Considering an On-Premise PBX System? Watch out for These Hidden Costs

The typical on-premise PBX system will cost you about $1,000 per employee.

You’ve probably read or heard about some of the biggest problems or limitations with on-premise PBX systems, namely concerning flexibility, scalability, and elevated capital costs.

A new PBX system costs tens of thousands of dollars, and if you need new hardware for multiple locations you’re looking at an investment in the hundreds of thousands of dollars. The typical on-premise PBX system will cost you about $1,000 per employee.

These costs are clear. And for some companies the investment makes sense. But alone they don’t tell the whole story. In fact they’re just the tip of the iceberg.

There are hidden costs involved with on-premise PBX systems. And uncovering these costs might make the case for a hosted PBX solution more compelling. But more on that later.

What are these hidden costs? We lay out the most important ones in this article.

The 10 biggest hidden costs of premised-based PBX

1) Low Flexibility

On-premise PBX costs don’t adapt to the ebbs and flows of your business. On-prem systems are over-provisioned because they need to be sufficiently robust to accommodate peak calling times, which might be relatively infrequent. So whether business is picking up or slowing down, you’re going to pay for high prices for the entire year, even if you only need your full capacity for a few weeks each year.

2) Running out of room

An on-premise PBX uses servers with limited capacity to store your call recordings and related data. Running out of space could cost your business and could cause major headaches if you’re not able to find call recordings when you need them.

3) Connecting multiple locations

If you want to add multiple locations to your PBX system, you’re going to need more complex hardware to facilitate communication between various locations. Depending on when your individual installations take place, you might have to use several different PBX models, which can easily lead to compatibility problems.

4) Sudden replacement costs

Although uncomfortable to think about, if your equipment is damaged (for example, if somebody spills coffee on an important component) you’re going to have to cover hardware and installation costs a second time.

5) Opportunity costs

The telecom industry is not immune to today’s nearly constant technological advancements. On-premise PBX systems usually last for about 8.5 years before becoming obsolete. During that time – particularly toward the end – you could find that the services on which you rely are no longer fully supported by your supplier. But even though the functionality you’re receiving is no longer industry-standard, you’re still going to pay industry-standard prices (or worse).

6) Vulnerability to fraud

In recent years, SMEs that use on-premise PBX systems have fallen victim of fraud. One San Francisco-based architecture firm lost $166,000 over a single weekend when hackers accessed their system.

By figuring out your system passwords, usually through a brute-force attack, hackers can access your on-premise PBX system and make outbound calls freely. This could leave you not only with a large phone bill, but could also result in irreparable damage if hackers contact customers on your behalf.

7) CRM integration

If you use a CRM system and you want your on-premise PBX to link into it, there’s probably going to be an additional charge for that. Connecting your system to a CRM is often a cumbersome and labor-intensive task.

8) Performance issues

You might find that the more features you bolt onto your on-premise PBX system, the more it’s going to start to show its age. If you want to get the most out of your system, you might have to pay to upgrade its processor to match the speeds necessary for new functionality.

9) Keeping your PBX up-to-date

On-prem PBX systems inevitably require upgrades and maintenance. Add these recurring costs to the costs of employing or contracting trained IT professional, license fees, installation costs, and the cost of installing building wiring, and you begin to see how recurring costs could get out of control. And when you want to add new functionality to your system, you’ll have to pay trained support personnel to install new hardware.

10) Growing out of built-in features

If further down the line you need additional calling features like conference calling, video conferencing, web meetings, eFax, etc., you’ll usually have to pay for each one individually. Some providers even charge for these on a per-minute basis, which makes budgeting for these add-ons very difficult.

Every time you need to add a feature, you’ll have to negotiate with your provider on cost. Bottom line: an on-premise PBX is not future-proof. Technology is always advancing and if you want to keep up you need to make continual investments.

Have you considered using a hosted PBX instead?

Hosted PBX systems are installed and maintained on your provider’s premises, so you don’t actually have to install PBX hardware at your locations to access the functionality of a PBX system. Because of this critical difference, a hosted PBX doesn’t have many of the hidden costs of an on-premise PBX.

Here’s a quick summary of how a hosted PBX compares on the hidden costs noted above:

1) Hosted PBX plans are based on a flexible contract, meaning that you’ll only pay for what you use. Adding capacity is as simple as upgrading your subscription.

2) Hosted PBX utilizes state-of-the-art cloud technology, meaning your storage space is virtually limitless.

3) Adding more locations to your system is as simple is adjusting your subscription. Once you update your subscription, you can use your existing telephone technology to make calls from a new office almost immediately.

4) Since hosted PBX data is stored in the cloud, it’s safe from on-site electrical failures or coffee-related disasters.

5) Hosted PBX technology is always improving, with new features added on a regular basis. As a subscriber you get access to these new features as they’re released – no need to install new hardware.

6) Hosted PBX data is stored in high-security data centers dedicated to keeping your proprietary information safe from hackers.

7) Hosted PBX subscriptions come with an array of built-in CRM integrations. No technical expertise required.

8) Cloud-based systems will maintain optimal performance levels no matter how many add-ons you need. You’re free to customize your service to best suit your business needs without having to worry about performance.

9) With hosted PBX, system updates are performed automatically.

10) Hosted PBX subscriptions feature transparent pricing, making it easy to choose the features that make sense for your business.

So, which PBX system is right for you?

When deciding, make sure you’re aware of the hidden on-premise PBX costs before you enter into an agreement with a supplier. Signing up for a long-term contract without understanding exactly what you’re getting into could take a sizeable bite out of your budget.

With telecom technology developing at an increasingly rapid pace, a hosted PBX system will ensure that you’re always one step ahead. Ultimately, you have to weigh the pros and cons of each and decide which one suits your company best.

Customers all around the U.S. are finding success with Bullseye Telecom’s hosted PBX solutions. Find out what they have to say about our service.

And learn how we could help your business by getting in touch today.

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