There are three major types of commercial phone systems on the market today: key systems, Private Branch Exchange (PBX) systems, and KSU-less phones. The type of system you choose will depend on how many stations (extensions) you need and what features you require.

A fourth type of phone system uses Voice over IP (VoIP) technology to route your internal calls over data networks, instead of traditional phone lines. For some businesses, VoIP systems can provide significant cost savings and other benefits.

Read more in our VoIP Phone Systems Buyer’s Guide.

PBX and key systems

If your company has more than 40 employees, or if you need advanced functionality, PBX systems are the best solution. You may know PBX systems as the massive telecom cabinets used by huge companies. While that still can be the case for large installations, the technology has progressed to the point where a powerful PBX for a small company can sit unobtrusively on a desk.

Most PBXes come standard with all the features you might want. In addition, they are totally programmable, so they can support the most complex implementations. You'll pay a premium for this flexibility, but in many cases the price difference between PBX systems and less adaptable solutions will be smaller than you might expect.

In the 5 to 40 employee range, key systems are more typical. This type of phone system uses a central control device called the key system unit (KSU) to provide features that are not available with ordinary phones. For example, a central unit typically allows users to make calls to another in-office extension, and prevents other users from accidentally picking up a line that is being used. Modern key systems also come standard with most features a business would expect – but in some cases they are less customizable.

While there are technical differences between key and PBX systems, the distinctions to a user have become relatively blurred. Many key systems include features that were once available only on PBXs, and some systems operate internally as either a key or a PBX depending on the software that is installed. The term "hybrid" is often used to describe commercial phone systems that resemble both key and PBX systems.

Both key and PBX telephone systems require professional installation and maintenance. All outside telephone lines must connect to the KSU or PBX cabinet, as well as all inside extensions. Unfortunately, configuring and wiring these phone systems can be nearly as costly as the phones themselves. You will almost always be able to use existing phone wiring. (Need new wiring run? Read our Cabling and Wiring Buyer's Guide.)

Don’t expect to continue using existing phones, however. Unless the phones you have are relatively new, they probably won't be compatible with the central unit and you'll need to purchase new handsets.

KSU-less systems

If your company has fewer than 10 employees, you may be able to meet your telephone needs with a KSU-less system. For a much lower initial investment, KSU-less phones are designed to provide many of the features of smaller commercial phone systems in a decentralized manner. The phones themselves contain the technology necessary to allow them to communicate with each other without requiring a central cabinet.

KSU-less systems are not permanently wired into your office. These phones can easily be unplugged and moved to a new location or sold. This allows you to treat a KSU-less system like any other business machine rather than as a permanent investment in your premises.

Make sure any KSU-less system you are considering is compatible with the type of telephone wiring used in your office, as well as accessories such as answering machines and modems. Because they are so inexpensive, KSU-less systems are not usually sold or supported by telecom vendors – you will need to do the shopping, installation, programming, and maintenance yourself. And they are also more susceptible to “crosstalk,” a problem in which separate conversations bleed into each other. With hybrid key systems dropping so far in price, KSU-less systems present more risk than they are worth for most businesses.

Regardless of the size of your company or the type of phone system you select, make sure you investigate what different vendors can offer your business.

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Additional Phone System Articles

Phone System Prices: A sampling of actual prices paid by phone system buyers who used our service can be found here, complete with purchasing details. An Overview of PBX Systems: If your company has more than 40 employees, or if you demand advanced functionality from your phones, you should consider purchasing a PBX system. Breaking down a multi-line phone system: Your primary concern when buying a multi-line phone system should be choosing the system that is the right size for your business.