When selecting a phone system for your business, consider which system is the most economical and cost-efficient. Premise-based and Cloud PBX are two very different types of business phone systems, so let’s look at the difference between the two.

Premised-Based PBX versus Cloud PBX

A premise-based PBX phone system is set up at the physical location of your business. However, the entire cloud PBX is internet-based with no on-site software or hardware to maintain or install. The provider for cloud PBX phones controls the whole system and the technology essential to run it. For premised-based phones, the system routes the calls through the internet utilizing SIP trunking as well as the phone.


Both phone systems scale as you grow, but it’s more difficult to scale with on-premise phone systems. It requires significant planning and forecasting then takes at least several weeks to delete or add lines. Cloud PBX systems allow you to scale as your business grows, and it only takes a few minutes to add or delete phone lines.

Cost Efficiency

Cloud PBX systems don’t require the installation and maintenance of software on the premises of your business. Therefore, they cost approximately 40 percent less than on-site phone systems. One system can support multiple locations, and you only pay for what you need. Upgrades and additional features are usually included in the cost.

For premise-based PBX phones systems, you must pay in advance to scale them. If your business has multiple locations, then you need a phone system at each place. Upgrades and maintenance are typically additional costs.


Maintaining on-premise phone systems is complicated. It requires IT specialists to make changes to the system or manage it. Conversely, the only things to maintain for cloud PBX systems are the phones themselves.


With cloud-based telephone systems, anyone can connect to this system with multiple devices as long as they have an internet connection. This flexibility allows your staff to work from anywhere letting you extend your workforce.

Recovery After Phone System Failures

Cloud PBX systems have a built-in failover in case of a power or internet loss. It automatically reroutes calls to other data centers so that there is no negative impact on customer service. Geo-redundancy is also built-in without the need for the capital outlay of hardware, software, or space.

Geo-redundancy for premise-based phone systems is possible but costly. It requires double the capital, hardware, software, and space. Recovery can significantly affect customer service because it’s often a slow process. Redundancy is conceivable but expensive.

Each business has different requirements, so one phone system may be a better fit than the other. Assess the needs of your business and cross-reference that with your budget to pick the one that’s right for your company.

About RC Security Consulting

RC Security Consulting protects the heart of Texas with design, installation, retrofit, repair, inspection, and monitoring of commercial security systems. We are centrally located in Collin County and provide service for almost 200 miles in all directions.

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Randy Conrad

Randy is the CEO and founder of RC Security Consulting, serving the Dallas / Ft. Worth area. Specializing in Security Consulting Services, Access Systems, Video Surveillance Installation & Support.
Randy Conrad
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