Choosing Between Dedicated IP and Shared IP

Posted on by Jerry Vasquez | Updated:
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In my last post, I started with a conversation about the general business impact of IP addresses and their purpose within Internet business, and introduced dedicated IP vs shared IP addressing.

In this article, we’ll continue these concepts while remaining focused on the business side of the operation. The conversation will center around the three core facets of Internet business required to stay relevant: stability, resource utilization, and reputation.

Let’s get started!

What Is an IP Address?

IP is short for Internet Protocol and is the address for any domain on the Internet. It is represented as a 32-bit number formatted into four 8-bit fields that are separated by periods.

IPs can host many domains, so we can conclude that IPs are the closest point at which we can separate traffic. Keeping stability, resource utilization and reputation in mind, we can start to attack the business impacts of proper separation of traffic so we can allocate resources effectively.

What Is a Dedicated IP Address?

A dedicated IP address is a domain address that serves as your home on the web. Your dedicated IP is not shared with any other domains. Simply typing the dedicated IP address into a browser’s search bar will take a user directly to your site.

When deciding between dedicated IP vs shared IP, remember that dedicated IP addresses will make the most impact on your dedicated server or VPS server’s stability and thereby your company’s reputation (make sense?). Here are a couple guidelines:

1. Dedicated IPs Should Be Isolated to a Single Client.

A dedicated IP, by definition, is an IP address dedicated to a single client. Keep it that way. It will help you later with reporting, tracking, and representation of each client.

2. In Some Cases, a Dedicated IP Address Should Be Isolated to a Single Domain.

One of the most significant advantages to using a dedicated IP address is that bandwidth outside the server can be tracked and identified more granularly.

For example, if this IP address is the target of a DDoS attack, and this IP hosts several domains, it’s often impossible to identify the specific site being targeted. Most often in these situations, the case is that the entire IP address needs to be mitigated or black-holed, not the individual domain.

If this action causes downtime for the targeted client, all of the domains hosted on that IP are now being affected. A tarnish point on your client’s stability equals one on your stability, therefore your reputation.

What Is a Shared IP Address?

A shared IP address is one that is shared among multiple different domains. A shared IP address is most used by smaller businesses that use a managed WordPress host or shared hosting providers.

As you consider dedicated IP vs shared IP, bear in mind that shared IPs can make the most impact on your resource utilization (i.e. your bottom line). Shared IPs should host multiple domains. Not doing so only leaves you spending more money than necessary.

Keep these in mind:

1. Ensure Transparency When Placing Clients.

Shared IP addresses get a bad rap. Being upfront about your resources with clients will help ensure a long and healthy relationship with them.

2. If Possible, Avoid Using the Server’s Main or Primary IP Address as a Shared IP for Hosting as Well.

Often the primary IP address of a server is set up as the catch-all IP for all services. Mail, DNS, FTP, Databases; all these services run on that IP address.

Going back to the example of a malicious attack: should the main IP of the server also be the shared IP address, and if utilizing a null-route or black-hole to address the attack is the only response, you stand to lose access to all those domains as well as all the other services running on that IP.

3. It’s Okay to Load IPs Up With Domains, Just Be Cautious With the Anticipated Traffic.

As far as server resources are concerned, there’s no difference between shared IP vs dedicated IP addresses. From NIC configuration to power consumption, processor, or memory utilization, there is no impact from the number of IP addresses hosted on the server.

The same is true with the domain-to-IP ratio. You can have hundreds of domains on a single IP and see no issues with performance. You only have to worry if you have traffic that should be segregated from other clients and is not.

choosing between dedicated ip vs shared ip

Main Differences Between Dedicated IP and Shared IP

One of the major sticking points in resource utilization is the price. Each IP address is a flat, monthly fee, and the amount is not going to be stable forever. To understand their impact on our business, we need to know how each type of IP, dedicated IP vs shared IP, is used, and the effect it has on our budget.

Let’s start by considering a single dedicated IP.

Following our best practices, this IP would host an individual client and only one domain. IP addresses at Liquid Web are 5 USD per IP, per month. That’s not bad! That’s a 60 USD investment for a single customer per year. Let’s assume you end up with twenty-five new clients in a year, a decent factor. This would equate to 1,500 USD per year in IP addresses alone if you were to put every new client on a dedicated IP address.

However, if you were to accurately identify clients and decide that they didn’t need this level of service, you could have put all twenty-five of those clients on a single IP address saving you 1,440 USD per year. That's significant funds that could have been reinvested in your business’s growth and infrastructure.

Further, if you compound that amount year over year, including continued growth, it’s easy to see where proper business IP structuring pays off. Keep this principle in mind as you consider dedicated IP vs shared IP addressing for your clients.

Benefits of Dedicated IP Address

Now that we have a foundation of what IPs are, how to use them, and the price points, we can look closer at why it is sometimes worth it to spend a little extra for dedicated IP hosting.

Classification for Stability and Reputation

Client classification requires an in-depth understanding of the environment, the client, and the client’s needs. Remember, IP addressing is about traffic segregation.

In a shared IP, the reputations of all domains are tied to the IP’s overall reputation. This could mean that one domain’s poor sender reputation could negatively impact the emails of all other domains at the shared IP. Potentially, a company with good email practices could still see its emails getting filtered into spam folders because of the actions of other domains on the IP.

A dedicated IP address assures businesses that they are entirely responsible for their domain’s reputation and not subjected to punishment for the improper actions of other domains. For many, the extra cost of a dedicated IP is worth the peace of mind of being in control of their own reputation.

With that in mind, there are three questions to consider when deciding between shared IP vs dedicated IP addressing for a new or current client.

1. Does the stability of this new client require isolation from other clients/sites?

Potential clients who answer ‘yes’ to this question could be customers who are of a higher business priority or who are sensitive to their stability. Often, clients of this caliber are willing to pay for the extra insurance dedicated IPs offer.

2. Does the stability of my other clients require isolation from this new client?

This is a question of trustworthiness. The Internet is often compared to the wild, wild west. It’s young, accessible, and incredibly popular.

That means it’s bound to attract all kinds of traffic and the only person standing up for your reputation is you. It’s easier to segregate less reputable traffic at the onset rather than try to do so later.

3. Is there a potential for any malicious activity aimed at or sourced from the new client?

Here, we’re considering both stability and reputation. Now, having malicious traffic sourced from a client is difficult to foresee. A hack, an ill-tempered former employee: these are unfortunate and unforeseeable issues of circumstance.

A history of attack, however, is a bit easier to see coming and potentially thwart before it causes your business problems. Be diplomatic as you engage on this topic.

I’ve mentioned the dreaded DDoS attack several times now and have done so intentionally. These attacks are a severe threat and should be prepared for in advance as much as possible.

Further, there are some types of sites that tend to see more DDoS attacks than others. Bidding sites, blogs that lean toward controversial topics, or sites focusing on high-competition industries are more likely to have issues than others.

Also, it’s completely acceptable to ask a client if they have had a history of DDoS attacks. Any reputable client will be forthcoming as it should be their desire to have a strong, healthy business relationship.

Also, don’t be put off if they’re honest and alert you to a spotty history. This doesn’t necessarily mean they’re bad clients. Remember, a DDoS attack is precisely that: a malicious attack. Often honest, well-intentioned people are the target of criminal activity.

With this information up front, you can start to protect yourself and your new client ahead of time.

Classification for Resource Utilization

The previous two questions were geared toward stability and reputation. If you can answer ‘yes’ to either of these questions, you can start to lean toward a dedicated IP address for this client and write the price off as the “cost of doing business.”

Resource utilization is a little more complicated and is very much a function of forecasting. Once we’ve protected ourselves from any immediate issues by spending more on resources, a choice needs to be made on how we’ll allocate the rest of our budget.

You can discuss growth or other business opportunities with the client to get an idea of their needs going forward. If they’re planning on moving to a dedicated server within a given amount of time or would like to expand to include a mix of shared IP and dedicated IP addresses, it may be a good idea to consider starting them on dedicated IP addresses. The remaining customers can likely be placed on a shared IP plan.

This planning reduces your overall cost and allows you to have some reinvestment opportunities while also giving you some wiggle room as you and your clients grow together.

Helpful Human Support

Shared vs Dedicated IPs at Liquid Web

Need to make changes to your clients’ IP addresses? No problem!

Starting with planning, Liquid Web’s method of IP allocation is relatively simple. If you need to migrate a customer from a shared IP to a dedicated IP, you can request a new IP through your Manage Interface. Just remember how valuable IP addresses are and vet every request carefully.

Fortunately, Liquid Web’s vetting process is also simple. You would just have to justify the reason you need a new IP then use it appropriately. Request only as many as you need ( a few, not hundreds) and supply the domain that’ll be using that IP. With a short explanation, your request should be granted quickly.

If you have a single server, remember how IPs work on hardware: one server can host many IPs. These IP addresses are probably housed on the same server, so migrating should just be a case of making a few adjustments in your server management interface. If the destination IP is hosted on a different server from the source IP, there may be a few technical caveats.

Our Helpful Humans can handle any questions, offer clarification, and start operations with no problem! Open a ticket, and you should be on your way to resolving whether to use dedicated IP vs shared IP for your customers.

In my final post of the series, I’ll be touching on some of the myths and dated information that still crops up across tech blogs.

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About the Author

Jerry Vasquez

A self-professed pirate captain with two decades of leadership experience, Jerry has led teams from 60+ cooks and chefs to 16 networking engineers. He brings those years of experience to his current role as Product Manager at Liquid Web, focusing on networking and security products. When not working or sleeping, Jerry can usually be found eating and having a good conversation with good people.

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