Hosted PBX: What Is It, Pros, Pricing Breakdown

Maybe you’re on the hunt for your first-ever business phone system, or maybe you’re back in the market for a brand-new provider. If that’s what led you to explore hosted PBX, you’re on the right track.

Hosted PBX solutions are perfect for growing businesses that need scalability without IT support. If you’re a field service team that needs mobility or a small operation wanting enterprise features without high costs, this business phone solution might be a strong option for your shortlist.

Here’s what you should know about hosted PBX, how it works, and why it might be the right solution for your service-based business.

What is hosted PBX? 

Hosted PBX (Private Branch Exchange) is a business phone system that uses the internet to make calls and send texts. It does that by using VoIP technology, otherwise known as Voice over Internet Protocol, rather than traditional telephone wires. If you’ve ever FaceTimed your mom, you’ve already seen how VoIP phone systems work.

In your research, you might’ve heard hosted PBX referred to as cloud-hosted PBX, hosted phone system, virtual PBX, or hosted VoIP. They basically all mean the same thing — a phone system that lets you call from anywhere, scales with you, and is easy to manage from devices you already own.

That means you won’t need a server closet or an in-house IT team. Hosted PBX (or just VoIP) offers mobility and flexibility for growing businesses, plus calling features that grow with you (without the hassle of calling a tech to configure them). Plus, they’re usually far more affordable than traditional phone systems.

How does a hosted PBX phone system work? 

Here’s a quick breakdown of how a hosted PBX phone system functions:

• You sign up for a hosted PBX provider online. You don’t need hardware setup, on-site installations, or equipment rentals.
  
• You pay a monthly subscription, usually per user. Some providers offer additional integrations and features as add-ons so you can customize the platform to your business needs.
  
• You choose your business phone numbers (local, toll-free, or vanity). Depending on the provider, you might be able to port existing business numbers. OpenPhone lets you do this by filling out a two-minute form in-app.
  
• You and your team download an app or use the browser. Now, you can make and receive calls, texts, and voicemails on your laptop, tablet, or mobile phone.

And that’s it. Your provider handles all the backend infrastructure — like hosting the system in the cloud, routing calls, and keeping things secure and up-to-date — so you don’t need to worry about maintenance or setup.

Traditional PBX systems vs hosted PBX

Traditional PBX systems require you to own and manage all the hardware on-site — think phone lines, servers, and desk phones.

But hosted PBX moves all that to the cloud. Your provider runs the system for you, so you don’t need to buy or maintain the physical infrastructure.

Here’s a closer look at how the two compare:

Learn more in our guide to VoIP vs traditional PBX.

How does hosted PBX help growing businesses?

Here’s how a cloud VoIP provider can help you streamline business communications:

• Take calls anywhere: Since hosted PBX works over the internet, you can make and receive business calls from any device with internet access. This is especially helpful for field service teams or business owners who need to take incoming calls on the go.
  
• Pay less up front: VoIP systems don’t need extra hardware, IT support, or annual maintenance, which means big cost savings for growing businesses. Most providers offer predictable monthly payments, too — no surprises at the end of the month.
  
• Get up and running fast: Traditional PBX and PABX systems can take weeks to install. But hosted PBX lets you sign up for an account in minutes, then download an app (just like you would for Netflix or Amazon) to make your first call.
  
• Scale on your terms: Hiring new team members? Opening a second location? You can update your hosted PBX phone system in a few clicks — no new hardware or complex setup required.
  
• Customize to fit how you already work: Unlike legacy phone systems, you don’t need to draw the line at your software’s built-in features. You can customize your phone settings in real time, without overhauling your setup or phoning in support.
  
• Do more than just call: Traditional phone systems give you one thing: making calls. But hosted PBX systems go beyond the dial tone. They can provide VoIP texting, messaging automations, AI voice agents, integrations, and collaboration features like shared numbers and internal threads.

Hosted PBX pricing breakdown

How much does hosted VoIP cost for small businesses? Depending on the phone service provider, you could pay between $15 and $40 per user per month. You might also pay extra for enterprise plans, add-ons, upgrades, and third-party integrations (like with your CRM).

Let’s say you manage a team of five. For a separate number for each person, a main office number, and free calls and texts to Canada and the US, you’ll pay $91.50 to $93 per month, plus a one-time fee of $19 for US carrier registration. You won’t need to purchase additional hardware — OpenPhone has desktop, web, and mobile apps for devices you already own.

Traditional PBX costs can get much more expensive, which can run around $2,605 for five lines, plus installation and maintenance. And keep in mind you might have to purchase your own hardware before getting started, like IP desk phones or analog handsets.

Want to compare costs for specific VoIP providers? Use our VoIP cost calculator to crunch the numbers.

Key hosted PBX features that support your business 

Not all hosted PBX systems are created equal. The best of the best offer accessible features to improve customer relationships and smooth out operations.

Here’s what to look for in a hosted VoIP phone system:

• SMS and MMS: You can send short messages, pictures, and documents to your customers. You shouldn’t have to text from just mobile devices, either — the best providers let you use a softphone (phone software) on your laptop or desktop.
  
• Messaging automations: Scheduled texts let you queue up messages in advance, while auto-replies respond to customers if you miss their call or text. You can also set up SMS workflows with tools like Make and Zapier to automatically send an appointment confirmation text when someone books a service, for example.
  
• Call recording, transcriptions, and summaries: The best systems come with manual and automatic call recording. That way, you can capture conversations for training, compliance, and data collection. They should also transcribe and summarize with action items so you never forget important details.
  
• Call routing and auto-attendants (IVR): An IVR (also called a phone menu) helps customers route themselves to the right team member, department, or business location. You can also use IVR to cut down on spam calls and keep your numbers free for customers.
  
• Shared numbers: Everyone with access to a shared number can make and receive calls and texts simultaneously, so there’s always someone around to pick up the phone if you’re busy. You’ll also get extra visibility into team member activity so you can make sure team members handle customer communications as they should.
  
• Business app integrations: Integrations expand the capabilities of your phone solution and let you sync calls, texts, and contact info with the tools you already use.
  
• Call and text analytics: You can use call analytics to track when you’re getting the most calls so you can adjust staffing accordingly. You can also monitor average time on calls and track the number over time to keep an eye on improvements.

OpenPhone: The best hosted PBX system for fast-growing businesses

Hosted PBX systems make it easier to scale without the inevitable growing pains of traditional on-premises PBX solutions. You’ll get enterprise-level phone features (without the huge price), the freedom to take calls from anywhere, and more reliable uptime so you can build better relationships with customers.

OpenPhone offers a hosted PBX solution for small businesses that want to build better customer relationships. You can manage calls, texts, and voicemails from shared phone numbers on any device. Then, you can set up custom call flows, third-party integrations, and texting automations to make OpenPhone your own.

All that’s left is to test it for yourself.

Try OpenPhone free for seven days and see how easy it can be to scale your business communications.

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