Different Types of Business Phone System

different types of business phone system

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Choosing the right business phone system greatly affects how well you communicate with customers and manage costs. Understanding the different types—Key System Unit (KSU), Private Branch Exchange (PBX), and Voice over Internet Protocol (VoIP)—helps you decide which phone system is best fit for your business.

1. Key System Unit (KSU)

A Key System Unit (KSU) is a business phone system designed for small to medium-sized enterprises (SMEs). It acts as a central switchboard that helps manage multiple phone lines and extensions efficiently without complex equipment. KSU systems typically include basic features like call forwarding, conference calling, and call transfer.

How Does It Work?

KSU systems assign specific lines (typically up to 40) to key phones throughout the office. Each key phone has buttons corresponding to these lines, allowing users to see which lines are in use and choose specific lines for making or receiving calls.


KSU phone systems are cost-effective compared to larger PBX systems. They involve initial costs for the KSU control unit and compatible key phones. Ongoing expenses mainly include maintenance and occasional upgrades.

Which Businesses is KSU Best For?

KSU systems are ideal for small to medium-sized businesses with up to 40 employees. They suit companies where employees need access to multiple phone lines and basic call management features.

Pros and Cons

While Key System Units offer manual line selection and enhanced visibility over line usage, they have scalability challenges for larger enterprises and the need for additional hardware for expansion.




  • Allows manual selection of phone lines.

  • Cost-effective for small to medium-sized businesses.

  • Supports up to 40 lines and extensions.

  • Provides visibility and control over line usage.

  • Limited scalability for larger businesses.

  • Basic feature set compared to PBX systems.

  • Requires additional hardware for expansion.

  • Maintenance and upgrades may be necessary.

2. Private Branch Exchange (PBX)

A Private Branch Exchange (PBX) is a private telephone network used within a company or organization. It allows internal communication among employees and manages external calls, both incoming and outgoing. Key features of a PBX phone system include call forwarding, voicemail, call recording, and automated attendants.

How Does It Work?

A PBX phone system connects multiple phone lines and extensions within an organization. It uses switching technology to route calls to the correct extension or phone line. PBX systems can be on-premises, where the hardware is physically located at the business, or hosted, where a third-party provider provides PBX services over the internet.

On-premise PBX

An on-premises PBX system involves installing and maintaining the hardware within the business location. It gives businesses full control over their phone system and its features. However, it requires a significant upfront investment in equipment and ongoing maintenance.

Hosted PBX

A hosted PBX system, also known as a cloud PBX, is managed by a third-party provider and accessed via the Internet. It eliminates the need for expensive on-site hardware and reduces business maintenance responsibilities. The phone system allows you to access advanced features and updates without worrying about system maintenance.


PBX system costs can vary significantly based on the type and features. An on-premises PBX system typically involves higher upfront costs for hardware, installation, and maintenance. A hosted PBX, meanwhile, has lower initial costs but involves ongoing monthly fees.

Which Business is PBX Best For?

PBX phone systems are ideal for medium to large businesses that need advanced features and greater control over their phone systems. They are particularly suited for organizations with high call volumes and multiple departments.

Pros and Cons

While PBX systems offer advanced call management features, they come with varying costs and maintenance requirements. Understanding its pros and cons helps businesses determine if PBX is the right choice.




  • Advanced features like call forwarding and voicemail.

  • Scalability for growing businesses.

  • Improved internal and external communication.

  • Greater control over call management.

  • Higher upfront costs for on-premises systems.

  • Ongoing costs for hosted PBX solutions

  • Maintenance and technical expertise needed.

  • Complexity in setup and management.

3. Voice over Internet Protocol (VoIP)

Voice over Internet Protocol (VoIP) is a technology that allows voice communication and multimedia sessions over the Internet. Instead of using traditional phone lines, VoIP converts voice signals into digital data packets. These packets are then transmitted over an IP network, such as the Internet or a local area network (LAN).

How Does It Work?

VoIP takes your voice and converts it into digital signals, which are then sent over the internet to the recipient. VoIP services can be used with various devices, including computers, VoIP phones, and traditional phones with a VoIP adapter. The system allows for voice calls, video calls, and text messaging, all through an internet connection.


The primary expense for a VoIP phone system is the monthly subscription, which ranges from $12 to $50 per user. The cost depends on the features provided and the number of users. Additional costs may include initial setup fees, which are generally minimal and cover the setup service and equipment costs.

Which Business is VoIP System Best For?

You can access the VoIP phone system from anywhere using any device, making it an excellent choice for remote work and businesses with multiple locations. You can make long-distance and international calls at local rates, which makes the VoIP system a cost-effective solution for businesses of all sizes.

Which Phone System is Right for Your Business?

Choosing the right phone system enhances your business communication efficiency. Each type of business phone system—Key System Unit (KSU), Private Branch Exchange (PBX), and Voice over Internet Protocol (VoIP)—has unique advantages suited to different business sizes and needs.

When choosing the right business phone system for your business, you must consider factors like size, scalability, budget, and required features. Calilio offers tailored VoIP solutions to optimize your business communication. Our VoIP-powered business phone system allows you to access advanced features and scalable options that adapt to your evolving business needs for enhanced connectivity and productivity. Sign up today!!

Frequently Asked Questions

What are the different types of business phones?

Business phones include Key System Units (KSU), Private Branch Exchange (PBX), and Voice over Internet Protocol (VoIP) systems. KSU systems are suitable for smaller businesses, while PBX systems cater to larger organizations needing advanced call management. VoIP systems utilize internet technology for flexible, cost-effective communication.

What business phone system should I use?

The best business phone system depends on your company’s size, communication needs, and budget. Small businesses may find KSU systems adequate for basic call handling, while larger enterprises benefit from PBX systems that manage multiple lines and extensions. VoIP systems are ideal for businesses seeking flexibility and remote work capabilities.

How to choose a business phone system?

To choose the right business phone system, assess your business’s size, growth projections, features you need, and budget constraints. A business phone system must-have features such as call routing, voicemail, and conferencing, and the ability to support remote work.

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