The 1st option is a "Shared Server". A shared server is a computer managed by your web hosting company that allows many websites to be hosted on one computer. This has both several advantages and disadvantages. One simple advantage is monthly fee (or rent) that is being charged to the end customer. If you have a website that is pretty simple and used mainly for advertising, then this may be the best option cost wise. To make a swimming pool analogy, let's say the swimming pool is the server and there are 100 people in the pool. All 100 people are sharing the same pool. Now the disadvantage to this is if one person in the pool gets rowdy it can disrupt everyone else in the pool and create discomfort. Well it is the same with a "Shared Server". If one website does a lot of processing, gets tons of visitors, it can effectively slow down the other websites on the web server. The computer resources are being shared among everyone. Another website can have something uploaded and everyone will be affected. That is the disadvantage. The advantage is cost savings ... it is a lot cheaper to allow many people to swim in a public pool then only one person. Most hosting companies break this into categories like
"Business Class" and
"Personal Class". The difference between the 2 is how many websites are allowed on that particular web server. Personal class may allow 10x more websites than a "Business Class" server. it's like limiting the # of people in a swimming pool. You pay more per month for pool A but only 50 people are allowed in at one time while pool B is cheaper but 200 people are allowed in at one time.
The 2nd option is a "Dedicated Server" This is going to the complete extreme compared to a shared server and is also the most expensive way to go. You are essentially paying a large monthly fee to rent you're your own computer each month. This option is best if you are doing online mission critical operations and your website is bringing in a substantial amount of money critical to the business operation. I would say even an online store does not need a website like this. If you are Macy's.com or a super high conglomerate then this may be the best option. To make a swimming pool analogy, it's like you are renting out the entire town swimming pool for yourself and no one else is allowed to use it while it is being rented. This is expensive!
The final option is a "Virtual Private Server". This is another option for web hosting that may be a middle ground between a "Shared Server" and a "Dedicated Server". This is basically taking the web server and slicing into a fixed number of virtual servers with allocated computer resources for each. This way you do not have to worry if someone else is bogging down the web server for you are only using a part of it. It is more expensive than a shared server but less expensive than a dedicated server. However, you are limited to your slice of the web server's hardware. Again to make a swimming pool analogy, it is like splitting the swimming pool into mini-pools by roping off each section. The swimming pool as a whole could be empty but again you are only allowed to swim in the confines of your section. This creates a set # of resources to each section so it doesn't matter what another section does unlike in a shared server. There are no ropes in a shared server so if someone makes a lot of waves in the pool then everyone is going to feel it. A virtual private server will prevent that but will not allow you to enjoy the full resources of the swimming pool on slow days.
In the end, it is best to discuss these options with your web developer to make the proper decision both monetary and on resources for your website needs.
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