A traditional PBX (Private Branch Exchange) requires physical equipment to connect your phones to the PSTN (Public Switched Telephone Network). The servers and hardwired handsets must be installed on your premises by an engineer.
As you can imagine, there’s a high cost attached to this—and then there’s the ongoing maintenance to consider. It’s also much harder to scale an on-premises setup because you’d have to go through all that again for each new location.
Cloud-based phone systems don’t need any hardware, as it’s all owned and looked after by your provider. You don’t even need desk phones—you can use their own mobile devices or turn computers into cloud phones using software. You could have employees use their own devices if you want to.
On-premises systems mean your phone number is tied to a specific location, with all phone handsets plugged into the network. With a cloud system, you can use virtual numbers (toll-free, vanity, or local), and log into your system from almost anywhere.
Another big difference is the cost of calling. Cloud-based solutions make calls more affordable, including long-distance calls (because they’re not charged by distance, like landline calls are). And you’ll be getting advanced features included in the price of your plan or package.