The question of whether a cloud PBX is cheaper than an in-house PBX is one that concerns many organizations. And rightly so, because the answer is more nuanced than a simple yes or no. After all, the true cost of telephony is not only in the purchase price, but also in maintenance, management, scalability and the time your employees spend on the system. In this article, we list everything so you can make a fair comparison. Want to know what’s possible for your organization? Check out our solutions for customer contact.
What is the difference between a cloud PBX and an in-house PBX?
A traditional PBX system, also called an on-premises PBX system, is hardware that is physically located on your premises. You buy the system, install it, manage it yourself and are responsible for updates, failures and expansions. The PBX is yours, but so is everything that comes with it.
A cloud phone system works fundamentally differently. The technology runs on a provider’s servers, and you use it over the Internet. You typically pay a monthly fee per user or per connection. No physical hardware is needed in the office, updates are automatic, and you can easily scale the system up or down as needed.
The biggest practical difference is in who has responsibility for the system. With an in-house PBX, that’s you. With a cloud solution, it’s the provider. That has direct implications for costs, but also for the internal capacity you need.
What is the actual cost of having your own telephone system?
The purchase price of an in-house telephone system is just the tip of the iceberg. Many organizations underestimate the total costs incurred over the years. Here are the cost items to consider:
- Purchase of hardware: The PBX itself, servers, cabling and physical devices.
- Installation and configuration: Technical implementation takes time and money, especially in more complex environments.
- Maintenance and management: Regular updates, bug fixes and modifications require internal IT capacity or an external maintenance contract.
- Replacement and expansion: Hardware has a lifespan. After five to seven years, replacement or a major upgrade is often inevitable.
- Licensing costs: Many on-premise systems operate on per-user or per-functionality licenses, which are renewed annually.
- Downtime and outages: If the system goes down, it has a direct impact on accessibility. Recovery costs and lost revenue are difficult to quantify, but real.
Add it all up over a five-year period, and the actual in-house telephone system costs are significantly higher than the initial investment suggests.
How much does a cloud phone system cost per month?
The cost of a cloud PBX varies greatly by provider, number of users and desired features. What you pay in most cases is a fixed amount per user per month. This usually includes:
- Use of the platform and all standard features
- Technical management and updates by the provider
- Scalability: add more or fewer users without additional hardware
- Support and helpdesk
Because prices can vary greatly from situation to situation, it is wise to request a quote that fits your specific organization size and needs. What is certain is that monthly costs are predictable. You won’t have any unexpected large expenses for hardware or troubleshooting. That makes budgeting a lot easier.
With cloud telephony for SMEs, a key advantage is the low entry threshold. You don’t have to invest in expensive infrastructure to still have professional telephony functionality.
When is a cloud solution cheaper than an in-house PBX?
A cloud solution is cheaper in the long run in most cases, but there are specific situations where the benefit is greatest:
- Your organization grows or shrinks: Cloud scales with you without additional hardware. With an in-house PBX, you pay for capacity you may not always use.
- Your current PBX needs replacement: Instead of reinvesting in hardware, switch to a subscription model without a large one-time expense.
- You have limited internal IT capacity: If you don’t have an in-house manager for telephony, the indirect costs of an in-house PBX are high.
- You work with multiple locations or home workers: Cloud telephony works anywhere there is internet, without additional links or hardware per location.
- You want to integrate with other systems: Modern cloud platforms link easily with CRM, ERP and other business applications.
Is your organization stable in size, have you already invested in recent hardware and have your own technical expertise? Then an in-house PBX may still be competitive in the short term. But in most practical situations, the cloud solution wins out on total cost.
What hidden costs should you be aware of when switching to cloud telephony?
Switching to VoIP cloud telephony brings benefits, but there are also cost items that you need to know in advance to avoid surprises:
- Internet connection: Cloud telephony depends on a stable, fast Internet connection. If your current connection is insufficient, investments are necessary.
- Migration and implementation: Transferring numbers, configuring routings and training employees takes time. Account for this deliberately.
- New devices or headsets: Not all existing hardware is compatible with a cloud environment. Sometimes new IP devices or softphone licenses are required.
- Contract term and notice periods: Pay close attention to the subscription term and what happens if you want to scale up, scale down or switch.
- Integrations with existing systems: Connections with CRM or other tools may require additional configuration time.
By mapping out these costs in advance, you prevent the switch from being more expensive than expected. A good provider will help you visualize this transparently.
How do you make a fair TCO comparison between cloud and on-premise?
TCO stands for Total Cost of Ownership: the total cost of ownership over a period of time, typically three to five years. This is the right way to compare a telephone system. Here’s how to go about it:
- Map all current costs: hardware, licenses, maintenance, management hours, outages and planned replacements.
- Calculate the cloud cost over the same period: Monthly subscription cost multiplied by the number of months, plus one-time migration cost.
- Add indirect costs: Consider lost productivity during outages, time spent by IT on management and the cost of limited scalability.
- Weigh functional benefits: Cloud platforms often offer more features, such as integrations, analytics and mobile accessibility. That value also counts.
- Involve the right people: A TCO analysis is not just an IT issue. Involve operations and finance as well to get the full picture.
Those who make this comparison honestly almost always discover that the cloud solution is more advantageous and flexible in the long run, especially for organizations looking to grow or modernize.
How Pegamento Phone System helps transition to cloud telephony
We understand that the move to cloud telephony raises questions about costs, continuity and complexity. That’s exactly why we developed Pegamento Phone System: a fully IP-based VoIP telephony system that runs on our own Dutch cloud infrastructure. No dependence on foreign servers, full control over data and AVG compliance.
What you get with Phone System:
- Professional cloud telephony without expensive hardware or complicated installations
- Easy management through an intuitive web-based interface
- Seamless integrations with CRM, ERP and omnichannel platforms
- Scalability that moves with your organization, from SMB to enterprise
- Everything under one roof: from implementation and management to support and strategy
- Support for legacy system migrations to ensure a smooth transition
You don’t have to take an expensive or risky step. We help you with a clear analysis of your current situation and a concrete picture of what the switch means for your organization. Contact us and discover what cloud telephony can do for you.
Frequently Asked Questions
On average, how long does the transition from an in-house PBX to a cloud PBX take?
The turnaround time for a migration depends on the size of your organization and the complexity of your current environment, but count on two to six weeks on average. Much of that time goes into transferring phone numbers (number portability), configuring call routes and training employees. An experienced provider such as Pegamento will guide you step by step, so that telephony remains available as usual during the switch.
What happens to my phone numbers when I switch to cloud telephony?
Your existing phone numbers can, in almost all cases, be carried over to the new system through a process called number portability. So you don't have to switch numbers, which is important for customer recognition. Your provider usually arranges this for you, but keep in mind that the porting can take a few business days to weeks depending on your current provider.
Is cloud telephony also reliable enough for organizations that are critically dependent on reachability?
Yes, modern cloud telephony platforms typically offer higher uptime than traditional on-premise PBXs because providers invest in redundant server infrastructure and active monitoring. Whereas an on-premises PBX will fail completely in the event of an outage until a technician is on site, a cloud system can automatically switch to a backup connection or mobile coverage in the event of a problem. Always check with your provider about the SLA (Service Level Agreement) and guaranteed availability.
Can employees who work from home or are in multiple locations simply use the cloud telephony system?
That's precisely one of the biggest advantages of cloud telephony: employees can make and receive calls from anywhere using the same system, whether they're in the office, working from home or on the road. Through a softphone app on the laptop or smartphone, they behave exactly the same to the caller as in the office, including the visible company number. No additional hardware or VPN connection is needed per location.
What should I do if my Internet connection is temporarily down? Will we be unreachable then?
An Internet outage is the most frequently mentioned risk in cloud telephony, but there are several ways to handle this. You can set up a failover where incoming calls are automatically transferred to mobile numbers or an alternative line if the Internet connection goes down. It is also wise to invest in a redundant Internet connection if reachability is business-critical, something your provider can advise you during implementation.
What questions should I ask a cloud telephony provider before signing a contract?
At a minimum, ask about the contract term and notice periods, what is included in the monthly fee (think support, updates and integrations), how migration of your current numbers will be handled and what uptime guarantee is in the SLA. Also ask specifically about data storage: are the servers running in the Netherlands and is the solution AVG-compliant? A transparent provider will answer this without hesitation.
Is cloud telephony also suitable for small companies with only a few employees?
Absolutely. Cloud telephony for SMBs is attractive precisely because you don't have to make a large initial investment and the system immediately offers professional features such as a welcome menu, call queues and call recording. You only pay for the number of users you need and can easily expand as you grow. Even a company with two or three employees benefits from the flexibility and professional image that cloud telephony offers.
