If you host on a dedicated server, you own the entire server. On the other hand, if you are using shared hosting, you are sharing the the server with many other users like you. All of you will split the cost of the server so it won't cut a hole in your wallet.
HostGator Baby plan, an "unlimited" shared hosting plan with unlimited disk space, bandwidth, websites, emails and databases cost you $9.95/month. A basic dedicated server will cost you $174/month and comes with a "limit" of 250GB disk space and 1,500GB bandwidth.
[This website is hosted on HostGator "Unlimited" Baby Plan]
Now the most interesting question - Why the basic dedicated server that comes with a limit cost you 17 times more than your "unlimited" web hosting plan?! :)
Why would people want to pay $174 for a limited plan? Why don't they just host with the $9.95 unlimited plan?
The answer is simply because there is really no such thing as unlimited web hosting and all web hosting plans in this planet are always limited. Simple logic will tell you that unlimited hosting is impossible.
If unlimited hosting is possible with a $9.95/month hosting, why do YouTube.com has to spent millions of dollars each year on hosting alone? Those giant sites like Google.com and Facebook.com that serve millions of users a day should just pay $9.95/month to host with HostGator Baby plan and save a few million dollars!
Why Web Hosts have to "Cheat"?
All web hosts selling shared hosting today have to cheat and sell "unlimited hosting" because web hosting is a very competitive business. Shared hosting plans are sold to small users and small businesses instead of BIG businesses. Such users are usually idiots (except you of course) and most of them don't really understand the specification of their hosting plan! For them, their mums had taught them that "the more the better".
Web hosts compete with each other by offering more and more. More and more disk space, more and more bandwidth. Idiots Consumers will simply pick the one offering the most. 1GB became 2GB, 2GB became 20GB, 20GB became 2,000,0000,000,000,000 GB and soon a web host decided to offer "unlimited"! Every other web hosts follow suit. And now every web hosts selling shared hosting plan will have "unlimited" everything.
They are "cheating" to survive the harsh business environment. If they don't "cheat", they will be out of business.
What are the Common "Unlimited" Features they are Marketing?
There are 5 features that are usually marked with unlimited. They are disk space, bandwidth, emails, databases and websites/domains.
However, not all 5 items will be "unlimited". Many hosting plans are still limiting you to 1 website per account.
What are the Real Limits of your "Unlimited Hosting"?
When you choose a web hosting provider, you need to understand your limits. There are many different ways that web hosts can implement the limit. Some are stated clearly while some are vague.
The first common limitation is the inodes limit. Inodes are simply the geek term for files. Number of inodes means number of files. BlueHost "unlimited" plans are limited to 200,000 inodes. HostGator has an inodes limit of 250,000.
[HostGator showing my inodes usage]
Almost all web hosts will also state that you can't use your web hosting account as your online backup. All files that you store in your hosting account must be linked and used by your website.
But most web hosts do not specify the limit clearly. Their usual terms and conditions will simply be "not jeopardizing" the server, which means "it is really up to me".
While usage of disk space, bandwidth, emails, databases and websites can be easily calculated, there are also usage that are harder to measure, i.e. CPU power and memory usage.
Each server are shared with thousands or customers and they all share the same CPU power and memory.
Other limitations are within common sense. If you sign up a $4.50 "unlimited" account and start giving free email accounts to everyone like Hotmail and Yahoo Mail, you are guaranteed to be suspended.
More about Inodes Limit
Inodes limit measure the number of files. Unfortunately, this can be very limiting sometimes. You may have a few "unsuccessful" websites that receive little to no traffic, so you don't use much bandwidth. You installed several scripts on each of your websites using the script installer and since these scripts are consist of mostly small text files, you don't use much disk space as well. But although you use very little disk space and bandwidth, you still use a lot of inodes! So inodes limitation is a bit unfair. Fortunately, hosts that implement inodes limit usually set a very high limit.
Limitation Policy by Some Popular Web Hosts
BlueHost, HostMonster - 200,000 inodes limit. In their words: "Bluehost's offering of "unlimited" services is not intended to allow the actions of a single or few subscribers to unfairly or adversely impact the experience of other Subscribers."
HostGator - 250,000 inodes limit. Cannot use 25% or more of system resources for longer then 90 seconds. Cannot run any MySQL queries longer than 15 seconds. Account using more than 20 gigs of disk space will be removed from off site weekly backup. etc.
iPage, Fatcow - "Normal" usage. Normal usage means that you operate a personal or small business website that utilizes resources in a manner similar to most of our other customers. (Means, don't look like an alien!)
JustHost - "The Services are intended for normal use only, and any activity that results in excessive usage that is inconsistent with normal usage patterns is strictly prohibited."
Among all web hosts, HostGator has the clearest usage policy.
Do all these Matter to You?
You will only be affected if you hit the limit of their "unlimited plan". You will either have to upgrade your hosting plan (means pay more dude) or in the case that your web host doesn't have upgrade options, you will have to move to another host. Or if you are hosting multiple websites, you can move some of the websites to a new account (again, pay more dude).
That's why we will still need to be cautions on our web host limitation. We would like to have a web hosts that is more generous and flexible. Also, a host that will give us more time to resolve the issue is better than a host that will suspend our account straight away. That's why we want to stick with reputable web hosts.
Don't be too upset if you hit the limit because that would means you are really doing very well with your website. It will be time to move on (pay more) to higher plans. Money will solve all your problem.
If one BlueHost account is not enough, get two. If two is not enough, get three!