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Dedicated servers are good, but usually expensive. At least it’s customer who says what is expensive and what is cheap. If your web business generated $100 per month, then you can forget about dedicated server. Even a very cheap solution (which is not recommended, see this article) could bring no good at all. On the other hand, earning $10000/month allows you to buy virtually any dedicated server no matter if it’s managed or unmanaged, cheap or expensive, Windows or Linux. In the first part let’s talk about dedicated servers and the second part mentions a few facts about virtual dedicated servers.

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What is cheaper and why; Managed or Unmanaged dedicated server?
As with every hosting service, you pay more dollars for a managed hosting than for an unmanaged. But to be honest, you MUST ask yourself if it’s worth spending money on managed server or not. If you need only initial set-up and if you can do the rest, then why to spend hundreds of dollars each month? In many cases “the rest” means copying files and moving databases, eventually changing permissions of a few files/directories. I personally think that paying money for a few hours or work each month is not worth it if you CAN do the same thing too. Here are the reasons:

1) If you’re buying a managed dedicated server, where is your website right now? Is it already running on some shared hosting which doesn’t fit your requirements any longer? In such a case, why do you need a managed server? In my opinion, everything should work fine after move.

Secondly, isn’t your web application running yet as a website? Then where is it now? I suppose it can be installed on some local server at your firm or at home. But, think about it; It is running and you KNOW the configuration, you know which packages are installed on your server. So if you were able to install these things on your local server, why can’t you do the same on another server?

Thirdly, if you’re a total greenhorn and there is someone who created your web application (since it doesn’t have to be a website necessarily), then better ask that person to move your website to a new dedicated server.

2) You should know better what is necessary to run your website properly than any other person. This is nothing personal against people who work as assistance teams for managed dedicated server plans, but you’re the one who knows all things. Even if your IT department created the application, they MUST know all details about the application. It is impossible that someone is a PHP programmer who doesn’t know anything about how to configure APACHE server or how to restart and configure MySQL. One doesn’t have to know everything, however even a small knowledge is a must. So once again; Why pay someone if there is already a team (or a guy, or it’s yourself) that can do the thing too. In addition, you may be paying these people already.

3) What is managed dedicated hosting in fact? Actually, it means these things: Someone from the hosting company is responsible for monitoring and patching services in your server. Bear in mind that these services are programs running on your server, they’re not services running within your web application. Imagine that your server needs regular restarts of httpd (APACHE), so someone will restart it from time to time. But you should ask yourself, why is it necessary to restart some service? Servers should be stable and they should offer 100% system uptime for duration of 1 or 2 years, eventually more! Also, if your server needs security updates, then it might mean that something is wrong with it. For example, picture this… Your server runs without a software and hardware firewall (very extreme case) and someone breaks through. But… Isn’t it normal to buy a secured server? In my opinion, it is. Sometimes cheap dedicated servers may come with old operating systems, outdated security patches and so on. Explained in a simple way: You have a 6-7 years old server, but you still want to make money from it. So you place an offer saying $30/month. Someone not skilled enough will buy it. But after a few days this and that goes wrong, no-one is happy. The customer feels upset, the seller lost the customer and probably receives bad review if that customer knows where to leave such reviews.

So basically, if you’re buying a newly configured and properly installed dedicated server, you shouldn’t have a need to monitor services or to install patches. After 8-10 months it can be different, however after 8-10 months you CAN buy a new dedicated server! So once again you will have latest versions of software and maybe hardware will be better too. And if you know how to install/upgrade applications on your server, then you don’t have to worry at all.

4) Linux dedicated server is usually CHEAPER than Windows dedicated server. Why? Just because Windows is not free. But in this case, I’d like to mention a few facts about Linux vs. Windows. Linux systems are: More reliable, Faster (if configured properly), Safer, Virus-free, It is possible to install many free packages there (unlike Windows where majority of packages are paid). So do not argue that Windows is better because you don’t know Linux. Nearly all websites need only PHP and MySQL and these two things can work on Linux as well as on Windows. But, Linux is cheaper!

Of course, if your web application was created for Windows servers only, then there is no way but choosing Windows dedicated server. To give you a comparison, on GoDaddy the same plan costs from $12.99 to $19.99 more if you choose Windows instead of Linux. Only Red Hat Enterprise (4 or 5) is more expensive than Windows. But you can have CentOS or Red Hat Fedora too, and they’re cheaper than Windows.

5) Hardware firewall causes the price go higher. The same applies to RAM, HDD, Bandwidth, SSL certificate, Control panel, Database server (MS SQL costs much more than MySQL! – MS SQL is for Windows, although MySQL can be on Windows too), Backups and other options. Some providers offer you unlimited traffic with a 10Mb link, some will offer you unlimited traffic with a 100Mb link, but usually this is not very important for ordinary websites (see this article for details about traffic).

Nowadays the lowest prices of dedicated hosting can be somewhere at $100/month. Is it cheap? Yes, it is. I don’t recommend you buying dedicated servers for $30 or $40 per month. Such prices say that something may be wrong with such hostings.

Virtual Dedicated Server Hosting
These are cheaper than dedicated servers, but they can be the gold middle way for many webmasters. If you’re earning about $500/month or $1000/month, then spending more than $100/month on webhosting can slower further investments into your web business. There is nothing special to mention but:

1) Again, Linux are cheaper than Windows (licences, MS SQL),
2) Virtual dedicated servers give you a dedicated IP address which is good for SEO purposes,
3) System uptime doesn’t achieve such a high values like a purely dedicated server does,
4) You can’t choose a hardware firewall since more users share the same server (but this doesn’t mean that the server is without that hardware firewall).

If you’re not sure, try a virtual dedicated server hosting and if you’re not happy with the result, use a dedicated one.