Hosted vs On-Premise VoIP Phone System - Which is Best for Your Office?The ability to use an internet-based phone system for calls, known as Voice over Internet Protocol (VoIP) has been around since the 1990s. But back then, the “tin can” sound and poor quality kept many companies from considering it a viable choice for replacing their phone system.

Fast forward a decade or two, and today the quality has improved dramatically, so that you can no longer tell the difference between a phone call over a landline or over VoIP.

Our Technology Visionaries VoIP Team has seen more and more small businesses adopting the technology over the older hard-wired lines for the cost savings and flexibility.

One decision that we help our clients make when choosing a new VoIP phone system is whether to go with a hosted or an on-premise solution. Both have their pros and cons, so it’s down to which fits a company’s specific needs best.

In this article, we’ll talk about hosted vs on-premise VoIP phone systems, how they’re similar and how they differ so you have everything you need to know to make an informed choice.

What Exactly is VoIP and What Can it Do?

While most people have heard about VoIP and have some type of understanding of what it is, many are often surprised when they find out how far the technology has come in the last 10-15 years.

Here’s a quick primer on Voice over Internet Protocol telephone technology and its capabilities.

VoIP allows you to make phone calls using traditional telephone handsets, mobile devices, or computers using a broadband internet connection rather than the traditional landline (or analog phone line).

Some of the free services that offer VoIP calls are ones like Skype and WhatsApp, but those are limited to computers and mobile devices and aren’t designed to replace office phone systems.

Others, like those that Technology Visionary offers through Ring Central (hosted) and 3CX (on-premise), are designed to allow you to make and receive calls though phone handsets and do a lot of other things like hold, transfers, and call routing, just like you’re used to with an analog line.

Companies that switch to VoIP can save up to 90% on calls.

According to, companies that change their phone systems to VoIP report saving up to 40% on local calls and up to 90% on international calls. Having the ability to call internationally without the high landline rates can even help US businesses expand their sales to other countries.

Here are common capabilities of both hosted and on-premise VoIP phone services:

  • Both local and international calling
  • Call transferring and call forwarding
  • Call routing with recorded messaging
  • Voicemail
  • Voice and video calling
  • Auto attendant and hold music
  • Integrations with CRM programs like Zendesk
  • Call reporting
  • Significant cost savings over traditional phone systems

Which is Best? Hosted vs On-premise VoIP

Now that we’ve discussed what Voice over Internet Protocol phone systems are and what they can do. Let’s take a look at the pros and cons of a hosted VoIP and an on-premise system.

Hosted VoIP means that you pay a monthly fee for your calling service and the hardware that makes it all work is hosted by a third-party provider. They take care of all the updating, security, and administration of the VoIP system for you.

An on-premise VoIP means that you’re hosting the main hardware at your physical location and handle all the administration, security patches, and updates of that hardware yourself.

Startup Costs

Startup costs will be less for a hosted solution, because you don’t have to purchase all the equipment needed to host the system. While you may end up paying less over the long term for an on-premise solution on paper, you also need to factor in the cost of staff or an IT support partner to administer the system.

Learning Curve

Unless you work with an IT service provider or have employees that know how to set up, monitor, and administer a VoIP phone system, you’ll have a bit of a learning curve if you use choose an on-premise one. A hosted solution is the fastest to get set up and start using right away.

Administrative Control

While you get a certain amount of administrative controls in the user panel of a hosted VoIP phone system, you get much more control with an on-premise system that you own and administer yourself whenever you want to.

Disaster Proof

If your power goes out at the office, an on-premise solution will also be down and you’ll be without phone service. Even though the office internet connection that a hosted solution also relies on may be down in an outage, you have the ability to easily re-route calls to another location where you do have power. This is a big plus to keep your business running in the event of a power outage or disaster.

Moving or Rearranging Office Space

If you’re moving to a larger office or just rearranging your current space, a hosted VoIP system is going to give you more flexibility over an on-premise to place the handsets where they work best for you and your team.

Interested in Learning More about VoIP Phone Systems?

You may be surprised just how much you can save while also increasing the flexibility and capability of your telephone system. Want to learn more about VoIP? Just contact Technology Visionaries by chat, email, or call us toll free at 800-806-6360.