Why do some organizations choose to host their own Web site on their own managed servers, while others contract with a Webhosting company or purchase their ecommerce hosting services through an ISP (Internet service provider)?

While cost (including risk) and flexibility are often the two primary considerations when choosing how to host a website, understanding distinctions among Webhosting options and the pros and cons of each will help you pare down the list to something considerably more manageable, ensuring that you make the best decision.

Webhosting plans can be categorized broadly into two types: virtual server hosting and dedicated server hosting. Small to medium-sized businesses typically choose a virtual server plan where multiple ecommerce web sites are hosted on space within a single server. This service allows you to share a server with others, but your site is further protected or isolated with its own server resources including processor, memory, and disk storage. This arrangement works well for small sites that rely on dynamic generation of content from a backend database, small ecommerce sites, or for customers who wish to manage several separate web sites.

The reason that vendors can offer low-priced domain hosting for virtual private servers is because the customers look the same and require a set of web services that are essentially identical from site to site. Webhosting vendors who are able to package similar services across a huge volume of customers most effectively are generally the most successful since they can capture substantial economies of scale.

Dedicated hosting on the other hand is an option for mid- to large-sized businesses that require or desire the flexibility that comes with dedicated servers. While more expensive, this type of plan generally provides a higher level of security, support, and maintenance with a guaranteed level of availability. Offering this type of guarantee generally reflects a level of redundancy within the vendor's data-center operations that severely decreases the chances of downtime or removes the risk all together. Depending on the vendor's plan, flexibility means you can write and run your own custom scripts or applications and even use a content management system to manage the web site but not worry about managing the network, server hardware, or operating system.

The easiest decision will likely be whether you intend to host the site yourself or contract with a webhosting vendor. Scale is the primary decision-making factor. Going it alone takes money and the willingness to assume the activities and risk associated with managing the server hardware, software, and connectivity. For organizations that already have a dedicated IT staff and data center, hosting may be an affordable option. The IT department may, in turn, offer a shared server arrangement where organizational entities such as the organization's library are provided space on the server. But for those who are unable to tap into existing resources or who are working for companies without IT resources, contracting with an external webhosting provider is the only cost-effective option.

Narrowing the choices down can be difficult since there are so many vendors from which to choose. The first step is to list your requirements for developing, managing, and offering a web site to your users. For very simple sites, the vendor may provide tools for creating and managing your site along with available services to extend your site's offerings, such as online form capabilities. Alternatively, you can use your own HTML authoring tool and upload pages as needed.

Vendors try to make choosing plans as easy as possible by packaging most-requested services together into specific webhosting plans. Doing so allows customers to more easily select what they need; they also benefit from a cost structure that can be kept fairly low. Most plans require an upfront set-up fee along with a monthly fee covering the plan you choose and any additional services (extra e-mail boxes, additional storage, etc.) that you request.

Finally, choosing a webhosting vendor can be confusing due to the array of options. A winning approach includes developing your list of requirements along with a plan for current and future growth to allow you to substantially clarify how your needs map out against your domain hosting options.