Every provider claims to put unlimited scalability at your disposal, but is that truly the case? In today’s hosting market, it is difficult to tell the difference between a shared and dedicated hosting. Especially mid-sized businesses need to make tough decisions. Most require dedicated resources, but often lack expertise, so both shared and dedicated seem like viable options.

This article considers both options, learn the critical difference between dedicated and shared web hosting.

What is Shared Hosting?

Comparison of shared hosting vs dedicated hosting and its features

As the name implies, shared hosting means you are sharing a physical server with other tenants. That includes all physical resources such as hard drive, CPU power, memory usage, and bandwidth. A hypervisor layer segments the server, and each tenant has access to their own isolated virtual environment. You have limited customization options, and the provider manages the environment. It is a more affordable option compared to dedicated hosting.Below are some of the key characteristics of shared hosting.

Limited Hosting Resources

No matter what providers say, shared hosting always provides limited hosting resources. To be more precise, scaling up is ever a problem with shared hosting. Every small and medium-sized business desires to grow. Their IT resources should facilitate or at least go hand in hand with that growth. Whether that is possible with limited shared plans depends on your type of business and individual use case. Generally, shared hosting may only be scaled up to provide more bandwidth and storage. Note: Scalability is the room to expand your resources, such as bandwidth, drive space, processing power, etc. It is also the ability to install custom software. Scalability provides room to accommodate for different use cases.


Shared hosting involves multiple virtualized environments, so it is more prone to suffer from high latency. There is a hypervisor layer between your environment and the underlying bare metal server. That means your software is not connected directly to hardware. As a result, you can expect a higher latency. Performance bottlenecks, which are more common in shared environments, may also lead to higher latency. Note: Computer latency is the delay between a command being run and the desired output. In ordinary everyday operations, computer latency is more popularly called “lag.”

Limited Customization Options

As noted above, it is the provider who manages shared environments. Thus, customization options are minimal. Once you choose the initial setup, it is challenging to accommodate for changing IT business requirements. Not to mention that you are not always sure which hardware components are really below all the virtualization layers.

Server Optimization

If your online app or website is running slow, you have fewer options to optimize the environment. Shared plans do not provide enough access to implement server-level speed and optimization options. This is another factor that depends on your use case. Most small businesses don’t mind not having to work on server optimization.

Quick Deployment and Migration

Virtualized environments are great for rapid deployments. Getting a virtual environment up and running within an hour is standard practice. Virtual environments’ fast deployment makes it the perfect solution for testing and developing online applications. Additionally, migrating data is often easier when working with virtual machines.

Shared Hosting is Cheaper

It may come with several limitations, but shared hosting is the most affordable option. Having multiple tenants on a single physical server dilutes the price for individual users. Furthermore, you do not need to have your own IT staff to manage the environment. Hence, shared hosting is an excellent choice for businesses that do not have the resources and expertise to manage their own dedicated servers.

No Unique IP Address

Every server has its own IP address. Hence, with shared hosting, you might end up sharing an IP address with other tenants. This division may pose an issue. If another tenant conducts forbidden actions, the authorities might blacklist your shared IP address as well. For example, if several tenants use a shared IP address for mass email delivering, that action alone can flag your IP address. Note: Some custom environment setups might require a unique IP address.

Less Responsibility

You may get less access and customization options with shared hosting, but you also have less responsibility. Namely, the provider is responsible for maintenance and uptime. The IT provider should provide full 24/7 support. The tenant needs only limited technical knowledge.

Reasons for choosing shared hosting over dedicated hosting

What is Dedicated Hosting

With dedicated hosting, a single-tenant organization has exclusive access rights to a dedicated physical server. The fact that dedicated solutions are not shared is what drives its superiority. Customization options are plentiful, and all server resources are always at your disposal. Organizations have the option to set up dedicated servers on-premises, collocate them in data centers, or rent.

  • On-premises: Hosting on-site is the most expensive option. Organizations that opt to host a server on-site must have highly trained IT staff. You need to pick the configuration, procure hardware, set up the server and configure a high-bandwidth network connection. Upfront costs are high, and network connectivity is often limited.
  • Colocation: Colocation is a great option if you need excellent network connectivity, but want to own the equipment. You rent server racks, cooling, power, physical security, and network connectivity. You own the server and access it via SSH. For this option, you need knowledgeable IT staff to manage the server.
  • Rent: This is the most affordable dedicated server hosting type. You pick the configuration, but the service provider deploys it. You do not own the equipment, you rent. Upfront costs are minimal, and the provider deals with hardware malfunctions. Organizations that rent do not necessarily need highly trained IT staff.

With dedicated hosting, you know precisely what services you are getting. You pick the hardware and set up the software environment according to your requirements. Below are some of the main characteristics of dedicated hosting.

Stability and Performance

You are not sharing the hardware, so there is no neighbor whose rogue script may affect the stability of your hosting environment. Exclusive control is the deciding factor for many organizations. Web apps need stable and often custom environments, making dedicated hosting the perfect choice. When it comes to performance, you’ll always get what you pay for. All resources are at your disposal at all times. Whether you opt for a state-of-the-art machine or an affordable low-spec server is up to your budget and use case.

Custom Hosting Environments

From hardware to software, dedicated hosting environments are fully customizable. In terms of hardware, organizations can select the components they see fit. When it comes to software, you can configure any environment necessary for your use case. You can even install a hypervisor and create your own cloud environment. In this case, the sky is the limit. However, even minor customization requires IT expertise. Whether that is something your organization has in-house is an essential factor when deciding on a platform.

Security & Scalability

Dedicated hosting often comes with precisely configured DDoS protectionIP address blocking, and other server-level security features. RAID configurations become available with dedicated hosting, adding yet another layer of redundancy. It ensures you can recover data from multiple locations. Additionally, dedicated hosting is free of other tenants whose misuse may create gaps in security. The scalability of a dedicated server is one of its main advantages. The opportunity for growth is immense if you carefully select your hosting configuration. This strategy will prevent any downtime due to server constraints. That is essential if you are running a software-as-a-service (SaaS) application.

Slower Deployment

Deploying a dedicated server is quite complicated. The provider needs to procure parts, build the configuration, and install it in the datacenter. Common configurations may take less time to complete, but custom hardware and software configurations may take several days to deploy. Nonetheless, organizations requiring high performing hosting that plan on time will still benefit from using dedicated resources. Carefully planning for the needs of a growing business is crucial.

Dedicated Hosting Costs

Dedicated hosting may cost up to 15 times more than simple shared solutions. Considering the advanced options dedicated hosting provides, its price is justified. The price of downtime will always greatly overshadow the extra money you put into not experiencing it.

Dedicated hosting vs shared hosting comparison

What is a Virtual Private Server (VPS)?

We will briefly talk about the ‘in-between’ option. Providers offer virtual private servers as unshared cloud resources. VPS is a balance between shared and dedicated hosting. In practice, the resources remain shared, but with firm boundaries between tenants. For such a setup, a physical server is divided only among a handful of tenants. Each instance gets its strict portion of resources. Every VPS acts as an independent server. Thus, access to resources is greater than in any shared option. Scalability is good, while performance, security, and stability are superior compared to shared hosting. However, raw computing power does not reach the level of dedicated hosting. Additionally, a VPS offers root access. Hence, you have more customization options. That does go hand in hand with the need for dedicated IT staff or managed services. The total cost is lower than any equivalent dedicated option. That is because the cost of all resources and maintenance is ‘shared’ among several tenants.

Key Differences between Shared Hosting, VPS and Dedicated Hosting

Shared Hosting Virtual Private Server Dedicated Hosting
Suitable for Websites Applications, complex and highly visited websites SaaS, large scale applications
Costs Low Mid to high Very high
Managed by Hosting provider End-user staff or hosting provider In most cases by end-user staff
Security Low to medium High Very high
Performance Low Medium to high Very high
Bandwidth Low Medium to high Very high
Scalability Limited Medium to high Very high
Note Good choice for rapid deployments or if you are dealing with a limited budget. More bandwidth and better performance than shared hosting, but for a higher price. Flexibility of dedicated hosting for a lower price. Complete control and ultimate performance…for the ultimate price. The only choice when performance and security are key to an organization’s success.

Making an Informed Decision – Use Cases

Planning is key. Before sealing the deal, any deal, think about your long-term goals. Where do you see your organization in 3 to 5 years? What will be your internal and external IT requirements? The right answers will differ from one business to another. However, we will look into common use cases.

Small e-Commerce Shop or Website

If you are running a small e-commerce shop or website with less than six-figure traffic numbers, then opt for shared hosting. The customizations that you may need do not require root user access nor do you need the computing power of dedicated hosting. For the amount of traffic that you receive, and the amount of resources you need, there is no need to splurge on a dedicated option. The only reason why you would want to opt for dedicated hosting or VPS is if you expect a sharp rise in traffic in the foreseeable future.

Hosting a Software-as-a-Service

Your business provides subscription software to a wide range of users. To keep your business growing, your service must be online at all times with as little downtime as possible. Resources need to be scaled up or down depending on the number of users. The platform of your choice needs to be customizable and adapt to whatever your next 10+ releases have to provide. As a SaaS provider, you will be handling user data as well. Choose a secure option, such as a PCI DSS v. 2.0 validated service provider. Most shared hosting offerings will not check the right checkboxes. Dedicated hosting is the best option for this use case.

Hosting Health Data

Your business handles very delicate information such as Protected Health Information (PHI). Storing, transmitting and collecting of medical data needs to be HIPAA compliant and, consequently, security is a major requirement of yours. You have two options, either opt for dedicated hosting or very secure cloud hosting. Some providers specialize in HIPAA compliant hosting, so there is an entire slew of options.

Video Streaming and Gaming Service

Bandwidth and performance are very important for your business. You expect constant traffic of up to 10 Gbps. One millisecond of lag is the difference between a satisfied customer and one that will avoid your service. Slow response times, lag and poor streaming will hurt your reputation and sales. Being in a very competitive arena, you need a capable dedicated hosting solution to power your service. Providers offer dedicated streaming media servers. Those are highly scalable, secure and reliable platforms for media hosting and streaming.

Large e-Commerce Shop

Downtime is the last thing an online merchant needs. Downtime equals less profit, so stability, uptime guarantee, site optimization and security are very important for your business. Load times must be lightning quick while custom chat support and dynamic content is often a requirement. Dedicated hosting will ensure you always have a stable and highly customizable platform for your online business. Shared hosting is not an option. If you want to opt for a cloud solution, choose a VPS or a Managed Private Cloud.

Hosting Service

As a hosting provider, the more resources you can get the better. You have clients of your own who want you to host their website, so shared hosting is out of the picture. You need dedicated hosting with root-level customization options or a VPS. You need easy scalability, system stability and confidence in the underlying infrastructure.

Pros and Cons of Shared vs Dedicated Hosting

Pros Cons
Shared Hosting Low costs.
Good choice for fast deployments.
Good choice where you have no IT support staff.
Hardware is shared between multiple virtual instances.
System stability depends on the vulnerability of each tenant’s environment.
Very low scalability.
Low bandwidth.
Virtual Private Server Complete control over the hosting environment.
Overall better performance than shared hosting.
Costs are significantly higher than for shared hosting.
Dedicated Hosting You have complete control over your server.
Highly scalable solution.
You need in-house tech staff to keep it running.
High costs. 

Making the Choice: shared server vs dedicated server

The use cases mentioned above are just several of many types of businesses that need to decide should they go with shared hosting vs dedicated hosting. If after examining the pros and cons listed above, you are still unsure about what is best for your business, we recommend working with a solutions provider to clarify your needs. Contact phoenixNAP today to get more information.