Choose the Right VoIP Phone System: Hosted vs. On-premise

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Choose the Right VoIP Phone System: Hosted vs. On-premise

Choose the Right VoIP Phone System Hosted vs. On-premise
January 31, 2023


Numerous businesses have already switched their traditional telecommunication system with a VoIP phone system. If you have not joined this group yet, you must think about the advantages of VoIP based communication system for your business. With technology advancements, you are lucky to enjoy cheaper rates, the better quality of service, improved security, cloud based access, and several other advantages. Moreover, it is not that difficult to switch from a traditional to a modern VoIP communication system for a business. 

When you made up your mind to switch to VoIP or look for options to move to this modern way of communication, you have to consider the options, so you can take later steps more conveniently. 

To help you make the right choice, we will help you make a comparison between two major options available to set up your VoIP business phone system. Before comparing these two major acquisition options, let’s understand some brief about VoIP communication systems for businesses. 

What is a VoIP telephony solution for businesses? 

A VoIP based telephony system for businesses usually gets developed by the best VoIP development company or offered by a VoIP service provider using a SIP trunking solution or any other VoIP based business communication software. 

This software uses SIP to SIP calling and internet lines to transmit voice, video, data, etc. instead of using the PSTN network, which is used in traditional telecommunication infrastructure. It provides a wider range of communication and collaboration features compared to its counterparts and also at cheaper rates, which is why it is more popular among businesses. 

Businesses that use a VoIP phone system usually have the option to get an on-premise or hosted solution to set up their business telecommunication infrastructure. 

How to get a VoIP business phone system? 

VoIP Telephony Solution by Best VoIP Development Company

There are two options to get this futuristic business communication system. 

  1. On-premise VoIP telecom system 
  2. Hosted VoIP telecom system 

On-premise vs. hosted VoIP phone system 

Let us help you make the right choice by comparing these two models in detail. 

Comparison Point

On-Premise System

Hosted System


You buy VoIP communication software such as a mobile SIP dialer, class 5 Softswitch solution, etc., and install the whole system on your premises. Thus, it is called an on-premise VoIP business phone system

You use a hosted solution offered by a third party service provider. It will be hosted on a server or cloud platform of the provider. You will be using the service from the provider on a recurring basis. 

Capital investment

In this type of system, capital investment is high because you are responsible for buying the software or getting its license. You may also invest in VoIP software development, which would further increase the total cost of ownership and capital investment. You will need to buy the required server space, cloud space, hardware, etc. 

The total investment would be quite low initially as you don’t need to pay for hardware, software, etc. You pay a predefined cost on an ongoing basis to the hosted solution provider. For example, if you use a class 5 Softswitch solution based hosted phone system, you only pay for the service you use and not for software. All these expenses will be borne by the provider. 

Technical responsibilities

You are responsible for all technical aspects, including, setup, installation, configuration, hosting, disaster recovery, and more. You can use a service from your software provider or have a VoIP developer on your team for this. 

You do not need to worry about any technicalities as that will be handled by the provider. You simply enjoy services. However, you rely on your provider for all technical changes and implementation, which may slow down some processes. 

Ongoing cost

Usually, ongoing aka operational cost would be quite low as there are no recurring charges for usage or software. However, infrastructure cost has to be borne by your business. 

Operational cost is high compared to other VoIP telephony system options because you need to pay recurring charges to the provider for hardware, software, etc. 

Reuse of existing infrastructure

You can ask your VoIP software development service provider to reuse your infrastructure while setting up such as LAN cables, internet setup, etc. With the right team, you would be able to reuse your infrastructure to reduce expenses. 

Usually, service providers don’t allow using your infrastructure and make you pay for IP phones, a mobile SIP dialer, etc. because everything comes in a package. Still, this may vary from provider to provider. You can discuss this before start using a hosted VoIP telecom system

Ease of switching

When you get an on-premise VoIP telecom system, you actually make a huge investment. This makes the cost of switching platforms quite high. It is not impossible to switch, but it can be an expensive affair. 

In the case of hosted system, you can simply switch from one provider to another whenever you need. There are usually no long contracts or huge financial loss related to it. This can be a great benefit of the hosted system. 


This system is very scalable and it is under your command and power to scale up or scale down the system as and when needed depending on your business. 

The scalability of the system depends on the software and your provider. It can be scalable or it might not be scalable, it is completely subjective. You may check this with your provider before start using the service from your provider. 


You own the system from day one. If you have not invested in development or a VoIP developer, still you own the license of the system. 

You never get ownership of the system. It will be owned by your provider. 

Concluding notes 

As you have sensed, both on-premise and hosted VoIP phone systems have their own pros and cons compared to each other. It is completely dependent on the business, its vision, manpower, and other factors to choose one of the models to initiate its journey as a tech-savvy company and always reachable business. 

We are renowned as the top VoIP development company that builds VoIP communication systems for these businesses along with VoIP service providers. If you are in need of help getting a consultation to choose the right model for acquiring a VoIP phone system or looking for a reliable hosted or on-premise VoIP business phone system, contact us. 

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