Premise Based PBX vs. Hosted PBX TCO

Total Cost of Ownership chart

Recently we had a company ask us about supplying Total Cost of Ownership (TCO) calculations over a 5 year period.  They were considering both premise-based and Hosted PBX options, and were having difficulties creating a model which would allow them to compare the two in an apples-to-apples fashion.  There are a number of semi-hidden costs when you go with a premise-based solution that need to be accounted for in a TCO model, and in response we created an Excel spreadsheet for them to capture that information.

Here is our model based on 20 seats.  As the number of seats go up, the monthly per-user cost for Hosted PBX goes down, so if you are looking at >50, >200 or >1000 seats it would make sense to contact us to make sure you get volume pricing information.  Also, the cost of the premise-based PBX goes up substantially as you add users.  Again, if you are looking for information on this we can provide ballpark pricing that we’ve received in our competitive analysis.

Without further ado, here is the model :
On Premise vs Hosted PBX cos comparison

If you’d like a spreadsheet emailed to you so that you can make your own modifications to the model, just email our Sales department.

Some of the key take-aways are the cost of software upgrades and maintenance for premise-based systems that are not often made available to you up-front.  That’s usually a post-sales follow-up surprise.  Also, remember that Hosted PBX completely replaces the need for your telco (ie: Bell Canada, Telus, Rogers, etc…).  The bill you currently have for lines from one of those companies will be completely replaced by your Cloud-based PBX provider (ie: Versature).

Lastly, this model assumes a VoIP enabled Premise-based PBX.  If it is an analog system, then the costs go even higher for moves/adds/changes and maintenance.  If you are currently on Centrex from your telco, then the TCO is even more compelling and we need to talk ASAP.

The industry is changing very quickly.  Everything IT and Telecom related are moving to the cloud.  You wouldn’t consider hosting your own website or CRM system on premise, would you?  The substantial one-time costs, hassles, ongoing maintenance, required upgrades and security concerns of premise-based PBXs make for a very compelling case for Hosted PBX.

About Paul Emond

As the Founder of Versature, Paul Emond provides the strategic vision and direction for the company. He is a serial entrepreneur with 20 years of experience starting and growing great companies. His last venture,, was named to the Profit 100 list two years in a row and was sold in 2012 . Under Paul’s leadership, Versature has experienced 450% growth over the past 5 years developing an extensive, loyal Versature customer base of over 7000 subscribers as well as establishing an MSP partner network coast to coast. He has disrupted the communications industry with the launch of the Versature TRUST initiative, the first and only initiative of its kind in telecom, providing insight and full transparency to the public about Versature system status in real-time and historical system performance data. Paul has developed a unique company culture that has attracted and retained top talent to Versature for well over decade. Versature is recognized for business excellence by the Canadian business community and the telecommunications industry including Canadian Telecommunications Employer of Choice in 2015, Best Ottawa Business in 2015, named one of Ottawa’s Fastest Growing Companies in 2013, and Business of the Year in 2012.