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Cloud Phone or On-Premise PBX: Which Costs Less?
This calculator compares the total cost of a cloud phone service with an on-premise PBX over three or five years, using only the figures on your quotes: hardware, installation, maintenance, trunks, handsets, IT hours and per-user fees. It shows each total, the difference, the cost per user per month, the break-even month and every line item side by side.
01 Calculator
Enter the figures from your two quotes
Every cost field starts blank: there are no averages of ours in here. Leave a line blank when a quote does not have it and it counts as zero.
02 Your result
What each option costs over the period
Enter the number of users and at least one cost from each quote, then press Compare the quotes to see the totals, the difference and the break-even month.
- On-premise PBX, total
- Upfront costs plus every month of maintenance, trunks and IT time.
- Cloud phone service, total
- Upfront costs plus the per-user fee every month.
- Difference between the totals
- Over the whole period you chose.
- Lower total
- Before taxes, fees, downtime and features; see what the totals leave out.
- Break-even
- The month in which the option with the higher upfront cost catches up.
- On-premise, per user per month
- Total divided by users and months.
- Cloud, per user per month
- Total divided by users and months.
Break-even.
Line by line
| Line item | On-premise PBX | Cloud phone service |
|---|---|---|
| System hardware and licences, one-time | No system to buy | |
| Installation or setup, one-time | ||
| Handsets for users, one-time | ||
| Number porting, one-time | Not counted | |
| Upfront in total | ||
| Lines and trunks, or per-user fees, over | ||
| Maintenance contract over the period | Usually in the fee | |
| IT time over the period | Not counted | |
| Running cost per month | ||
| Total over | ||
| Per user per month |
03 How it is calculated
How is the cost comparison calculated?
Upfront costs plus a running cost for every month of the period, on each side, with your figures substituted:
- On-premise upfront PBX hardware and licences + installation + handset x users
- On-premise per month maintenance contract / 12 + trunks + IT hours x cost of an hour
- On-premise total upfront + per month x months (years x 12)
- Cloud upfront setup + number porting + handset x users
- Cloud per month monthly fee x users
- Cloud total upfront + per month x months
- Difference on-premise total - cloud total
- Per user per month each total / users / months
- Break-even month (higher upfront - lower upfront) / (higher per month - lower per month)
Assumptions
- A blank cost line counts as zero, so a quote without a maintenance contract, a porting fee or a setup fee still totals correctly.
- Every figure is held flat for the whole period: no price rises at renewal, no discounts in later years, no financing. A period is 3 or 5 years of 12 months.
- Handsets are bought once, for the number of users you entered, on whichever side you priced them. Reused phones are a blank line.
- The per-user-per-month figure is the total divided by the users and the months, so it includes the upfront costs spread over the period.
- IT hours are counted on the on-premise side only, because that is where the brief of this comparison puts them; the cloud service still takes some of your time, which the list below says plainly.
Sources
This calculator relies on no outside statistics. Every figure is one you typed from your quotes; the only constants are the calendar (12 months in a year) and the two periods offered. For the figures behind our other tools, see the VoIP bandwidth calculator and the conference room display size calculator.
04 What the totals leave out
What does the comparison ignore?
The pattern behind most quotes: the cloud fee bundles maintenance, upgrades and the carrier connection into one line, while a PBX hides its running cost in hours. Neither total includes the items below.
- 01
Taxes, surcharges and regulatory fees
Both bills carry them, in different amounts; they are not on either quote in full, so they are not in the totals.
- 02
Downtime and its cost
An outage costs the same whichever system is down, but who fixes it and how fast is different; neither is priced here.
- 03
Features
Call recording, analytics, CRM integration, mobile apps and video are in some quotes and add-ons in others. Compare the feature lists before the totals.
- 04
Power, cooling, rack space and the internet line
A PBX needs a room and power; a cloud service needs internet headroom and a backup path. Neither is in the totals.
- 05
Price changes over the term
Cloud fees rise at renewal and carrier bills change; a PBX is bought at one price. The calculator holds every figure flat.
- 06
Time your own team spends on the cloud service
Adding users and changing call flows in a web portal still takes someone's time; only the PBX side counts IT hours here.
05 What to do about it
What to do with the figures
- Phones
Business VoIP and cloud phone systems we install
Cloud services such as Nextiva, on-premise systems from Avaya and Yeastar, Yealink and Polycom handsets on either, installed and supported from Irvine.
- Compare
Nextiva vs RingCentral vs 8x8 for small business phones
How the three cloud services compare on calling, apps, integrations and support, and which questions to ask before you sign.
- Bandwidth
VoIP bandwidth calculator
A cloud service puts every call on the internet line. Check what your concurrent calls need before you commit to it.
- Talk
Book a free quote review
Bring both quotes to a 30-minute call. We check the line items, the assumptions and what each system will cost you in hours.
06 Questions
Questions about the phone system cost comparison
Why does the calculator have no default prices?
Because any figure we typed in would be our number, not yours. Published averages for PBX hardware or cloud seats come from vendors and go stale, and a comparison built on them tells you about the market, not about your two quotes. Every field starts blank; a line a quote does not have stays blank and counts as zero.
What are the hidden costs of an on-premise PBX?
Mostly hours. Moves, adds and changes, firmware and security patches, the server or appliance it runs on, the backup, the after-hours failure, and the eventual end-of-life replacement all take someone's time or a vendor's invoice. The calculator captures them as IT hours per month and a maintenance contract; be honest about both when you fill them in.
What does a cloud phone fee usually include?
Usually the calling plan, voicemail, the mobile and desktop apps, software upgrades and support, which is why the cloud side of this calculator has no maintenance line. Check the quote for what is extra: international minutes, call recording, analytics, CRM integrations and toll-free numbers are often add-ons, and taxes and regulatory fees sit on top of the seat price.
How do I read the break-even month?
It is the month in which the option with the higher upfront cost catches up, because its lower running cost has paid the difference back. Before that month the other option has cost less; after it, the gap widens. If one option is lower both upfront and per month there is no break-even, and the calculator says so.
Is the cheaper total always the right choice?
No. The totals leave out downtime, who answers when the system fails, the features each quote includes and how the cost behaves when you add ten people or open a second office. A PBX suits a stable office with in-house IT; a cloud service suits teams that change, work remotely or want one bill. Telxpress installs and supports both.
Next step
Want Both Quotes Checked Line by Line?
We install and support both kinds of system: cloud services such as Nextiva and on-premise systems from Avaya and Yeastar, with Yealink and Polycom handsets on either, so we have no side to sell you. Book a free 30-minute consultation and bring the two quotes.
Last reviewed: . Published by Telxpress, Irvine, CA.