If you’re here, you’re in one of two boats: shopping for your first business phone system or trying to upgrade the setup you already have. Either way, you’ve run into terms like “hosted PBX” and “SIP trunking” and want to know which one makes sense for your business.
You can think of hosted PBX like ordering a couch online and having it sent to your living room. SIP trunking, on the other hand, is like ordering parts from IKEA and building a couch yourself (because you already have the tools, time, and know-how).
This guide walks through the key differences between hosted PBX vs SIP trunking so you can pick the best option for your business. It also explains why most growing businesses opt for hosted PBX — because you can immediately put your legs up and enjoy the evening on your new “couch.” 😉
What is hosted PBX?
Hosted PBX is a business phone system that lets you call and text through an internet connection. Sidenote: You may have heard hosted PBX referred to as “cloud PBX,” a “VoIP service,” “hosted VoIP,” or simply “virtual PBX.” These all mean the same thing: a business phone service that handles calls and texts from anywhere.
It uses VoIP (or Voice over Internet Protocol), which routes calls and texts through WiFi rather than a traditional telephone network. If you’ve ever called someone on Messenger or joined a Zoom meeting, you’ve already used a VoIP service.
Unlike traditional phone systems, hosted PBX doesn’t require additional hardware. All you have to do is download an app. Your hosted PBX service offers updates, maintenance, and security measures on the backend.
This saves you on costs since you won’t need to worry about IT resources and equipment. Plus, hosted PBX solutions have easily scalable features that grow alongside your team (no extra desk phones or cabling required).
How to set up a hosted PBX phone system in 4 steps
Here’s a quick look at how a hosted PBX service works:
- Make an online account with your hosted PBX provider. You don’t need to set up hardware, pay for a server closet, or have an in-house IT team.
- Choose a subscription tier for your business. This is usually a monthly payment per user per month. When you add a new person to your team, they’re instantly added to your phone system and monthly invoice.
- Log in to your account to pick local, toll-free, or vanity VoIP numbers. Some hosted PBX providers also let you port existing numbers. OpenPhone, for example, lets you do this with a two-minute porting form in-app.
- Complete US carrier registration so you can text US phone numbers. Some service providers (including OpenPhone) walk you through this process step-by-step.
Tada! You’re ready to start making and receiving calls and texts from any internet-enabled device like your phone, tablet, or computer — both in-app and through a web browser.
Your VoIP solution will deal with the rest. This includes hosting, routing, maintenance, and security processes so all you have to do is focus on your customers.
What is SIP trunking?
SIP trunking (Session Initiation Protocol) bridges the gap between internet and analog desktop phones. It lets you keep your existing PBX hardware (like the box in the back room that handles your communication system) but routes phone calls over the internet instead of the traditional landline network (PSTN).
You can think of it like connecting an old box television to a streaming service. The hardware itself is still clunky and outdated, but it can still do something if you’re willing to put money into it.
SIP trunking can connect you with internet calling (VoIP), but keep in mind you’re still tied to your physical phone equipment. It also requires a steep learning curve.
Unlike hosted PBX providers, SIP trunking leaves you to deal with:
- Installing and maintaining physical hardware
- Managing software updates and security patches
- Troubleshooting issues when things go wrong
You’ll either need to be tech-savvy or have dedicated IT staff to keep everything running smoothly. And even if you do have an expert, it might be tough to schedule vacations or sick days. If your business phone goes down while your experts are out, you’ll need a backup plan to keep your system operational.
This Redditor sums it up nicely:
“I know how to run a PBX, and [have] managed FreePBX systems for years. We still went with a hosted solution for our office phones because otherwise I’d be the only person on staff who knew how to fix anything. It’s worth the money to have an outside vendor to handle issues for us.” — Reddit
How to set up SIP trunking in 5 steps
SIP trunking is a little more involved than hosted PBX. You’re essentially putting a traditional phone system on life support to use the internet for calls.
Here’s what setup usually looks like:
- Check that your on-premises PBX system is compatible with SIP trunking. You also need enough bandwidth to make simultaneous calls. If you’re not sure how to calculate this, you can contact a SIP trunking provider for help.
- Choose a SIP trunking provider. You’ll need to pick a phone service that supports your existing PBX system. Some providers offer compatibility guides or will help you assess if your system is SIP-enabled.
- Configure your PBX system for an internet connection. To do this, you’ll need to adjust settings in your PBX admin dashboard, open ports (virtual phone lines) on your firewall, or set up your router for VoIP traffic. Most teams bring in an IT consultant at this stage to avoid network or call quality issues. Just keep in mind this isn’t cheap (and isn’t always included in your SIP trunking package).
- Install and test your SIP trunks. Once you’ve configured your PBX system, you’ll need to set up your SIP trunks with your login credentials and IP address(es). You may also need to fiddle with complicated networking concepts like Network Address Translation (NAT) and Quality of Service (QoS). Your provider may offer tools or onboarding help, but setup will likely involve technical legwork on your end.
- Maintain and monitor your system. Unlike hosted PBX, you’re responsible for updates, security patches, and system reliability. You’ll need to monitor call quality and troubleshoot issues as they arise, like dropped calls, audio delays, or issues with your telecom network.
Hosted PBX vs SIP trunking: 5 key differences
Hosted PBX and SIP trunking services are both capable of connecting your business communications to the internet. But they’re fundamentally different solutions with distinct implications for small service businesses.
Hosted PBX doesn’t require equipment or IT knowledge, which makes it a simpler solution for businesses looking for an effective business phone system. In contrast, SIP trunking requires technical prowess and is mostly used for salvaging phone systems (not necessarily upgrading them).
Let’s break down the details.
💡 Related: VoIP vs traditional PBX
SIP trunking vs hosted PBX: Visual breakdown
How do SIP trunking and hosted PBX compare? Here’s a quick table summarizing the differences:
| Factors | SIP Trunking | Hosted PB |
|---|---|---|
| Technical knowledge & support | Requires expert IT support | Anyone can set up |
| Cost | Per minute or channel, can vary month to month | Often per user per month, predictable monthly cost |
| Mobility | Tied to desk phones | Uses any device with an internet connection |
| Scalability | Requires IT tech | Takes minutes online |
| Features & functionality | Calls only | Calls, SMS, MMS |
Now, let’s take a closer look.
1. Technical knowledge and support
Hosted PBX is designed for non-technical users and requires virtually no technical knowledge to set up or maintain. There’s a low learning curve, and there’s always support from the provider with everything you need from set up to troubleshooting.
SIP trunking requires technical expertise, so you can buy, set up, maintain, and troubleshoot your equipment. If you don’t want to become a telecom expert yourself, you’ll need to hire a team or pay for someone to come out and help.
Here’s how one Reddit user explained this:
“You set the connection up in your PBX, you create your own [channels], and your own call routes, hunt groups, auto-attendants, mailboxes, etc., based on however you want to handle calls. The incoming call will tell you what number was dialed and what number the caller is coming from, and you route it based on that. Any changes are made by you, on your PBX.” — Reddit
And speaking of heavy commitment, let’s talk numbers.
2. Cost
Typically, VoIP costs around $15 to $40 per user per month. With some providers like OpenPhone, $15 per user per month also comes with unlimited calling and texting to the US and Canada and no per-minute fees for domestic calls.
That gives small teams a more predictable monthly cost without needing to monitor usage or juggle different rates.
SIP trunking costs vary depending on your provider and usage but usually include monthly fees per channel (for concurrent calls) plus per-minute rates. For example, with Telnyx, inbound local calls start at $0.0035 per minute, and toll-free calls start at $0.015 per minute.
If your business takes about 150 local inbound calls per week, averaging 5 minutes each, that’s around $10.50 per month just in inbound call costs — not including any outbound or toll-free calls or monthly trunk fees.
Let’s take a closer look at the specifics of SIP trunking costs:
- Payment: SIP trunking has two major payment structures: pay-as-you-go (per minute) or pay-per-channel (number of concurrent calls). This could get expensive fast if you rely on your phone to keep in touch with customers or have call volume spikes.
- Hardware: SIP trunking might charge for new IP PBX phones and/or replacements.
- Installation costs. SIP trunking providers may charge extra to help with implementation.
- Configuration fees. SIP trunking requires you to set up inbound and outbound calling, your caller ID, and other settings on the backend. If you can’t DIY the code on your own, you might have to pay an extra fee for someone to do it for you.
- Additional services or features: Call recording, auto-attendants, and/or call routing can cost extra with most SIP trunking providers.
3. Mobility
Hosted PBX works on any device and anywhere with an internet connection. This makes it ideal for service businesses with field teams or remote workers, especially if they need to get work done on the go.
SIP trunking is tied to wherever your PBX hardware is located. Sure, it runs on an internet connection, but it still needs to stay tied to your business communications network. This makes it difficult to work from remote job sites, home offices, or while on the road.
And while we’re on the subject of scaling your team…
4. Scalability
Hosted PBX lets you instantly add users, numbers, or locations with a few clicks. The best VoIP apps (including OpenPhone) constantly update their software, add new features, and improve existing ones without forcing you to pay for upgrades.
SIP trunking requires on-site labor to add new lines, hardware, and other physical infrastructure. You might be able to upgrade channels without contacting support, but if your existing hardware can’t keep up, you’ll need to upgrade equipment or reconfigure your system. That’s time and money spent managing tech instead of growing your business.
This brings us to our final point: features.
5. Features and functionality
Hosted PBX offers the features most service-based businesses need to scale. They include:
- Text messaging
- Texting automations like auto-replies and scheduled messaging
- Voicemail
- Call recording and transcription
- Integrations with tools you already use (like your CRM and email)
- AI voice agents
- Team collaboration and tools like internal threads and shared numbers
- Contact notes and custom properties for customer service personalization
- Analytics for spotting bottlenecks, adjusting staffing, and improving response times
SIP trunking provides connectivity only. Some providers do offer basic integrations, but these (along with added features) would need to be added separately to your PBX system for an additional cost.
And keep in mind SIP trunking doesn’t offer VoIP texting.
How to choose between hosted PBX vs SIP trunking
The “best” phone system depends on your specific business needs. Some make more sense for enterprise brands, while others are a better fit for growing small businesses.
If you’re an organization with specialized telephony requirements or a very specific use case, SIP trunking can make sense. Just be sure you have the resources (like a dedicated IT team) to manage the process in case of downtime or system failure.
Hosted PBX systems are a better solution if:
- Your business is growing
- Your team works remotely or is often on the go
- You want the flexibility to handle calls from anywhere without relying on old-school equipment
- You’re not technically savvy and don’t have the resources to become an expert
- You prefer predictable monthly costs as opposed to variable pricing that can fluctuate with usage
OpenPhone: The best hosted PBX solution for growing businesses
So now that we’ve got all the cards on the table, how do you pick between hosted PBX vs SIP trunking?
SIP trunking lets you squeeze a little more life out of legacy PBX hardware but leaves you to deal with hardware, updates, maintenance, and troubleshooting. Hosted PBX, on the other hand, gives you everything you need to manage calls and texts from anywhere and on any device.
If you’re a small business owner who just wants a straightforward, comprehensive solution, a hosted PBX system like OpenPhone will take the cake (er, couch) every time. You can easily share responsibility for incoming calls with shared numbers, use auto-replies to stay responsive 24/7, and organize conversations with threads and mentions so you can tag-team every customer touchpoint.
At the end of the day, choose the solution that helps you focus on your business, not just managing phone technology.
Just another reason why 58,000 small businesses trust OpenPhone.
See for yourself by signing up for a seven-day free trial.
FAQs
A PBX (Private Branch Exchange) is a business phone system that allows you to chat with people sharing the network (aka coworkers). A traditional PBX lets you make calls outside your organization through old-fashioned telephone wires. SIP connects PBX equipment to the internet so you can make WiFi calls inside and outside your business.
P.S. With hosted PBX, you don’t need PBX plus SIP trunking to make calls over the internet.
A cloud PBX system is a virtual phone service that lets you make and receive calls and texts through the internet. So it doesn’t require traditional wiring, extra equipment, or server closets. SIP trunking connects an existing traditional PBX system to the cloud so you can get a few more miles out of your legacy equipment.
TL;DR: You don’t need hardware other than your existing devices (mobile, tablet, computer) to use a cloud-based PBX system. But the only way to use SIP trunking is if you already have (or want to purchase) an expensive on-premise system.
VoIP (Voice over Internet Protocol) is a technology that lets you make calls over the internet instead of traditional phone lines. SIP trunking is just one way to use VoIP, specifically if you want to keep an existing phone system (PBX hardware) but route calls through the internet.
Hosted PBX is not the same thing as VoIP. VoIP is the technology that powers internet-based calling. Hosted PBX is a phone system built on top of that technology. It gives you business-friendly features like call routing, voicemail, and auto-attendants without needing physical hardware or IT support.
SIP trunking makes you responsible for all phone system setup and maintenance. It’s also not a beginner-friendly communication solution and requires extensive experience in telecom and IP networks. Keep in mind it’s relatively inflexible and difficult to scale, which means it usually isn’t a fit for fast-growing businesses.
