Virtual Private Server: Definition, Uses and Considerations

Updated December 12, 2022

Many organizations use servers to help them store or process their company data, programs or services. One type of server that individuals or businesses can use is a virtual private server (VPS). Virtual private servers can provide companies with improved memory capabilities, faster data processing times and enhanced security features.

In this article, we discuss what a virtual private server is, explain how they work and explore factors to consider to help you decide if VPS could benefit your organization.

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What is a virtual private server?

A virtual private server is a digital operating system that provides independent servers to multiple clients. Servers are powerful types of computers that can offer resources, services, programs or data to another computer. Regular computers and other technological devices access servers through a network.

A virtual private server is actually one computing server that uses virtualization technology to split itself into multiple servers. Although a VPS uses shared hardware, each server created through a VPS is entirely separate and private for every client. Every server within a VPS receives its own memory, processing, bandwidth and storage capabilities.

Related: What Does a Server Administrator Do? (With Average Salary)

Virtual private server uses

Companies can use VPS for nearly any purpose that a regular server provides. However, since a VPS is technically multiple servers sharing one computer, a VPS typically provides less storage space and slower data transfers than a server dedicated to one client. This makes VPS an ideal choice for organizations that need less storage space while continuing to provide their employees and clients with consistent performance. Here are some of the ways that a client or company might use a VPS:

  • Hosting a web server, or a server that runs websites

  • Providing databases

  • Hosting between one and 10 websites

  • Creating or offering cloud-computing services

  • Hosting an organization's internal email system

  • Providing virtual workstations to employees who work remotely

  • Hosting a gaming server

  • Storing large or confidential business files

  • Allowing employees to access company data from a variety of geographic locations or devices

  • Hosting a virtual private network (VPN), or a tool that can give a public computing network the security of a private one

  • Developing or testing computing code

Related: What Is Cloud Computing? (With Usage Info and Benefits)

Virtual private server benefits

Using a virtual private server can provide organizations with a few benefits, including:


With a VPS, it’s often easier to add or remove resources as business needs change. For example, if a business significantly grows its customer base, you can quickly add more memory and bandwidth to your VPS service. By using a VPS, businesses can scale up or down depending on their situation without any interruption to their existing services.

Related: 6 Ways To Scale Your Business Effectively (With Examples)


In many cases, using a VPS is more affordable than a dedicated hosting solution. This is because a VPS solution uses resource sharing, allowing VPS providers to offer more affordable hosting plans compared to dedicated hosting providers. This makes VPS solutions more attractive to new and smaller businesses that may not have large enough budgets for dedicated hosting solutions.

Related: Types of Computer Servers and How They Function


Virtual private servers come with advanced security protections. Within the VPS, each client's resources are protected against other users on the same server. Users also have protection against outside intrusions, as a VPS solution allows businesses to quickly install firewalls or other security tools to protect their data.

Related: Working in Cybersecurity: Definition, Careers and Skills

How do virtual private servers work?

A virtual private server is a form of cloud hosting that contains multiple users. VPSs use one physical server, known as a parent server, to provide several virtual servers to different clients. They then provide server resources, like memory and bandwidth, over the internet to users. This parent server features a virtual layer on top of its operating system (OS).

The virtualization process creates digital walls to separate the different virtual servers. Since the virtual servers have a separation between them, clients sharing one parent server can run their own operating systems and software on their section of the VPS. This wall also protects users on the same server from one another so that each user’s data and resources are secure.

Related: How To Become a Network Administrator in 5 Steps

Virtual private server vs. other types of hosting

Apart from VPS, there are two main types of computer hosting systems:

Dedicated hosting

Dedicated hosting means that a client or organization has an entire server to themselves. Unlike VPS, users of a dedicated hosting system don't need to divide up a server's resources. Instead, the users of dedicated hosting can gain access to all of that server's memory, bandwidth and processing capabilities. A dedicated hosting system is also fully customizable, so users can install or adjust its software to fit their needs. With dedicated hosting, clients can fully control the resources on the server. Dedicated hosting is typically the most expensive type of hosting system.

Shared hosting

Shared hosting refers to a system where multiple users share a server's resources. These resources include the server's storage, processing equipment and memory. Like VPS, shared hosting involves more than one client making use of the same server. However, with VPS, users have their own set amount of storage, bandwidth and other resources separate from the server resources for other clients.

For example, if one client using a shared hosting service experiences a sudden increase in website traffic, that traffic increase could slow down or cause errors on websites hosted on the same server by other clients. This is not the case with a VPS, where the other users on the server would remain unaffected.

Related: 37 Tech Terms Everyone Needs To Know

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Virtual private server considerations

Here are some factors that might help you determine if your organization could benefit from implementing a virtual private server:


Evaluate the company's budget for IT initiatives and systems. A VPS is the most cost-effective option for organizations that need to increase their server's memory or bandwidth capabilities. While a dedicated hosting system can provide those same benefits, this option tends to be pricier than VPS.


Think about the current speed of your website, database or other processes that rely on your current server. If your website or other server functions often run slowly, this could be a sign that you need more random access memory (RAM), meaning temporary data storage space. A VPS offers much faster data loading and processing times than shared hosting systems.

Related: 15 Website Improvement Tips

Type of business

Certain types of businesses may need more memory, storage or bandwidth capabilities than a shared hosting system or a network without a server can provide. Companies that might benefit from a VPS include:

  • Web development or web designer businesses

  • Cloud-computing providers

  • Gaming companies that develop games run on the internet

  • E-commerce businesses

  • Companies with a large remote workforce


Assess how much traffic your website or server receives and if you currently have the IT resources to handle that traffic load. If your website or other processes on your server struggle to keep up with the number of users accessing it simultaneously, that could indicate you need a VPS. A VPS can provide multiple users with reliable access to its data or processes at the same time.

Related: 26 Effective Ways To Increase Traffic to Your Website

Server errors

Consider how frequently you or your employees receive error messages related to your server. If you use your server to provide services to your customers, such as with a website or email platform, chances are that your customers also receive those error messages as often as you do. VPS can minimize these types of errors by greatly increasing your server's processing and storage capabilities.

Related: 504 Gateway Timeout Error: What It Is and What To Do About It

Custom software

Look at the company's software needs. Organizations that need to use customized software or advanced programming features on their servers might benefit from a VPS. While shared hosting services can help companies that use standard content management systems (CMS), businesses that need more personalized features often can access those through shared hosting. Customized software or advancing programming needs might include:

  • Video, image or audio files

  • Tax or billing software

  • Virtual sandboxes, or places to test new programming codes

  • Bookkeeping programs

  • Virtual databases

  • Customer relationship management (CRM) software

  • Extranets, or private networks with extra authorization features

Security concerns

Think about your organization's current cybersecurity system. If you want to improve your company's cybersecurity, a VPS might help. Since VPSs provide separate server environments and resources for each client, VPSs are inherently more secure than shared hosting systems. A VPS also has enhanced security features, such as the ability to closely monitor visitors to your server and safely process customer payments.

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