Hosted VoIP or Traditional On-Premises:
Comparing Cost and Customization Options for Your Business


The business landscape has changed over the years, and modern telephony has grown to be as complicated as it is customizable. You’re probably familiar with a traditional, on-premises PBX or phone system. And you might have heard of the newer cloud-based, hosted VoIP phone system. Both have a place in modern telephony. But we know what you’re thinking—what is the actual cost of VoIP? And how does it compare to an on-premises phone system?

As a business owner, you know how important it is to carefully weigh your options – especially when that choice will affect your bottom line. Hosted VoIP and traditional on-premises phone systems each have their own advantages. What makes sense for one business doesn’t necessarily make sense for another. With that in mind, we’ve compiled some key points where the two differ to help simplify the decision-making process.

Hosted VoIP
Overall Cost
Operation Expenditure – you pay a set price per month per user in a service delivery model, plus the potential one-time cost of VoIP handsets or devices.
Capital Expenditure – you pay a large, one-time cost that can be capitalized as an asset.
Software Updates
Updates are included in the monthly cost.
Typically requires separate purchase of specific software update or software assurance package.
Sound Quality
Since voice data is sent over the Internet, potential hiccups or interruptions may occur, dependent upon the stability of your Internet connection.
Tried and tested hardware of a landline ensures impeccable voice clarity regardless of any other factors.
A hosted VoIP system’s reliability is unmatched. Since its infrastructure exists in the cloud, the user will still have full access to VoIP features through their connected device.
Reliability is dependent on whether the user can make it into the office. Phone access is not impeded when there is a power outage or interruption.
Installation and Maintenance
Little to no installation or maintenance costs. Scaling can be done simply with a change in monthly subscription cost. In the cloud, data remains protected from disaster.
Initial costs and regular maintenance are typically required. Since infrastructure is personally housed, backup may be required in case of disaster.
Standard features like voicemail, conference calling and call forwarding are included in the cost of VoIP systems. You also enjoy the added benefit of mobile integration and automatic updates.
While standard features are typically included, some features may be an additional cost. Since it is not web-based, a traditional phone system won’t offer portability and mobile integration.



The first step is to analyze how your business communicates. If your business spends a substantial amount of time on the line with international clients, it may be beneficial to switch to a VoIP service to cut costs in that regard. But keep in mind, cost is not simply factored in a dollar amount. Lower VoIP pricing may save some money, but the proven reliability of a traditional on-premises phone system may save you a lost call or a lost client.

It should be noted that typical on-premises phone system services have dropped in price with the emergence of VoIP. Mitel is a low-cost VoIP provider offering affordable small and large business solutions in the way of on-premises, as well as VoIP.

Many companies choose to keep landline service as a backup to account for any service interruptions with their VoIP system. Although costlier, this is an ideal situation as your business will benefit from the newest features available with VoIP while keeping the security of the tested reliability of an on-premises PBX.

Mitel offers VoIP deals as well as great pricing for traditional PBX options. Contact us for VoIP quotes for your small, midsize or enterprise business today. We are low-cost VoIP providers.


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