The choice between the type of web hosting, virtual or dedicated, is governed by several factors that need to be taken into consideration by the site owner. The key for a site owner is to try and fulfill his requirements while staying within his budget. An understanding of the pros and cons of both forms of hosting is the first step in deciding which to choose.

Virtual hosting: This type of hosting is preferred by most small websites. Several websites are hosted on a single server in this form of hosting. Hosting providers offer packages with different combinations of disk space, domain names allowed with each hosting account, and bandwidth allotments. Small sites and blogs that do not require too many resources to run can select a smaller virtual hosting package.

With virtual hosting, the distribution of resources means that the speed of web pages loading depends upon other web sites sharing the web server. If quick download and upload are essential to a site owner's plan, then virtual hosting which offers sufficient bandwidth should be considered. A good host will ensure that websites with similar resource requirements are hosted together so that site owners pay only for the resources and scripts that are used by them.

Virtual hosts may or may not allow access to non-public directories, these are directories used for storing files that are not meant to be accessed via the word wide web. Small sites that hold sensitive data should check for this facility. SSH/Telnet are important for site owners that wish to communicate directly with the servers and run queries on the databases.

In terms of security, websites can get compromised even when there are no lapses on their part; carelessness on part of neighboring websites on a virtual server can lead to the server getting hacked into and every website may be at risk. However, choosing a good host with solid security will mitigate this risk.

Dedicated hosting: With dedicated hosting, all the resources of a server are made available to the site owner exclusively. Dedicated hosting is best suited for sites that attract a lot of visitors and have a high bandwidth requirement, ecommerce sites that may need special software, or web sites that hold sensitive information and therefore need greater security.

Dedicated servers allow unlimited domain names and greater freedom in managing the website. Dedicated hosting is divided into managed and unmanaged hosting. Managed hosting implies greater support from a technical team that performs regular technical updates and routine maintenance without the site owner having to look into it. Unmanaged dedicated hosting is cheaper than managed dedicated hosting but additional support can be an added cost.

Dedicated servers are accessible only by the host and the site owners; by using features such as secure FTP and encrypted terminal sessions, site owners can be assured of greater security. Webmasters who run multiple sites can also host all their sites on a dedicated server; this enables better management and may work out cheaper than hosting the sites separately on different virtual servers.