You are currently viewing When to upgrade from a Shared Hosting to a Cloud or a VPS server. A monetary perspective.

When to upgrade from a Shared Hosting to a Cloud or a VPS server. A monetary perspective.

You have a website on a shared hosting provider, and you just realize that your website is not opening on your PC and nor either on your mobile. Or if your website opens, its page load times are abysmally slow. 

Here we are talking of that website which opens fine most of the time, but in critical moments like office business hours, it goes down or becomes unresponsive. Also it includes e-commerce websites which crash especially in holiday or shopping season. And there it hurts most as it is that time where you have to get your sales rolling. 

This kind of performance of a website, points out to the vagaries of the shared hosting environment where on a single VPS or a server, 1000’s of websites are running, and sharing various resources like RAM, CPU and of course the network traffic. So when your site is just one amongst the thousands of websites, it is very natural to face such kind of problems. It is just the nature of how the shared hosting works. 

Now you have heard that there is something called VPS (Virtual Private Server) or a Cloud server/instance which can provide you predictable and consistent performance. But of course as compared to shared hosting service which costs $, this costs $$. So now here we look into the financial considerations which can help you decide whether you need to go for a VPS or not. Is going for a VPS really worth your dime? Here in five points I would point out when you need to consider an upgrade to a VPS.

P. 1) When your website or web application is an integral part of your business workflow.

Here let me start with a use-case. Say you are running a laboratory service, and your website or app allows your customers to download and view their reports. This indeed is a very important and a good value proposition of your website or app, as receiving online reports etc. is very natural for your user who are spending a good deal of their lives online.

Now lets put in some numbers. Say for a Test ABC you are charging $15, and each day you are conducting 100 such or similar tests. And these test reports are very important for your patients or clients, as they have to refer them to their doctor.. You website or app must be doing two critical online activities

  1. Letting users signup and pay up for their test and sample collections.
  2. Letting users download their reports once they are available

So now your website or online App directly impacts $1500 ( $15 x 100 users ) of revenue on a daily basis. Or $45,000 revenue on monthly basis or $540,000 on yearly basis.

And the most interesting part is that nearly half a million of your revenue is dependent on a shared hosting service for which you are paying just $25 per year. And this hosting service due to its very nature can never ever be reliable.

If the core activity of your business directly depends on a highly available and predictable hosting platform, then surely VPS is the best possible upgrade option. There are no two thoughts about it.

P. 2) When your online store starts generating 20% or more of your total online revenue.

You set up an online e-commerce store. Like any new website or an e-commerce store it works well on your shared hosting platform. But in due course it starts getting traction and one day you realize that your this online store is responsible for 20% of all your revenue.

Lets put in a few modest numbers. Say your clothing business was selling 40 jeans a day in your brick and mortar store at an average price of $30 per jean. This comes to $1200 a day revenue. Now after you started your online store, after a few months of online marketing etc., you are able to sell 10 jeans a day from your online store. This bumps of your daily revenue to $1500, Of this $1500, $300 came only through online sales. So therefore in a month, your online sales channel generates $9000 worth of revenue or $108,000 revenue in a year.

In-fact if we consider holiday and shopping seasons, your annual revenue from online sales gets bumped even further.

Now as mentioned previously would you want your ecommerce website to depend on a shared hosting environment. The answer is definitely NO. Its high time you get a VPS rolling, and also its not that expensive.

P. 3) When your are provisioning B2B services like Web Hosting or E-Commerce Website Development or Digital Marketing.

Here we consider those businesses whose very existence is their online presence. Typically web hosters, web developers and digital marketers would fall in this category. 

The regular trend for such entities has been to go for a reseller pack, which lets them provision multiple web sites or hostings. These reseller packs would typically cost $10 to $40 a month, whereby you maybe able to run 20 or 30 or more websites in a single pack. And very importantly, these reseller packs run on the very same shared hosting servers. Therefore the websites in these packs are not immune to shared hosting issues.

Let us go by some numbers. Say you are running 30 websites in a reseller pack, and are paying $30 per month for this reseller pack. Now let’s consider the business value which your clients consider for their websites. We can safely assume that your client would put $100 to $500 a month business value for their website. So lets take $250 a month as mean business value of a website in your reseller pack. Therefore for 30 websites, you are responsible for $7500 per month business value. Also lets consider that your clients are willing to pay you upto 5% of their business value as the hosting cost, provided you offer them a great service. So this comes to $375 a month. A reseller pack on a shared hosting server would not do justice to it.

It would rather be better if you were to spend $100 per month on a VPS to host all these websites, offer your clients even a greater business value proposition, and this would help you to even offer better upselling options to your customers. You would be able to earn more revenue per customer. Remember a happy customer is a paying customer.

P. 4) When your IT spend cost is $$$$, and cost of VPS is just $$.

Say you are pushing a new project and you have already spent $5000 on developing it. Now you are doing Facebook / Instagram / Linkedin or Google Ad marketing, on which you are spending $2000 a month. And importantly you plan to spend $2000 each month for next 12 months.

Your annual expenditure would come to about $30000. Shared hosting costs $25 a year and a typical VPS would cost $850-900 year. Would you like to bet your $30000 on  a $30 shared hosting, with all its perils. Wouldn’t you be better off with a VPS which gives you a consistent and predictable performance. The answer should be very clear to you now. VPS is the way to go forward.

P. 5) High Value Premium clients and brands.

Either you or your client represent a high value premium client, and they have tasked you with the responsibility of deployment of their web site or their  app. For a client or a brand whose value is $$$$$$$ , would you like to put it on a $30 year shared hosting. Well in that case you would be taking quite a risk because with shared hosting its very likely that some time or the other, they are going to face some issue like downtime or slow speed. This is not to say that a VPS does not have its problems, but the probability of the same is reduced a lot.

Now when your client can afford to spend $$$$ on the IT infrastructure, but if you put him on $$ shared hosting infrastructure, then in this case you are taking quite some risk. Probability of service disruption is highest in shared hosting. If something were to happen, apart from IT disruption, you may even risk losing your premium client. Shared hosting is not worth its risks.


Above I have tried explaining various scenarios w.r.t. business and monetary perspectives on both shared hosting setup and VPS setup. I can very safely say that whatever your business size is or whether its a new or an old business, VPS setup is the way to go forward. 
We at Pack Web Hosting specialize in providing high performance VPS and Cloud solutions which offer you predictable and consistent performances. Also our VPS solutions are seamlessly scalable. To learn more about our VPS solutions, please visit