Any successful business endeavor was once a small business. That’s how business works. You start small and expand it over time. This usually takes a lot of planning. But when it comes to online businesses, there is a bit more to consider. The most crucial factor to calculate is your website’s expansion – namely, the infrastructure behind it. After all, your website’s reliability, speed, and security rely not only on your hosting provider but also on the type of hosting plan you choose.

So, when your business starts booming, you need to scale your hosting website’s infrastructure accordingly. Sooner or later, you will outgrow the comfort of the shared hosting, and you must make one of the biggest business decisions of your maturing state – VPS vs Dedicated Server.

Both Virtual Private Servers (VPS) and Dedicated Servers have their benefits and downsides. However, the main question is, with which of the two is your business more compatible?

Today, we will give you the answer. We will discuss the differences between VPS and dedicated servers, what their pros and cons are, who can benefit most from both, and which one will fit your business model, industry, and plans.

But before we get there, let’s take care of the obvious.

What is VPS Hosting?

Imagine renting an apartment in a high-rise building. You have your own space, your own locks, and a fair share of the building’s utilities, but you still share the infrastructure with other tenants. That’s essentially how VPS hosting works.

The VPS is a virtualized environment created within a physical (or cloud) server, where multiple users get their own private “apartments.” This space, however, receives dedicated resources like CPU, RAM, and storage. Unlike with shared hosting, other occupants can’t use your resources, whether you’re using them or not, despite the server still being shared. This gives you much greater power when it comes to scaling your operations, utilizing your space, and securing your data.

If you are interested in details, we have already published an extensive explanation of what is VPS. In a nutshell, it’s a dedicated space with dedicated resources on a shared server.

In our experience, the most common VPS hosting users are online stores. The eCommerce industry requires significant flexibility when it comes to resources and robust security. A single security slipup can cost an online store their entire business. Thus, most brands look for proper VPS hosting before they even start searching for the best eCommerce website-building companies.

Developers are the other big users. However, while eCommerce is usually looking for managed VPS hosting, in this industry, the main target is unmanaged VPS. That’s hardly a surprise, as they have to configure their environment according to their projects. So, they are looking not only for a partner that will guarantee secure, reliable, and fast VPS hosting.

Finally, some small app projects go for VPS hosting. The main reason is that it’s much more affordable than going straight to dedicated hosting before they know if their product will get traction.

What is Dedicated Server Hosting?

In contrast to VPS, using a dedicated server is like owning an entire hose. You don’t share the space with anyone else, and you own all the resources on your property. Naturally, this means much better security and complete freedom when configuring and using your server.

In a nutshell, a dedicated server is an entire physical machine that is exclusively rented to one user (typically a business).

In our experience, large eCommerce stores are the most common dedicated server users. While small eCommerce websites can do with a VPS, if you want to run a true marketplace with thousands of daily transactions, you will need extra security, performance, reliability, and flexibility.

The second most common use of dedicated servers is, in our experience, a Gaming server. Hosting multiplayer games requires powerful hardware and a stable connection. With a dedicated server, game developers and communities can run high-performance gaming environments without lag or crashes. Nether League of Legends, World of Warcraft, or any other MMORPG can run on a VPS. And sure, Blizzard and other gaming brands don’t rent a server; they configure and own their own. But for smaller projects, like all those .io games, renting a dedicated server is a great start to accommodate the thousands of visitors playing simultaneously.

Finally, if you are a SaaS company that runs a resource-heavy application, you need a dedicated server with full control over the environment. It’s the place where you store crucial confidential data, so it’s wise not to have other people have access to your server. While the VPS solution is extremely secure, whenever someone has access to your server, there is a risk – something large enterprises can’t afford.

So, if you need unlimited control over security, configuration, and performance, a dedicated server is the way to go.

VPS vs. Dedicated Server At A Glance

VPS vs. Dedicated Server in Detail

Going a step further, let’s explain the differences between VPS vs. Dedicated Server in more detail:

Resource Allocation

VPS hosting shares a server with other users. Inside this server, you have a dedicated space and can count on dedicated resources. None of the other users have access to your space or resources, regardless of whether you use them or not.

A dedicated server goes a step further. With this type of hosting, you own the entire server, and you don’t share it with other users. This allows you much greater flexibility in customizing your hosting environment.

So, if you are a small online boutique with moderate traffic, you don’t need a dedicated server. A VPS will suffice for your security, performance, and reliability needs. On the other hand, a dedicated server is a must for a global eCommerce platform where thousands of transactions are done daily.

Traffic Volume

VPS can handle moderate to high traffic but may experience slowdowns if traffic surges unexpectedly. This means you will have to plan for your traffic not to consume all your dedicated resources. The great thing about VPS, however, is the flexibility. If you are paying monthly (which is the most common practice), you can scale up for the months when you expect more traffic and reduce your resources for the more lenient months. For example, a local news outlet will have massive traffic in times of election or during local events like sports or festivals. On the other hand, in mid-August, typically, everything slows down, so they can scale down their resources.

Direct servers are built to handle sustained high traffic. They offer stability for websites that receive thousands of visitors daily. For example, national news outlets don’t have a slow season. Thus, they will constantly need all the resources they can get to ensure their user experience is smooth.

Performance

A VPS works extremely well for moderate-to-high traffic. Still, it does rely on predetermined hardware components, and while scalability is possible, it is still determined by the server’s capabilities.

Dedicated servers are an entirely isolated environment where the entire server is configured with your business needs in mind. Thus, dedicated servers offer unparalleled performance, regardless of the industry, niche, or user’s needs.

So, a rising startup can launch its new product on VPS hosting, as all it needs at the moment is secure, reliable, and fast VPS hosting. On the other hand, a high-traffic news outlet that allows seamless streaming, media play, and other features will need a dedicated server. This will ensure smooth access to millions of visitors, even during breaking news events.

Security

VPS hosting provides strong security, but since the physical server is shared, vulnerabilities in neighboring VPS instances could pose minor risks. Your data will be secured, but attacks on other VPS owners on the same server can drive the entire machine to crash.

A dedicated server offers the highest security level, as no one else shares the hardware. The hosting security relies entirely on your efforts, though, as you own the server and you are the only one with access to it.

So, it really depends on how sensitive the information you handle is.

In our experience, eCommerce websites that use payment gateways don’t store sensitive payment information for their clients. Thus, they can go with VPS without a problem. However, for hospitals managing patient records or law firms handling confidential legal cases, a dedicated server is a must.  

Customization

VPS hosting allows full software customization, but the underlying shared hardware limits you. So, you need a dedicated server if you want to go for a specific CPU or another hardware.

Dedicated servers allow unlimited customization. Users can configure hardware and software freely. After all, they own the entire server, so they can install anything they want. Practically, they rent space in a data center.

For example, a digital marketing agency running multiple WordPress sites might need some control over the server’s software but definitely not complete control. At the same time, a gaming company will need to customize its server to fit its specific needs heavily.

Cost

VPS hosting is unsurprisingly much more budget-friendly. Typically, managed VPS hosting costs around $40/per month. So, we can confidently say it’s ideal for small-to-mid-sized businesses that expect rapid growth but don’t want to strain their budget at the very beginning of their operation.

Dedicated server hosting is much more expensive. Prices start at around $120/month. However, this investment is well worth it if you need a dedicated server’s security, stability, control, and performance.

Scalability

Both are actually pretty good at scaling. Still, VPS hosting allows quick and efficient increases in RAM, Storage, and CPU without the need to migrate everything to a new server. So, any fast-growing business that’s not ready for a dedicated server will benefit greatly from this feature.

Dedicated servers require manual hardware updates, making scalability a bit more complex. As you are the only one with access to your server, you will have to do all the work. On the other hand, the scalability is practically unlimited, while if using a VPS, at some point, you will start paying much more than just going for a dedicated server.    

Management

VPS hosting users can choose between managed and unmanaged solutions. The former allows them to have all the VPS benefits without having extensive technical knowledge. The latter gives much more control over the server, but it also requires extensive technical know-how.

Dedicated servers demand technical expertise, requiring IT management. Thus, if you go for a dedicated server, you can’t manage it alone. It requires constant supervision, updates, backups, and maintenance. So, you will need to hire an entire IT team to maintain your dedicated server.

Learning Curve

VPS hosting requires moderate technical knowledge but is user-friendly for those with essential experience. For managed VPS hosting, the user practically delegates the server maintenance, security, and updates to the hosting provider. So, essentially, one can use VPS with little to no IT knowledge.

With Dedicated servers, that’s completely different. They have a steep learning curve and need advanced server management skills. In our experience, companies that use dedicated servers employ entire IT teams to handle their servers.

Now that we have a detailed understanding of the differences, let’s discuss the benefits and downsides of VPS vs. dedicated server.

VPS Pros And Cons?

Just like any other hosting solution, VPS also has its fair share of ups and downs. So, before you jump into decisions, we suggest taking a closer look at the benefits and downsides of VPS hosting.

Pros of VPS Hosting

• Cost-Effective – VPS hosting is affordable yet powerful. If you ask us, managed VPS hosting is the ultimate shared hosting upgrade. It will give you the desired resources, security, and reliability, but at the same time, you won’t break the bank. It’s an outstanding solution for most mid-sized businesses and even some large businesses with heavy-traffic websites and excessive security needs.
• Scalability –VPS hosting is the ultimate solution for scalability. It allows you the flexibility to scale up and down depending on your month-to-month needs. With the managed solution, you don’t have to relocate your website elsewhere if you want to upgrade your resources. More importantly, you don’t need extensive IT knowledge to implement the upgrades. The hosting provider will do it for you.
• Lower maintenance requirements – Managed VPS hosting is the ultimate solution if you have no knowledge of server administration. The hosting provider will take care of all service requirements. Moreover, they will handle maintenance, updates, security patches, backups, and anything needed for your website to perform at full capacity.  
• Outstanding security – VPS hosting is one of the best solutions for brands who need extra security, yet they don’t have the cybersecurity understanding and knowledge to implement the necessary steps. With a managed VPS, security is handled by the hosting company, making it both robust and effortless to manage.  
• Managed & Unmanaged Options – While we talk about managed VPS hosting a lot, if you have the knowledge, you have the option to go with an unmanaged VPS hosting solution. In this case, you will be in charge of your dedicated space, which will have full access to its customization and hosting environment. This is a perfect solution for testing grounds for independent developers, as well as the perfect solution for small app-based startups.

Cons of VPS Hosting

• Limited Resources Compared to Dedicated Servers – While VPS provides dedicated virtual resources, it still operates within a shared physical server. If your website experiences high traffic or needs significant computing power, a VPS might struggle compared to a dedicated server with fully allocated resources.
• You still share a server – While your space is separated from the rest of the server, it’s still in the same “building.” Naturally, this leaves a small window for potential threats and reliability issues. Though those are rare, you still must be wary of the quality of the VPS hosting provider. Make it your business to understand how they handle security and what guarantees they offer.
• It is not fully customizable. VPS hosting allows some customization, but the underlying hardware and hypervisor settings still limit you. Not to mention, the managed VPS hosting solution blocks any advanced customizations entirely. Still, if you need dedicated resources, better security, and uncompromising reliability without some fancy customizations, VPS is the best solution.

Dedicated Server Pros And Cons

Compared to VPS hosting, a dedicated server may seem like the next step – the bigger, better solution. Still, that’s not universally true. Indeed, this solution has many benefits, but it also has some drawbacks that, in our opinion, can be a game changer when deciding.

Dedicated Server Pros

• Superior Performance – Dedicated servers are yours and yours alone. You can count on 100% of the server resources. Moreover, you will be the only one who has access to the server. This allows for superior performance, regardless of how heavy your website is or how many people use it simultaneously.
• Maximum Security – Since you are the only one with access to the server, security will be as tough as you make it. This means you can fortify your data, and no one besides you will have any access to it. Of course, this requires some cybersecurity knowledge. But ultimately, if you need unwavering security, a dedicated server is as close to unbreakable as you can get.
• Unlimited Customization & Control – Dedicated servers allow complete control over hardware and software configurations. This means you can create any hosting environment that you like.
• Endless scalability – While the scalability process is a bit harder than with VPS hosting, direct servers allow for unmatched scalability. You can grow your website with almost unlimited resources. This is perfect for enterprise-level companies.
• You can create multiple VPS environments – A dedicated server allows you to create multiple VPSs and separate your projects in different hosting environments. This will enable you to host multiple projects while staying on top of their performance, security, and needs.

Dedicated Server Cons

• Much higher price – Dedicated servers are significantly more expensive than VPS hosting. The cost is due to the exclusive use of the server’s resources, including the hardware, power, and cooling requirements. This can make it a significant investment for small businesses or startups that don’t yet require such high-powered hosting.
• Demands extensive knowledge – Unlike VPS hosting, which often comes with managed services, dedicated servers require extensive IT knowledge to manage properly. Businesses need to handle server setup, security configurations, software updates, and troubleshooting themselves. This often results in hiring an IT team to take care of the server administration.
• Longer deployment time – Setting up a VPS can take just a few minutes, as it’s a virtual instance that can be provisioned quickly. However, dedicated servers require longer setup times, especially when dealing with custom hardware configurations. This requires planning and additional resources and funds. Thus, for businesses that need immediate scaling, this solution is hardly optimal.

Who Are They For?

As you can see, while getting a dedicated server is a more powerful solution, it’s definitely not optimal for just about any business. Considering your needs can save you a lot of additional costs and time.

Naturally, both hosting solutions have industries and business models that they work best with. To help you out with the decision-making process, we created a quick list to overview which businesses work best with VPS and which go with dedicated server hosting.

Who Should Choose VPS Hosting?

1. SMBs – These are businesses that have outgrown shared hosting but don’t yet need a dedicated server. While they can benefit from the latter, they will suffer from the downsides far more than if they stick with a VPS hosting.
2. Startups and Entrepreneurs – If you’re running a startup, a VPS allows you to scale resources as needed without committing to a high-cost infrastructure from the beginning.
3. Freelancers and Web Developers – VPS hosting is an excellent choice for developers managing multiple projects, as it allows them to test and deploy different applications within a secure and dedicated virtual environment.
4. Growing eCommerce Websites – If your online store is seeing increasing traffic but not at a level that justifies a dedicated server, a VPS ensures your website can handle customer visits without performance slowdowns.
5. Businesses Looking for a Budget-Friendly Option – VPS offers a cost-effective solution for companies that need reliability, security, and performance but don’t have the budget for a dedicated server.
6. Companies Hosting Business Applications – VPS hosting is ideal for businesses running CRM systems, cloud-based software, or other web applications that require a more stable environment than shared hosting.

Who Should Choose Dedicated Server Hosting?

1. Large Enterprises and High-Traffic Websites – If your website consistently handles high traffic volumes, a dedicated server ensures stable performance without the risk of slowdowns from other users.
2. Ecommerce Platforms Handling Sensitive Transactions – Businesses that process large amounts of customer data, such as payment transactions, require the security and compliance benefits that a dedicated server provides.
3. Media and Streaming Platforms – Websites that host video content, podcasts, or high-resolution images need the high bandwidth and performance capabilities of a dedicated server.
4. Businesses Requiring Full Customization – If your company needs a specific server configuration, custom software installations, or unique security settings, a dedicated server gives you complete control over the environment.
5. Game Hosting Companies – Multiplayer game servers require dedicated resources to prevent lag, ensure seamless gameplay, and maintain low latency. A dedicated server is the best option for hosting gaming environments.
6. AI, Big Data, and Machine Learning Applications – Businesses handling AI models, large-scale analytics, or real-time processing require the extensive computing power that a dedicated server provides.
7. Healthcare and Financial Institutions – Industries dealing with sensitive data, including hospitals, banks, and insurance companies, benefit from the high security, compliance, and isolation of dedicated servers.
8. Companies with In-House IT Teams – If your business has an IT department capable of handling server maintenance and configurations, a dedicated server gives you complete control over performance and security.

VPS vs Dedicated Server: What Do You Need

So, if you’re running a small-to-midsize business, a startup, or a somewhat small online store, VPS hosting offers an affordable, scalable solution without requiring extensive IT knowledge. On the other hand, investing in a dedicated server is the way to go if your business demands high performance, maximum security, and full control.

Regardless of what your need is, you must focus on finding a reputable, well-known hosting provider. This is essential if you want to get all the benefits of your chosen hosting solution.

This is where HostArmada shines. We offer a state-of-the-art managed VPS hosting solution and a dedicated CPU service. So, do your due diligence, check out our plans, and choose the solution that will best fit your needs