Can a website company that builds 4-5 websites a year afford dedicated hosting?

Question

We manage about 30 websites that use shared ASP.NET SQL Server web hosting. These are typical small/medium business websites and they perform fine in this environment. They average around 1Gb outbound a month.

Recently I was looking at VPS hosting in this thread How do you host multiple public facing websites on a VPS?

After contacting a provider in one of the replies I was told that VPS hosting is not recommended for 30 sites, even if they are small. The resource requirements might be too great even for VPS. So I should turn to dedicated hosting.

The lowest cost dedicated hosting is $219 per month (see http://www.serverintellect.com/dedicated/pentiumdservers.aspx). But this is only for a single processor which seems too light for a machine running both IIS and SQL.

In our office all the developers work on quad cores so I assume I’d really need the Quad Processor. However, this starts at $599 monthly.

Now, I won’t be able to transfer all of our 30 sites to this machine. I’d only be able to transfer say 5 or 6. However, moving forward, I’d be able to host all future sites on this machine. This amounts to 4-5 per year.

Let’s look at the economics. Shared hosting costs are typically $16.95 monthly (see http://www.crystaltech.com/dotnet.aspx). So here’s the dilemma

First months costs: $599

First month revenue: 6x$16.95 = $101.7

Loss in first month: $497.3

First year costs: $599x12=$7188

First month revenue: 6x$16.95x12 + 5x$16.95x6(averaged) = $1728.9

Loss in first year: $5459.1

Clearly it is going to take years for this server to pay for itself. It just doesn’t seem economical!

Am I missing something here, or is dedicated not the way to go with the amount of sites we build?

Answer 1

Petras,

The "number" of websites you are capable of hosting on a VPS is dependent on the type of load that each application is experiencing (and App Pool over head etc. too, of course). A better measure (although not definitive) would be how much traffic you are pushing - this is usually more indicative of the type of load your machine is under.

You cannot make a decision based on what someone else says is best practice. Best practice is using a solution which suitably addresses your requirements. Is the VPS too slow for you? If not, why upgrade? If the VPS is too slow for you, then investigate where the issue is occurring - there is a strong chance that it may not be load based and could be as simple as a configuration change.

Quincey.

Answer 2

If you're going to lose money, it's not the right solution.

Answer 3

If you're not going to make the money back, there's no point. If you're honestly reaching a VPS resource limitation, my advice? Add a second VPS account.

Answer 4

Let's say for a moment that you really need this dedicated machine...

First, you can save money by purchasing your own equipment and using a co-location provider instead of renting your server.

Secondly, your pricing model should factor in the costs associated with doing business. So if you need to provide a more costly service, do what everybody else does. Raise your prices.