The Economics of Purchasing Dedicated Server Hosting

If you are searching for dedicated server hosting, three factors dictate which server you will get and at what cost: Price, Performance & Protection

The three-fold PPP approach to buying a dedicated server hosting plan

When looking for a dedicated server, it is critical that you seek out the highest preforming server at the lowest price possible. Additionally, you should also know how to operate it. In a perfect world, you could buy a brand new, fully-managed Dual Xeon 2600 series server for $99 per month.  Since this scenario is highly unrealistic, I would like to introduce you to the three-pronged PPP model for selecting a dedicated server. Choosing the perfect dedicated server can be difficult, as you must take into account several different factors such as RAM, traffic, HDD, time, investment in new hardware and many more. Although this process may appear daunting at first, I hope this brief explanation from the hosting prospective allows you to select dedicated server that suits all your needs and allows you to manage your expectations. Personally speaking, I recommend to anyone who is renting a server for over $175 to consider a lease-to-own option, which would throw my entire analysis out the window.

Below you will find three different options, each of which will guide you through the process of buying a dedicated server in terms of a managed or unmanaged server, price and server quality. I believe that each one plays off the other two as you go through this process.  I also assume that you will only get to choose two out of the three because of the need to maximize profits and earn higher returns.

If you’re unsure if a dedicated server is right for you, this post may benefit you more.

Option 1: Getting the deal of a lifetime price-wise and getting a new server; you’re managing the server yourself.

When you are deciding among different dedicated hosting options, you will only reap the benefits from two out of the three aforementioned options. While you can have the best preforming servers at a great price, it is essential that you know how to manage them, as paying for managed hosting can be very expensive.  Dedicated servers are either sold as managed or unmanaged. If you need your hosting company to manage everything for you, the chances of getting a great server at rock-bottom prices are slim.

Option 2: Dedicated server company manages your server, while the price is increased; however, you still get a good server.

You have no idea what you are doing regarding dedicated servers. Thus, the hosting company will take care of all aspects of management, including server monitoring, backup and firewalls. You have chosen one of the three P’s. Let’s say that because your website demands you have the best server, you will need to pay more for it. This is just the way this whole business works. Like I’ve already stated above, you only get to choose two of the three options.

Option 3: Dedicated server managed by customer and you’re on a $59/month budget. What to do?

If you are OK with using an older server, then this option will work for you. This works for many people, although those who have heavy server demands are not able to do this. This is a situation in which you must ensure that your hardware grows with your business. If paying in the future to do this poses a problem but you can manage to pay more now, you could always look into a lease-to-own program.  In this scenario, you would add $25 per month to a dedicated server and after one year, you pay just $99 per month for a $300 server. But back to the point, as this option assumes you only have a budget of $59 per month. This means you will be working with an older server and might consider a VPS for better performance.


The reason I have not included network in this discussion is because the network and the amount of bandwidth is now commoditized. Unless you find an extremely cheap hosting company, you are most likely receiving tier-1 traffic. For this and many other reason, I have left it out of this article.

by Richard Norwood

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