What Is A PBX System, And How Can It Work For Your Business?

Posted: Jan 23 2020, 10:34am CST | by , in Technology News

What is a PBX system, and how can it work for your business?

Most people may know their way around a landline, but when it comes to business telephone systems, things become a lot harder to grasp. A PBX, for example – what actually is it? And how will it work for your business?

A PBX, otherwise known as a private branch exchange, is a piece of technology that allows a business to have more phone handsets than it does lines.

Think of it this way – instead of each department having its own separate phone line, a PBX allows you to give each department its own extension instead.

This allows you to keep one singular inbound line, and set up multiple extensions from the PBX.

From a caller’s perspective, this means they dial your business’ number, then once the call reaches the PBX, they can select which extension (i.e. department) they need.

The piece of technology that enables callers to select which extension they need is called an auto-attendant.

Investing in auto-attendant technology has been proven to increase workplace productivity, and can save businesses the cost of employing a receptionist.

Traditional PBX vs IP PBX vs Virtual PBX

How a PBX works for your business will depend on the type of PBX you choose to invest in.

There are not two, but three different types of PBX. While each type of PBX essentially does the same thing, the way in which they all work is very different.

One of the main differences between them is that both IP PBX and virtual PBX support VoIP technology, whereas traditional PBX doesn’t. VoIP stands for Voice over Internet Protocol, and it allows you to make calls over the internet.

This immediately places a traditional PBX as the underdog, but you can decide which one works best for your business yourself.

We’ve outlined the details below.

Traditional PBX

A traditional PBX uses the classic copper wiring of the telephone network. The PBX itself sits in your premises, which means your business is responsible for its maintenance.

Because it uses copper wiring, a traditional PBX can only process voice data. This means video calling and instant messaging via your phone system is out of the question.

In fact, the number of businesses investing in a traditional PBX is declining, with 20 state leaders having already given primary telephone provider AT&T permission to end the landline services in their state.

Having a traditional PBX installed tends to be a sizable investment, with a system for 12 users usually costing around $2,500.

Because it requires this level of investment, a traditional PBX is best suited to larger businesses looking for excellent audio quality, without having to rely on a decent internet connection.


An IP PBX (Internet Protocol Private Branch Exchange) gives your business the best of both worlds. Because it works on traditional copper wiring and the internet, there’s always back up if one goes down.

Thanks to its internet connectivity, an IP PBX allows you to send video and image data, as well as voice data. This makes your investment far more suited to modern business environments.

It too sits within your business premises, which means you’ll need a team on hand to perform any updates or necessary maintenance. While having an IP PBX on premise is great if you’d like a phone system designed to your own specification, it does make it pretty costly to set up.

Installing an on premise IP PBX can cost around $500 to $1,000 per employee, but remember that it’s customizable to your business’ unique needs, and you’ll own all of your equipment.

Virtual PBX

A virtual PBX is a PBX hosted by your phone system provider. It runs purely on the internet, making a reliable internet connection essential.

It offers up all the same capabilities as an IP PBX, including the ability to transfer video and image data. The main difference, however, is that it doesn’t offer the same level of customization. And because your telephone system is hosted on a joint server, you won’t be able to install the same level of security.

As your virtual PBX is hosted by your provider, it’s cheaper to set up and maintain. Hosted PBX packages usually range from around $25 to $40 per user per month, depending on the features you need (things like inclusive international calls and hold music can cost extra).

And because you’re not employing a team to look after your phone system, your associated costs are lower, too.

Virtual PBX phone systems are easily expandable, which makes them great for growing businesses. All you’d need to do is call up your provider, and they’ll add a new extension and configure a new handset for you.

What does this mean for my business?

VoIP really is at the forefront of global telephone technology, with the US VoIP market making up 30% of the global share. This means that if you want to keep up with the crowd, you should be looking to invest in VoIP-enabled technology.

While traditional PBX systems still have their place, both IP PBX and virtual PBX phone systems offer far more to businesses. Here are some of the features that you could take advantage of:

  • Unified communications – the ability to centralize phone, email, instant message, video, and call center capabilities

  • Call forwarding – configure your phone system to automatically forward a call to pre-set numbers. This means you’ll never miss an important phone call

  • Conference calling – have multiple people in multiple locations join the same call with the use of a joining or PIN number

  • Video calling – works similarly to conference calling, but with the addition of video

  • Automatic call distribution – distributes incoming calls according to certain criteria. For example, certain numbers are automatically forwarded to the director’s phone

  • Interactive voice response – a more advanced version of an auto attendant. It can collect data and provide automated responses thanks to voice recognition technology

Make sure you shop around before you sign on the dotted line of any phone system contract. You’d be surprised at what features providers include (or don’t include) in their various packages.

This story may contain affiliate links.


Find rare products online! Get the free Tracker App now.

Download the free Tracker app now to get in-stock alerts on Pomsies, Oculus Go, SNES Classic and more.

Latest News


The Author

<a href="/latest_stories/all/all/2" rel="author">Luigi Lugmayr</a>
Manfred "Luigi" Lugmayr () is the founding Chief Editor of I4U News and brings over 25 years experience in the technology field to the ever evolving and exciting world of gadgets, tech and online shopping. He started I4U News back in 2000 and evolved it into vibrant technology news and tech and toy shopping hub.
Luigi can be contacted directly at ml[@]i4u.com.




comments powered by Disqus