How Dedicated Hosting Can Actually Be Cheaper Than Shared Hosting

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Early on in the life of our online store, I used to wonder when the right time would be to transition our website from shared to dedicated hosting. And this past weekend, I received the answer shoved down my throat.

I discovered the hard way that I needed to switch because this past weekend our online store lost a significant amount of revenue due to a hosting related issue with our website.

So what happened exactly? Basically, our website went down for almost 2 entire days and it was not immediately obvious that anything was broken. It’s one thing to go down with a nice maintenance message, but our online store basically crashed with cryptic error messages that only surfaced while the customer was checking out.

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Photo By Florian

When considering whether or not you need to make the transition to dedicated hosting, you really need to consider a variety of factors depending on the nature of your business. In the end though, it all comes down to money and control.

Why Did I Stick With Shared Hosting For So Long?

Before I go into exactly what this crash had to do with my webhost, I just want to take a moment to go through the reasons why I stayed with shared hosting for so long. If you’re reading this post just shaking your head at my stupidity, consider the following factors that were going on in my head at the time.

  • Our shared webhost has run our online store without any problems for 2 straight years
  • Our store has a decent amount of daily customers but not enough to bring down a shared server
  • The cost of shared hosting is about 10x cheaper than any vps or dedicated solution
  • If everything is working, why fix it?

The bottom line is that shared hosting is good enough for a low traffic website and it’s a great way to host your business in the beginning when you are unsure whether your business will take off. But as I discovered the hard way, any serious business will use a dedicated server to host their website.

My Mistake

So what critical aspect of hosting a website did I neglect to consider? I forgot to account for the cost of downtime as well as the need for full control over my server.

Our business has grown exponentially these past 2 years and I knew that we needed to graduate to a dedicated hosting platform at some point, but I kept dragging my feet because I was satisfied with the status quo and assumed that things would continue to run along smoothly.

But this past weekend, our online store crashed because our web host suddenly decided to upgrade all of their servers to the latest software release which completely busted our entire store.

Things wouldn’t have been so bad had I realized it early enough. But as I mentioned earlier, the upgrade only affected our store during customer checkout which made it a difficult bug to notice. In fact, the only reason I knew something was wrong was because we went an entire day without completing a sale, something that hasn’t happened in over 1.5 years with our store.

How Much Did We Lose?

Ultimately, our store was down about 2 days. Judging by the number of failed transactions in our database, we probably lost a little over a thousand dollars in revenue. Now, if we do a little bit of math, it’s quite depressing.

Shared hosting has cost me about $250 for 2 years. A cheap and reasonable VPS hosting plan would have cost about $1060 over 2 years. Doing the subtraction, I’ve saved about $800 in hosting costs. But if you take into account the $1000 I just lost, shared hosting has cost me $200 overall.

Why Dedicated Hosting Is Necessary

In a previous article, I advised using shared hosting when starting out with your online store. While I still recommend this strategy, I would now immediately move the online store to dedicated hosting as soon as you’ve ascertained the viability of your store. Here’s why

  • You will have the freedom to do whatever you want. In a shared hosting environment, your website is extremely limited as to what you can do. For example, my shared hosting account only allowed me to send 500 emails an hour. Even though 500 emails an hour sounds like a lot, it makes sending out a wide reaching newsletter pretty much impossible.
  • Your shared hosting environment only allows you to use a set amount of CPU time. If you exceed this CPU usage limit, your site is shutdown. This is something that very few shared webhosts tell you about.
  • Your shared webhost may decide to upgrade the software on your server at any time without warning. In our case, our webhost upgraded to php5 and sql 5.0 which completely busted our shopping cart. With a dedicated server, you have full control over your upgrades.
  • You can withstand a much higher traffic load without slowing down your website. It takes quite a bit of traffic to overload a server. But in a shared hosting environment, you are sharing one machine with hundreds of other users. I asked my webhost once and they told me that they host around 700 users on any given machine. If one or several of these 700 users sees a spike in traffic, your online store could slow down to a crawl.

Lessons Learned

I waited too long to transition to dedicated hosting and I paid the price. Besides the reasons mentioned above, I also dragged my feet because I was somewhat fearful of having to manage my own dedicated server. At the time, I had very little server management experience and I wasn’t sure that I could get things up on my own.

If there’s anything to be learned from my experience, it’s that it’s dangerous to leave the fate of your website to a third party webhost. Even though your site might be running great right now, it can go down at any time if anything changes with your setup. Unless you have full control over your own server, even the simplest upgrade can bring you down.

The second thing I learned was that it’s amazing what you can learn when placed under the gun. I picked up a ton of server knowledge while frantically trying to migrate our site and set up our dedicated server. The transition actually went rather smoothly and I should have had more confidence in my abilities.

Finally, I learned the hard way that procrastination and complacency are terrible for business. If you eventually have to upgrade, do it now and plan ahead. It will only get more painful later on. In addition, full control over your mission critical website is necessary to ensure that unexpected downtime does not occur.

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21 thoughts on “How Dedicated Hosting Can Actually Be Cheaper Than Shared Hosting”

  1. That hurts that you’ve lost a lot of business, Steve. But, since you rely upon the internet for your store, then having a virtual or dedicated server seems like the best plan of action to take. Hopefully, your business will rebound and you’ll recoup what was lost quickly.

  2. I’ve been wondering about the switching point myself.

    This was a great article but seems to be lacking one thing… It would be great if we could hear what hosting companies you are using and what your thoughts are, especially in your search for a dedicated server and why you made the choice you did.

    Best of luck with the upgrade to dedicated!

    Marty

    1. @Matt
      Yep, same conclusion that I came to. The transition went well. Everything is up and the site is faster and more responsive than ever.

      @Marty
      Good point. I’ll write a followup post about my webhost search.

  3. I’ve gone back and forth and just recently moved a few blogs from a Virtual Dedicated Server, back to my shared hosting.

    I totally agree with your advantages. It really all depends on the sites that are running on your server, though. Sure, my shared host is down from time to time, but only for small snippets of time. And I’ve only exceeded my CPU limit once, and that was a zenhabits guest post that brought a freaking heard of bloggers to Motivate Thyself. And even then, it was snippets of down time. They didn’t cut me off at the knees or anything.

    For $6/month as apposed to $40+ (for a good VDS with 512mb ram) I prefer shared hosting. Once I reach a higher blogging status and need the power, the control and lack of down time is not that big a deal.

    Also, you have to know MUCH more about servers/Apache/etc… with a VDS. More control, yes. More complicated, absolutely!

    Just my thoughts. Great post/points! Eric

    1. @Eric

      That’s interesting. I would think that you could move all of your blogs onto a single VPS account and breakeven on the money front. I guess the difference between a blog and a store is that it looks much worse if a store goes down especially when the customer is trying to pay:) In any case, I agree with your assessment. My shopping cart is a bit fragile right now and I’ve had to do little fixes here and there with every upgrade. The control is worth every penny for me

  4. If you knew all the answers ahead of time you wouldn’t need to write this blog, you would be on your yacht in the South Pacific. Your mistakes are your greatest learning opportunity. While it is hard to do they should be celebrated. One mistake you won’t make again.

  5. Great article. I look forward to the day where I would need to make the switch myself.

    I made a lot of mistakes in my business, but its all a part of the package. The best thing you can do is learn and move on.

  6. Yeah, that’s one big difference between a blog and a biz site. The worst thing that can happen to a blog is that a reader can’t comment for a 2 minute hickup. Not a good thing, but no big deal. But a 2 minute hickup when someone is trying to input their CC info…VERY BAD! So I hear ya there.

    Actaully, I’ve got most of my blogs/websites on one shared server. A good shared server can usually handle 1 fairly high traffic blog along with a few light blogs websites with no problem. But two or more high traffic sites and you’re pushing it. (And by higt traffic I’m talking a few thousand hits a day, not 30 or 40 thousand like zenhabits.) Eric

  7. Hi Steve,

    As usual, great post! It’s great to benefit from your learning experiences. Thanks!

    I don’t know if the money is the biggest issue here. There are some other issues to consider. For example, who takes care of the server? Who will upgrade? Who will maintain and install security patches? Do you have to hire someone if it stops working?

    Also, if the server is shared by hundreds of sites, what are the security risks? I had a shared hosting site that was hacked and they placed malicious code on my pages.

    Thanks!

  8. I have to add that my shared hosting service for my blog has been down for hours now. I think you jinxed me! Just kidding.

  9. I too will most likely delay too long, in the event that NuHabits takes off. Why? Because I am cheap.

    Oh well, lesson learned (for you anyways).

    😉

  10. I just went through a similar experience when my sites went down for a day. In the end I figure I probably broker even, but I didn’t want to go through that again. So I upgraded from shared to a VPS plan. It costs 5x more per month, but with better customer service and increased reliability. Well worth the peace of mind.

  11. I strongly urge you not to rely on your own server to send out bulk mail. To properly manage it so the messages are not filtered as spam can take a highly experianced admin hours a week. You will likely never even know how many of your messages land in spam folders.

    If your not proactivly managing your mail server, I can asdure you messages are being lost to peoples SPAM folders.

    Using someone that is a professional mail provider solves most of the issues with spam filters. Aweber is very well known. So is constant Contact. Mail chimp is newer, but has been doing well from what I hear and runs on the cheaper side.

    Feel free to contact me if you have questions.

  12. I agree with your post. This is true that if we host our website at dedicated hosting server, It will be become cheaper than shared hosting.

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