OnPrem SIP Trunking or Hosted PBX
To Host or not to Host - That is the question. Since the time SIP was commercialised, there has been a religious war raging, a fierce war with two staunch opponents - On-Prem (on-site) PBXers, and Hosted (off-site) PBXers.There are benefits to both methods, it depends on how many channels and features you want (remember, in the world of VoIP, lines = channels), and how you are going to use them. If you run your local takeaway, then you could get away with a couple of channels, and a Hosted PBX solution would work fine if you don't need anything more than very basic PBX features, but if you need advanced features, or least cost routing capability, even unlimited voicemail storage, or have more than a couple employees, an attached warehouse, large office space, or your business is on multiple floors, then having your own local PBX phone system on-site using SIP trunking makes much more sense.
Imagine being the boss who cant buzz his PA in the next office, or the sales manager who can't contact the storeman to verify stock without walking all the way down to the warehouse - all because the Internet's dropped out, can you guess what they are ?????
If you have a bigger business and large office space you don't just use the phones for external business, you use it for internal business as well.
Another very important consideration is least cost routing, a method used to route outbound calls by another, cheaper provider, you can't do that if you're on a hosted solution! Even the unlimited call plans most providers offer, be they hosted or trunks, never include international calls as their costs vary wildly, so your hosted provider might offer dirt cheap local and national calls, but charge like a wounded bull for mobiles and international, well that's tough luck, your stuck with it unless they are included in your plan, but with an on site PBX and SIP trunking, adding in a cheaper outbound route or two takes about a minute.
Having an on-site PBX avoids all of those issues and lets you have all the features you could want at no extra cost, since most Hosted Solutions do not offer anywhere near the full suite of features you could get with on-site PBX like FreePBX or Grandstream UCM where you have full control, you enable the features you want, and how you want, at no extra cost, you have far more freedom and control than a Hosted PBX, done right you may have better security too.
If you are a larger business, then an on-site system wins hands down as you will use those handsets a lot for internal voice and video calls, but if you're a small business most your calls will likely be external, where it's not as clear cut, the only way to know which method is best for you then, is to establish how your phones are going to be used, estimate call usages, then plan how you want your phone system to work, most PBX's, even hosted, in basic form are simple, a typical setup is pretty basic like this Flow Chart shows, or you can get more creative, such as multi level IVR's and much more.
Once you've completed your plan, you need find out if your Hosted PBX provider allows you to accomplish what you require, and, at what cost, most of them charge you extra for anything more than very basic PBX features, then, you compare those costs to an on-site SIP Trunking PBX and its costs, and don't let someone talk you into believing you need a $5K PBX system, that's so 1990's, but I guess that's all those high commission sales agents know.
Anyway... It's time to do some homework, yep, sorry kids, Schools in!
So Lets take a look at two businesses, Alpha and Bravo companies.
Footnote: This post was spurred on from a conversion I had with someone following a debate he was having about it on a forum, so I'll use that Hosted providers charges, I am aware of the company and it has a reasonably good name and reputation, their call charges for Hosted PBX are fairly average, so I'm not singling out any one provider here.
For a summary on most common VSPs and Trunk providers see This giude
Lets get started, the costs are $0.09 per minute per mobile call, $0.11 untimed for local and national calls. They charge extra for IVR, Call Recording, Conferencing, and $2.95 a month per DID, I don't know how many channels they allow, but they do not appear to charge by number of extensions, I guess it means unlimited number of channels and just pay for calls?
Welcome to Alpha Company
Alpha uses the Hosted PBX Solution so has no local PBX
Alpha has 10 agents concurrently making calls, so we're going to need 10 channels
Each agent makes 10 x 5 minute mobile calls, and it's a slow day, so they only make 10 local/national calls
10 x 5 x $.09 = $4.50, and 10 x $0.11 = $1.10, so $5.60 per agent each day
x 10 agents, that's $56 every working day x 20 working days a month, which is $1,120
Because we all need holidays, we have 11 months of the year x $1,120, coming in at $12,320 a year
Remember, we are not including costs for DID's IVR, call recording or conferences which are extras, so keep that in mind, although compared to call costs, they would be pretty negligible, so lets just go with $1,120 a month and $12,320 a year
Now...
Welcome to Bravo Company
Bravo uses an on-site FreePBX Phone System so uses SIP Trunking
Bravo identically has 10 agents concurrently making calls, but this is a SIP Trunk with 10 unlimited call channels, so the costs are simple, whether Bravo makes 2, 20, or 200 calls a day per agent to either mobile or local/national, the costs remain the same.
There is a myriad of SIP Trunk providers out there, and since pricing varies quite wildly, I'll list a few here, but will use Telstra for the costings, since crazily most clients prefer them, not the cheapest, but not the most expensive either.
MNF at $630 a month
Telstra $540 a month
Maxotel at $495 a month
Crazytel $300 a month
Lets do some sums YUK!
In 12 months using a Hosted PBX, with 20 calls a day per agent Alpha pays $12,320
In 12 months using on-site PBX, with unlimited calls a day per agent Bravo pays $5,940
BUT WAIT! Bravo bought a nice new Intel Nuc, that cost them $900, and $100 for a consultant to install and configure FreePBX on it, so, in the first year, Bravo actually paid $6,940, however Bravo's second and subsequent years will only be the Trunk costs of $5,940
(Ohh, and yeah, for the purpose of this exercise, I'm assuming no price increases)
Even in the first year with the cost of purchasing the PBX hardware, the savings are still substantial in using your own PBX with a SIP Trunk service, and if you use a cheaper Trunk provider than Telstra, the savings are even greater, how much greater? That's an exercise for you, the reader
TCS after 5 years for Alpha is $61,600
TCS after 5 years for Bravo is $30,700
It's no wonder Voice Service Providers and their reseller agents push their Hosted PBX solutions hard - especially with those types of margins!
Ok, Schools out, have a great weekend!
The Cost of PBX hardware was at article writing time, there are also equally powerful yet cheaper industrial hardware available such as the Partaker B7 or I3 models.
Sangoma PBXact hardware is reportedly using Partaker - but buying direct saves you hundreds for higher spec'd unit
If you're not yet on the NBN with Aussie Broadband but want to join, they run a referral system where you get 50 dollars off your first bill, if you're ready to jump on board, you can use our referrer code: 4451415 disclaimer: using this code saves you 50 bucks, but also sends some credit our way too, which will help us out greatly.
If you have a bigger business and large office space you don't just use the phones for external business, you use it for internal business as well.
Another very important consideration is least cost routing, a method used to route outbound calls by another, cheaper provider, you can't do that if you're on a hosted solution! Even the unlimited call plans most providers offer, be they hosted or trunks, never include international calls as their costs vary wildly, so your hosted provider might offer dirt cheap local and national calls, but charge like a wounded bull for mobiles and international, well that's tough luck, your stuck with it unless they are included in your plan, but with an on site PBX and SIP trunking, adding in a cheaper outbound route or two takes about a minute.Having an on-site PBX avoids all of those issues and lets you have all the features you could want at no extra cost, since most Hosted Solutions do not offer anywhere near the full suite of features you could get with on-site PBX like FreePBX or Grandstream UCM where you have full control, you enable the features you want, and how you want, at no extra cost, you have far more freedom and control than a Hosted PBX, done right you may have better security too.
If you are a larger business, then an on-site system wins hands down as you will use those handsets a lot for internal voice and video calls, but if you're a small business most your calls will likely be external, where it's not as clear cut, the only way to know which method is best for you then, is to establish how your phones are going to be used, estimate call usages, then plan how you want your phone system to work, most PBX's, even hosted, in basic form are simple, a typical setup is pretty basic like this Flow Chart shows, or you can get more creative, such as multi level IVR's and much more.Once you've completed your plan, you need find out if your Hosted PBX provider allows you to accomplish what you require, and, at what cost, most of them charge you extra for anything more than very basic PBX features, then, you compare those costs to an on-site SIP Trunking PBX and its costs, and don't let someone talk you into believing you need a $5K PBX system, that's so 1990's, but I guess that's all those high commission sales agents know.
Anyway... It's time to do some homework, yep, sorry kids, Schools in!
So Lets take a look at two businesses, Alpha and Bravo companies.
Footnote: This post was spurred on from a conversion I had with someone following a debate he was having about it on a forum, so I'll use that Hosted providers charges, I am aware of the company and it has a reasonably good name and reputation, their call charges for Hosted PBX are fairly average, so I'm not singling out any one provider here.
For a summary on most common VSPs and Trunk providers see This giude
Lets get started, the costs are $0.09 per minute per mobile call, $0.11 untimed for local and national calls. They charge extra for IVR, Call Recording, Conferencing, and $2.95 a month per DID, I don't know how many channels they allow, but they do not appear to charge by number of extensions, I guess it means unlimited number of channels and just pay for calls?
Welcome to Alpha Company
Alpha uses the Hosted PBX Solution so has no local PBX
Alpha has 10 agents concurrently making calls, so we're going to need 10 channels
Each agent makes 10 x 5 minute mobile calls, and it's a slow day, so they only make 10 local/national calls
10 x 5 x $.09 = $4.50, and 10 x $0.11 = $1.10, so $5.60 per agent each day
x 10 agents, that's $56 every working day x 20 working days a month, which is $1,120
Because we all need holidays, we have 11 months of the year x $1,120, coming in at $12,320 a year
Remember, we are not including costs for DID's IVR, call recording or conferences which are extras, so keep that in mind, although compared to call costs, they would be pretty negligible, so lets just go with $1,120 a month and $12,320 a year
Now...
Welcome to Bravo Company
Bravo uses an on-site FreePBX Phone System so uses SIP Trunking
Bravo identically has 10 agents concurrently making calls, but this is a SIP Trunk with 10 unlimited call channels, so the costs are simple, whether Bravo makes 2, 20, or 200 calls a day per agent to either mobile or local/national, the costs remain the same.
There is a myriad of SIP Trunk providers out there, and since pricing varies quite wildly, I'll list a few here, but will use Telstra for the costings, since crazily most clients prefer them, not the cheapest, but not the most expensive either.
MNF at $630 a month
Telstra $540 a month
Maxotel at $495 a month
Crazytel $300 a month
Lets do some sums YUK!In 12 months using a Hosted PBX, with 20 calls a day per agent Alpha pays $12,320
In 12 months using on-site PBX, with unlimited calls a day per agent Bravo pays $5,940
BUT WAIT! Bravo bought a nice new Intel Nuc, that cost them $900, and $100 for a consultant to install and configure FreePBX on it, so, in the first year, Bravo actually paid $6,940, however Bravo's second and subsequent years will only be the Trunk costs of $5,940
(Ohh, and yeah, for the purpose of this exercise, I'm assuming no price increases)
Even in the first year with the cost of purchasing the PBX hardware, the savings are still substantial in using your own PBX with a SIP Trunk service, and if you use a cheaper Trunk provider than Telstra, the savings are even greater, how much greater? That's an exercise for you, the reader
TCS after 5 years for Alpha is $61,600
TCS after 5 years for Bravo is $30,700
It's no wonder Voice Service Providers and their reseller agents push their Hosted PBX solutions hard - especially with those types of margins!
Ok, Schools out, have a great weekend!
- Most Voice Service Providers sell both Hosted and SIP Trunks, so I'm not suggesting you leave your Hosted provider, maybe just alter the way you do business with them
- If you have an existing PBX, it may very well be possible to not have to replace it. I wrote an article about that a couple years ago in NBN And PABX Phone Systems
- Also keep in mind some Hosted PBX providers may offer volume tiered charges, although our example above is very low call volume so likely would not affect our example to any great degree if at all
- You can also purchase PAYG SIP Trunks that suite low volume outbound call traffic (I actually use one myself since most of my usage is inbound), but ensure when doing this, you are on a Trunk service, Trunks do not come with IVR's, Voicemail, Follow Me and so on, they provide the path only, often have a single network login, or access by IP address, it is not the same as hosted PBX service
The Cost of PBX hardware was at article writing time, there are also equally powerful yet cheaper industrial hardware available such as the Partaker B7 or I3 models.
Sangoma PBXact hardware is reportedly using Partaker - but buying direct saves you hundreds for higher spec'd unit
If you're not yet on the NBN with Aussie Broadband but want to join, they run a referral system where you get 50 dollars off your first bill, if you're ready to jump on board, you can use our referrer code: 4451415 disclaimer: using this code saves you 50 bucks, but also sends some credit our way too, which will help us out greatly.
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Wayne Strauss on :
and 100 dollars to set up Freepbx? Really?
NoelB on :
It takes 20 mins to install the freepbx and OS, it takes, 10 mins to ensure everythings updated, you are not sitting there constantly watching it, you do other stuff at same time, it takes 2 minutes for a set-up restore - an overall template configuration for trunks, IVR's queues, everything, it takes 10 seconds to add each extension, 30 seconds to alter trunk auths, pretty much every install is that because its pretty industry average, occasionally I need to do multi level IVR's, whoopie takes an an extra few minutes, nothing overly time consuming and the system is up and running, why should I charge more than 100 bux for that? The cabling work is where the money is.
And even if I did sit there and watch it and charge for all the time, even if I installed and configured freepbx from scratch, it would take maybe 60 minutes tops, so thats an hours time plus service call to them, the thing runs overnight before I install it so if theres a problem i'll pick it up - why should I charge for that?
I have a conscience
As for ongoing pbx maint? What exactly do you think there is to do, ongoing?
Most businesses want a phone system setup and be done with it, they concentrate on their business, they don't sit there and say ohhh what can I tinker and change today, each client gets a cheat sheet to add/del an extension thats pretty much all that happens, there are hundreds and hundreds of clients out there over the years from lawyers, accountants, hardware stores, retail outlets, doctors, dentists, real estates, retirement villages, hotels, motels, caravan parks, local and state govt offices, and funnily enough even a phone shop, and only call backs I get is to install more cabling every now and again for new outlets, they are all happy with how things run, if you want something done that takes 30 seconds i'll guide them over the phone, if they want complex changes, I'll charge time, christ, even if they changed stuff every month, thats not even an extra 1200 a year, still substantially cheaper than hosted, but just like hosted, the onsite pbx clients, can make these changes themselves if they want to without involving me, just like without involving a hosted provider, this is 2020, not 1990.
so again I ask, what ongoing maintenance costs?
I provide a service, I dont exist to fuck people over any and every way I can to drain that last bit of coin from their wallet.
I dont include the service call above because thats not a direct PBX cost, since I spend more time configuring phones and any cabling changes, if I dont need to, the service call applies, 88 and includes the first 15 minutes so if you want to be pedantic and say I'm configuring freepbx and taking and installing it only with no phone programming or cabling, well call the 100, 188.
So Wayne, which hosted pbx provider do you run/work-for?
Antony Callebreio on :
Marcus Dellrey on :
NoelB on :
Even if they are not in same state as you, someones data has to traverse multiple network hops across the country and back again, so long as the head office has the bandwidth, it's exactly the same as if you were connecting to a hosted solution but you have absolute control, and since most A-law calls are typically about 90 kb/s, even a shitty but stable cheap 25/5 nbn connection will easily accommodates this.
Marcus Dellrey on :
NoelB on :
40 calls a day really? That seems a lot for a newsagent hope he's on an unlimited plan.
Shane T on :
NoelB on :
Derrin Stahl on :
It was acceptable for outside calls, but was not so good for inter office calls, I borrowed a mypbx U200 from a supplier on condition if it worked better we bought it, so on a weekend we changed some phones over to it, which our voice provider MyNetFone allowed us to use a free SIP trunk (free as in no contract period) for that weekend for testing, it worked better than we could hope for, even the quality of audio was amazing, the ability to have much more features was a big winner too.
On that Monday morning, we bought the mypbx proper, and MyNetFone moved everything to the SIP trunk, by Monday afternoon we had everything changed over. The article only mentions MyNetFone for calls inclusive plans, but they do have pay as you go as well for a SIP trunk with unlimited channels, limited only by the internet connection, this company does use the NBN, it uses 12/1 as its the most stable profile here.
Four years later, the only regret we have was not using the local PBX from the get go.
Terry on :
I.T. provided us with a PBXact system, real tiny thing, about the size of a pack of cotton buds, cost us 900, works great with our Yealink phones.
I guess you can say I agree with your blog that onsite PBX is better depending on each use case, in my current employers it is way better, but my last employer had about the same number of people and same number of calls, but we gave our clients our direct numbers so no reception and we had little intra calling, only to transfer the occasional overflow call, so in their case it would make no difference so hosting worked.
Maurice Camdeb on :
But the above was when it worked, we had no doubt that NBN was mostly responsible for errors and SIP provider, who is by the way a well known provider and very popular on whirlpool forum that has been around for long time, for the smaller remainder percentage.
As you can think, this is not very desirable, Sunday is a quieter day for us, one day I loaded freepbx on it and played around, setting it as though it was our real phone system, and with practise manager approval, late one night I swapped the phones of duty doctor, nurse and reception after firing up freepbx PC, essentially running on site, the call quality was out of sight better for internal calls, even when quiet we al partylined and had zero blips spits or farts, and no delays, external call quality remained same.
I was then asked to configure all phones to use the new design.
A week later when we had the monthly meeting, everyone complimented the new phone design, there were no repeat this repeat that, no drops, clear call quality all round - except external calls, which whilst stuck on fibre to node nothing will fix.
This was 3 years ago, and we are still using that design today much happier with it, also saved lots of money over the time since we dont have to pay for per feature, with freepbx it is all there, we did stay with that provider just freepbx talks to them instead of 27 handsets, will never go back to hosted pabx ever again.