Shared, VPS, and Dedicated Server Hosting: How to Choose the Best Option

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There is more to selecting the right hosting product than just pricing.

In fact, basing your decision entirely on price is a recipe for disaster. When comparing prices on shared hosting vs VPS vs dedicated hosting, it may seem like a no-brainer to sign up for the cheapest option, right?

thinking about shared hosting vs vps vs dedicated

If you are running a web agency, you are not alone in thinking that shared web hosting, often as little as $5 per site monthly, is the most cost-effective solution for your business.

However, take a deeper look and you will quickly see how the financial, functional, and emotional benefits of a more robust plan from a managed hosting provider provides far more “bang for your buck” by giving you the performance, security, configurability, and scalability that you need to grow your business.

Need help choosing your next managed host? Download our 20 Point Checklist for Vetting a Managed Hosting Provider.

Defining Shared Hosting, Virtual Private Server Hosting, and Dedicated Server Hosting

Before we can make an informed decision, first let’s go over what is meant by these terms: Shared Hosting, VPS, and Dedicated Server Hosting. Consider the following:

Bronze Tier – Shared Hosting

The most basic and cheapest of the hosting tiers. These plans allow you to rent space on a shared hosting server, which also hosts many other websites on the same server alongside your website. These plans are the cheapest solutions as they provide the least performance, security, and flexibility.

Silver Tier – Virtual Private Server (VPS) Hosting

Virtual Private Server (VPS) Hosting is a cross between Shared & Dedicated. A physical server (also called the parent) runs several VPS instances, which are granted a strict portion of the parent server’s hardware resources. These instances are rented out and operate as independent servers from one another. So it’s essentially renting part of a dedicated server. These plans range in prices and offer affordable scaling, better performance, and security than a shared hosting website.

Gold Tier – Dedicated Server Hosting

Dedicated Servers are exactly as the name implies: a single server dedicated to you. All the hardware that makes up the server is under your control. Dedicated servers often share network access with neighboring dedicated servers in a data center, but they share no hardware. These plans tend to be the most expensive but give you the best performance, security, and flexibility.

Each of these hosting products work in different ways. This means each will have its own strengths and weaknesses over the others.

Let’s compare shared hosting vs VPS vs dedicated server hosting by a few different metrics to see how we obtained this tier structure. This evaluation applies to products from any host, not only Liquid Web.

chart comparing dedicated vs vps vs shared


Performance matters. If you want to keep your clients happy, you need to provide them with top-notch performance. A survey conducted by Kissmetrics discovered that nearly half of web users expect a site to load in 2 seconds or less, and they tend to abandon a site that isn’t loaded within 3 seconds.

Furthermore, 79% of web shoppers who have trouble with website performance say they won’t return to the site to buy again and around 44% of them would tell a friend if they had a poor experience shopping online. The bottom line here?

Literally, a one second difference in page load speeds has the potential to lose out on revenue from frustrated visitors.

How do the three products stack up against performance?

Poor Performance – Shared Hosting

These plans generally include very limited resources as they are granted only a fraction of the available system hardware. A shared hosting account holder can find themselves robbed of resources by other sites on the same server monopolizing the limited resources. The shared hosting tier is good for low traffic and static websites.

Good Performance – VPS Hosting

VPS plans are limited by the available hardware assigned to the plan. There is a performance tax on the hardware when running in a visualized setup. However, this tax has become smaller over time and provides more comparable performance levels to dedicated servers.

Great Performance – Dedicated Server Hosting

Direct access to the hardware provides the best possible performance configurations with a dedicated server.

Visualize Performance: The House Party Analogy

Let us consider shared hosting like your first apartment. It’s in a shared building with shared entrances, hallways, etc… Hosting a house party in your small two bedroom apartment is very confined. You can easily invite too many people and start flooding the hallways with people and noise that will surely displease the other tenants in the building. The same holds true in reverse. If your neighbor throws a house party, you could be impacted by the ruckus. Your apartment works well, as long as you and the other tenants in your building respect one another and behave.

apartment are like shared hosting

Continuing the analogy, but now you live in a duplex or condominium. This is more akin to VPS Hosting now. You and your neighbors have more space and share less common areas. You or your neighbor can now throw a larger party than could be done effectively at your apartment. However, there are still limits and you still do have shared common areas such as parking. Your visitors will likely impact your neighbors, just to a lesser extent. But you do have more freedom in this space and your neighbor is less likely to be bothered by your party.

dedicated is like owning your own home

Closing out the analogy, we have the true house party. Dedicated hosting is like having your own house, complete with a big yard and extensive driveway. This provides plenty of parking for your friends and little chance that you or your neighbor’s party will get out of control affecting one another adversely.

As you can see from the analogy, as your party grows in size, it’s better accommodated and tolerated the further up the hosting tier you go. The party in the analogy is your site traffic.

The larger your traffic and number of visitors, the further up the tier you will need to go in order to accommodate the demands of your traffic.

Consider these questions as you pinpoint your business’s hosting needs:

  1. Will your clients’ sites have heavy or highly variable traffic?
  2. Do you need to minimize downtime or guarantee high availability?
  3. Do you want control over your server and its performance?

If none of these issues sound important to you, you might be fine on a shared hosting plan. If you answered “yes” to any of the above, consider VPS Hosting or Dedicated Hosting.

having a secure host and infrastructure is important


While Risky Business was big in the ‘80’s, business today is all about minimizing threats. When comparing shared hosting vs VPS vs dedicated servers, the differences become clear very quickly.

Can you afford the risk of a client’s site being hacked? As a business owner, in addition to the costs of downtime and repairs for a client’s site going down, your reputation is also impacted, which is a much more serious and permanent problem.

Consider the following security summary for each type before you decide what is right for your clients.

Low Security – Shared Hosting

The activities of other sites on the server can affect your clients’ sites, putting them at risk of viruses, hacking and blacklisting. The more domain names pointed to your shared server’s IP address, the more often it is targeted for an intrusion.

Good Security – VPS Hosting

Each user occupies their own space, isolated from their neighbors with independent IP addresses. Rarely, a virus may bypass the hypervisor, which could leave all sites on the VPS server vulnerable.

Best Security – Dedicated Server Hosting

Because you are the only one using the dedicated server, risk of attack or outage is minimal, especially compared to the other hosting tiers.

shared hosting vs vps vs dedicated offer different levels of access to the hardware


This metric is a gauge on how control the user has over the server and their environment on that product type. This varies greatly between shared and VPS/dedicated servers, but not so much when looking at VPS vs dedicated.

Highly Restricted – Shared Hosting

Each user is highly restricted in their own environment. Customization is limited to surface level changes such as .htaccess, PHP versions, Specific List of Modules. There is no access to any service or server level configuration.

Mostly Unrestricted – VPS Hosting

There are very little restrictions on a VPS. Each environment is separate from the others on the server and acts exactly like a dedicated server with a few off-limits configuration. Direct access to hardware being the biggest restriction. This prevents running hardware emulation within the VPS and accessing non-network attached storage devices.

Unrestricted – Dedicated Server Hosting

Dedicated servers can be configured anyway you choose with no limitations or restrictions from the host. The user has direct access to the hardware.

scalability differs greatly between shared hosting vs vps vs dedicated hosting


The scalability score measures how difficult it is to scale the product resource limits. The more difficult the scalability the lower the score. Versatility and turn-around time also play a role in scaling, which differs between different web hosts.

Limited – Shared Hosting

The user is confined to a package which allows specific limits based on bandwidth, disk usage, and other factors depending on the hosting provider. This package can be changed up or down depending on the needs and price-point, but scaling upward is limited due to division of resources among shared users, which forces migration to a new server or product type.

Very High – VPS Hosting

VPS systems are extremely flexible in scale factors. They are only limited by the available hardware on the parent server. However, they are generally portable between like parents so they can be easily moved and upgrade with minimal downtime and turn around time for upward scaling.

High – Dedicated Server Hosting

Dedicated Servers are limited by the physical hardware and space in their chassis. Upgrades are always possible and may require significant downtime or migrations depending on the needed upgrade. Server Clustering & High Availability solutions can limit this but generally have a much larger price point.

pricing between shared hosting vs vps vs dedicated hosting


The simplest metric that should not be overlooked when deciding which hosting platform works best for you is pricing. The costs summarized here includes monthly incurred charges and potential costs of upgrades.

Lowest – Shared Hosting

Shared Hosting packages are very low-cost due to their nature. Shared servers are often banking on overselling their hardware, which means more users reside on the server than a server can handle if all users were fully active. This allows small sites to be packed in around busier sites reducing monthly costs needed to recoup the cost of the server.

Mid to High – VPS Hosting

VPS solutions come in many forms, from the smallest 2GB VPS, to massive 128 core machines. VPS Parent servers are often built from the very best hardware available at the time to offer the most varied amount of configurations for users. 

Highest – Dedicated Server Hosting

Hands down, these servers will have the biggest costs, in both monthly recurring fees and hardware upgrades. This is a result of paying directly for the hardware you are using and not piggy-backing off of a larger hardware set used for VPS configurations.

Direct Comparisons

We’ve gone over general benefits of each hosting type: shared hosting vs VPS vs dedicated server. However, this doesn’t tell the whole story. Let’s get a bit deeper with some one vs one comparisons. 

Shared Hosting vs VPS

Shared hosting setups are a single server environment with multiple users. As a shared hosting site owner, you make up merely one of the many other users on the same server. This model relies on locking down access and permissions to all users so they can only operate within their personal environment. However, all the libraries and software binaries are shared between users. This not only limits the software a shared hosting account is allowed to use, but opens the door for possible intrusion from other users looking to exploit the system.

On the other-hand, VPS are a completely isolated environment separate from other users on the server. This environment acts exactly like a stand-alone server. This gives the owner the freedom to install and configure any required software without interfering with, or interference from, the software installed on another VPS running on the same parent server.

VPS vs Dedicated Server

While VPS servers function similar to Dedicated Servers, there are limits. The VPS product does not have direct access to the hardware on its parent server. It is running in an emulated hardware environment which prevents certain software from functioning. For example, a VPS cannot run hardware emulation as it requires direct access to hardware and is restricted to only the parent server. So you cannot emulate a VPS within a VPS.

This hardware restriction aside, there is very little software a VPS cannot run. They can even be configured to be comparable in performance to a dedicated server that has matching hardware. The big selling point for VPS is scalability. Since the hardware environment is emulated it can be modified on the fly and, in most cases, without any downtime. So if the 8GB of memory on your VPS is not enough, you can easily upgrade to 16G without having to take the server offline and add the new RAM physically. Isn’t virtualization beautiful?

Dedicated servers can literally do anything when it comes to hosting solutions. They are what make up the backbone for all internet hosted sites or application. In some form or another, all software has to run on physical hardware so there really is no limit to what can be done with dedicated servers.

You can even use a dedicated server in conjunction with other dedicated servers to setup clustered or high availability services to prevent or reduce downtime during critical hardware events.

A single dedicated server can be used as a parent server to multiple VPS servers running hardware emulation and those VPS instances can be moved between similarly configured multiple parent servers to allow for more/less hardware as needed. Dedicated servers provide total control over your hosting environment.

Shared Hosting vs Dedicated Server

Comparing shared hosting vs dedicated server hosting is effectively identical to Shared Hosting vs VPS. Dedicated servers offer even more control over the environment than a VPS but inherit all the same strengths and weaknesses. Additionally, Shared Hosting servers are typically made from a dedicated server or cluster of dedicated servers. Inherently, dedicated servers have more ability to scale, perform better, and provide more protection from attacks. The only downside is the price point.

Shared Hosting vs VPS vs Dedicated Server

When considering shared hosting vs VPS vs dedicated server hosting, each one falls into their own niche of use cases. Their differences and their strengths compliment their intended use.

Shared hosting is the lowest cost, least-configurable, least-scalable, least-secure, and lowest-performing solution. However, it works well for small businesses or individuals without much budget, students, and other users looking to get started in developing their own website.

VPS solutions are moderately priced in comparison to shared hosting or dedicated servers. They come with full access to their own environment, mostly isolated from others which increases security while reducing potential downtime from neighbors on the same server. VPS solutions are also highly scalable and can be upgraded and downgraded as needed due to their virtualized hardware. This makes them excellent as both production and development environments and can house most websites and applications while still providing great performance.

Dedicated servers are premier hosting solutions. They can be setup and configured in most any capacity to handle the needs of any website or product. Dedicated servers can be custom built and allow unlimited access to the hardware, making anything possible on your dedicated server. The hefty price tag comes with the best possible levels of performance, security, scaling, and configurability.

Managed Hosting

Managed vs. Unmanaged

Now we have compared three different hosting tiers: shared hosting vs VPS Hosting vs Dedicated Hosting. But, there are actually five options here for you to choose from.

While shared hosting is always managed (albeit without many of the services that are associated with managed plans), VPS and dedicated hosting come in two flavors: Managed or Unmanaged. This effectively doubles your options.

So…now how do you choose?

Try not to underestimate managed solutions. Most Managed Hosting solutions come with a more robust support structure. The cheaper Shared Hosting plans will typically offer basic technical support, but not much above and beyond that. There is immense value in having access to a full team of experts, like The Most Helpful Humans In Hosting™, who have specifically tuned your server for the idiosyncrasies of hosting and securing your clients’ websites.

The decision between managed and unmanaged hosting will come down to how much work you are willing or able to put into managing your own servers. Ask yourself the following questions when determining between managed and unmanaged hosting:

  1. Am I willing to maintain software updates?
  2. Am I ready and able to research and apply security patches to patch up software vulnerabilities?
  3. Am I able to troubleshoot unexpected problems?
  4. Am I available 24/7/365 in case my website suddenly goes down?

If this is an undertaking you are incapable of handling or don’t have the staff on hand to keep up with your growth, then Managed Hosting is certainly right for you.

Unmanaged Hosting – A Cold Shoulder

It varies by provider, but in most cases, unmanaged server providers offer little to no effort with troubleshooting. They will typically help with things that are out of the server’s control, like network, hardware, and power problems. But you’ll be on your own when it comes to configuration, optimization, routine maintenance, and more.

Managed Hosting – The Friend Next Door

Providers offer a myriad of helpful services to their managed customers in addition to those that an unmanaged customer would expect. They can render easy assistance by providing base configurations for your site or application. You can even get assistance with the day-to-day sysadmin tasks like migrations, scaling, backups, disaster recovery, monitoring, updates, and maintenance.

Begin with the End in Mind

In the end, when deciding between shared vs VPS vs dedicated hosting, make sure you select a hosting provider that will not only meet your needs today but also be able to accommodate your needs into the future. While it is easy to see that shared hosting is a cheaper solution, it can also get much more expensive for web agencies in the long run.

Try and remember the old adage: “You get what you pay for.” It really is the case when it comes to the hosting service you choose.

Cloud VPS

Liquid Web’s Fully Managed Cloud VPS servers come equipped with baseline optimizations built-in to their template. When you select any of our fully managed server images, you can rest assured that it can handle itself from the moment it spins up. This makes it faster and easier than ever to get up and running on our Cloud infrastructure.

Dedicated Servers

Liquid Web Dedicated Servers are comprised of the best hardware in the business. We are constantly bringing in new hardware and retiring the old. Your dedicated servers will be built to your specifications to meet the needs of your growing application, online store, or website.

Download our 20 Point Checklist for Vetting a Managed Hosting Provider

eBook - 20 Point Hosting Checklist

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