mostly in-office, but many need out-of-office flexibility. Compared to cloud-based systems, hosted PBX systems operate most efficiently when employees are most working in-office as a team. Since hosted systems work with a physical server, they’re scaled to fit the business’s particular needs. Plus, the telecom features, storage, and usage patterns are consistent and uniform across the company. You can still utilize the server and use your business line away from the office when need be. But if you’re doing work entirely remotely, a cloud-based system would be a better fit.

Top Suppliers

If you’re looking to start a new hosted VoIP system or switch to a better supplier, you likely want to compare and contrast your options. We’re here to help you compare by giving you the top suppliers providing hosted options:

SupplierFeaturesPricingBest for:
NextivaUnlimited domestic calls
Hold music
Multi-location scalability
HD voice
Auto attendant
Call recording & analytics
Starts at $20 per user per month
depending on number of users
Large businesses
(More cost-effective as
number of lines increases)
Ring CentralUnlimited calls in U.S. and Canada
Unlimited SMS messages and faxes
Call recording
Video conferencing
Group calling
Free set-up and integrations
CRM, Email integration
Starts at $22.99 per user per month
depending on number of users
Small to medium businesses
(Most features offered on
lowest grade plan)
8 x 8Unlimited calls in U.S. and Canada
HD video conferencing
Internet fax
SMS messaging
Online call management
Mobile & desktop app connectivity
Starts at just $12 per month per user
depending on number of users
Small to medium businesses
VonageUnlimited calls and SMS messages
Customized conference groups
Voicemail transcription
Mobile & desktop app connectivity
247 customer support
CRM integration
Starts at $19.99 per month per userSmall to medium businesses,
or growing businesses
Verizon VoIPVirtual office call analytics
Virtual receptionist
Video conferencing
Voicemail to email transcription
Hold music
Group calling
Starts at $25 per month
for 20+ employees
Medium businesses
(20+ employees)

Ready to look at your options? We work with the top VoIP suppliers that can talk to you more about your options. They give you free quotes so you can find the best business phone system for your business. Get started here – we’re excited to help you improve your business communications!

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