How to Choose Between VPS and VPN for Your Business Needs

vps vs vpn

These days, you encounter similar-sounding terms in the tech world that confuses even seasoned users. 

One such combination is VPS and VPN. While these might sound similar, and many people assume that they refer to similar ideas, you’d be surprised to learn that VPS and VPN refer to two very different products. 

In fact, VPS vs VPN is a hot debate in the information security field because both are very important to setting up private and properly secured communication and data exchange channels.

This article will go into the details of the VPS vs VPN discussion, especially highlighting the difference between VPS and VPN. You should know the differences between the two ideas so that you can choose the right tool for securing your digital presence.

Table Of Contents

  1. VPS vs VPN: A Short Overview
  2. What is a Virtual Private Server (VPS)?
  3. How Does a VPS Work?
  4. Benefits of Using VPS For Business Operations
    1. Enhanced Management and Adaptability
    2. Dedicated Resources
    3. Scalability
    4. Cost effectiveness
    5. Security
  5. What is a Virtual Private Network (VPN)?
  6. How Does a VPN Work?
  7. Benefits of Using a VPN
    1. Secure Remote Access
    2. Protection of Sensitive Data
    3. Unblock Geo-restricted Content
    4. Secure Communication
    5. Improved Online Privacy and Security
    6. Protection on Public WiFi
  8. VPS vs VPN: The Question of Price
  9. VPN vs VPS: The Key Differences
    1. Functionality
    2. Access
    3. Encryption
    4. Traffic Routing
    5. Cost
  10. Use a VPS to Create Your Own VPN
  11. Conclusion
  12. FAQs

VPS vs VPN: A Short Overview 

For starters, VPS stands for Virtual Private Server, while VPN stands for Virtual Private Network. As we mentioned earlier, these similar-sounding acronyms refer to products that are very different from each other. 

In practical terms, a VPS refers to a virtual machine hosted on a physical server. A single physical server machine can host multiple VPS, with the physical server resources (processing power, RAM, storage) being the only limitation on active VPS. 

In contrast, a VPN is a service that encrypts your internet connection for secure communication. While there are commercial VPN services on the market, you can set up your own VPN if you need better-than-average security for your business operations. 

Now that you know the basics, let’s dive deeper into these two ideas to discover more about them to better understand the VPS vs VPN debate.

What is a Virtual Private Server (VPS)?

What is a Virtual Private Server

A VPS is a type of hosting server that acts as an independent virtual machine. 

Several hosted VPS share the resources of a single physical server. However, each VPS is configured to operate as a separate entity with its own operating system, computing, storage, and other resources. In most cases, the users accessing the server (or the files/data hosted on the VPS) can’t tell that they’re accessing a VPS. 

This allows for increased flexibility and control over the server environment. That’s why VPS hosting is popular among businesses and individuals who require more detailed control over their server than shared hosting while avoiding the cost or responsibility of managing a dedicated server.

VPS hosting provides almost the same benefits as dedicated hosting but at a lower price. In addition, VPS hosting is scalable, allowing users to add or remove resources easily and quickly as their needs change. This makes VPS a popular hosting solution for startups and small businesses that need the power of a dedicated server but can’t spare the budget for one.  

How Does a VPS Work?

A VPS functions by utilizing virtualization technology which facilitates the creation of multiple virtual servers hosted on a single physical server.

At the core of VPS is a hypervisor, a software layer that administers to setup and run multiple virtual servers on a single physical server. Hypervisor regulates the allocation of resources amongst the virtual servers to ensure each VPS has a distinct allocation of resources that other virtual servers cannot access.

VPS hosting can be managed through a control panel that offers a GUI to perform essential tasks such as managing resources, installing/removing software, and starting or stopping VPS. 

Unlike shared hosting, VPS grants users greater authority over their hosting environment so that they can customize it for their projects. At the same time, they are responsible for their servers’ management, maintenance, and security.

Benefits of Using VPS For Business Operations

Let’s look at some advantages that make VPS such a reliable solution for hosting business projects.

Enhanced Management and Adaptability

A VPS grants users greater authority over their hosting setup than shared hosting. They can set up and personalize their server settings, select their preferred operating system, and install and configure the software stack to better fit their specific requirements.

Dedicated Resources 

Each VPS has exclusive resources, like CPU capacity, memory, and storage. As a result, the performance of a VPS is not impacted by the operations of other VPSs hosted on the same server.


The scalability of VPS hosting allows users to modify their resource allocation to accommodate traffic spikes and increasing requests from users. Administrators can easily scale down VPS when the demand is low or crank up resource allocation when the demand increases. 


VPS hosting is generally more affordable than dedicated server hosting, making it a good option for small to medium-sized businesses that require more resources than shared hosting can provide but don’t want to pay for a dedicated server.


Compared to shared hosting, VPS hosting provides enhanced security because each VPS is completely isolated. So, if one VPS is breached, all other VPSs remain unaffected. 

Furthermore, users have greater control over how to set up their server’s security configurations. They can mount specific security controls they prefer to secure their VPS from unauthorized access and potential cyberattacks.

What is a Virtual Private Network (VPN)?

What is a Virtual Private Network

A VPN refers to a secure solution for establishing a protected network connection, especially when utilizing public networks. By encrypting the internet traffic originating from your devices, VPNs effectively safeguard your online identity.

The encryption process used by VPN adds an extra layer of security, making it significantly challenging for third parties to track your online activities and compromise your sensitive data, providing you with enhanced privacy and data protection.

People and organizations often rely on VPNs to gain access to content that is restricted geographically, avoid censorship on the internet, and ensure the safety of their online conversations and transactions. Businesses use VPNs to securely link remote employees to their internal networks. This sets up a secure “tunnel” that allows remote workers to access and retrieve protected company assets regardless of their location.

VPN services have seen a surge in popularity due to rising concerns about online privacy and the need for strict cybersecurity measures. Although VPNs are not impervious and may have certain weaknesses, they’re still a valuable option for ensuring online privacy and security.

How Does a VPN Work?

When a VPN is active, a secure and encrypted tunnel is established between the user’s device and a VPN server. Instead of directly sending the traffic to the internet, all internet traffic from the user is routed through a VPN server, which encrypts the data before sending it out over the internet. 

Once the encrypted data reaches its intended destination, it is decrypted and processed normally. This cycle is repeated for the response, where the data in the response is encrypted and returned to the user’s device via the established VPN tunnel.

VPN safeguards users’ privacy and security by concealing their IP addresses and online activities from various risks, including hackers, eavesdroppers, and government surveillance.

A popular use case for VPN is accessing geo-restricted content. This often happens when content is hosted on a server located at a location that the user can’t access from their current location. 

Using a VPN is simple. All a user has to do is install a VPN client on all their devices. Now, when the VPN client is activated, it connects the user’s device to a VPN server. The VPN client deals with the process of encryption and decryption of data as data flows through the VPN tunnel.

Benefits of Using a VPN

Here are a couple of reasons why you should use a VPN for business and personal use. 

Secure Remote Access

Employees can safely access a company’s network with a VPN. This enables workers to work and collaborate remotely from anywhere without jeopardizing network security for the business. 

Protection of Sensitive Data

 Every business has sensitive data, such as financial and personal information. A VPN can help protect this data from potential hackers by encrypting the data in transit.

Unblock Geo-restricted Content

If a business operates in different countries, a VPN is a great option to access geo-restricted content and services in countries where users might not be able to access the data.

Secure Communication

VPNs are often used for secure communication between different branches or departments of a business, protecting sensitive communication and data from potential eavesdropping.

Improved Online Privacy and Security

 A VPN encrypts your internet traffic and hides your IP address, making it much more difficult for hackers, snoopers, or government surveillance to intercept and read your online activity. 

Even when other security measures are active, a VPN adds another level of protection by encrypting your internet traffic and shielding your data from individuals with malicious intent. 

Protection on Public WiFi

Public WiFi networks are open to all, including hackers, who can easily intercept data on these access points. You can safeguard yourself by encrypting your data using a VPN.

VPS vs VPN: The Question of Price

The price of a VPN or VPS can differ significantly based on the provider, service level, and subscription length. 

Here are some rough estimates:

VPN: VPN costs can range from $5 to $15 per month, depending on the provider and subscription length. Some providers may offer free VPNs, but these often have limitations such as limited server locations, slow speeds, or data usage restrictions.

VPS: VPS hosting costs can range from $5 to over $100 per month, depending on the provider, level of service offered, and the server resources needed, such as CPU, RAM, and storage space.

Researching different providers and comparing their pricing and features is important before choosing a VPN or VPS provider.

Some providers may offer discounts or promotions, so it’s worth shopping around to find the best deal for your needs.

VPN vs. VPS: The Key Differences

As previously mentioned, VPN and VPS are distinct technologies with varying purposes and unique features. 

The following are some significant differences between VPN and VPS.


The primary purpose of a VPN is to ensure online security and privacy, while a VPS is utilized for hosting websites, applications, or other online services.


A VPN enables remote network access, ensuring secure access to resources as if they’re on the same local network. A VPS offers remote access to a virtual server, empowering users to deploy and manage their applications and services.


A VPN generally employs encryption to safeguard data during transmission, whereas a VPS may or may not use encryption, depending on its setup.

Traffic Routing 

A VPN is designed to route all internet traffic through a VPN server, while a VPS allows more granular control over traffic routing and server configuration.


A VPN is cheaper than a VPS. It requires fewer resources and less configuration.

Use a VPS to Create Your Own VPN

Here’s the interesting thing about the VPS vs VPN. You can follow these steps to create your own VPN using a VPS:

Choose a VPS provider: Select a VPS provider and set up an account. Some popular VPS providers include Amazon Web Services, Redswitches, DigitalOcean, and Linode.

Choose a VPN protocol: Decide which VPN protocol you want to use. OpenVPN is a popular choice and is supported by most VPS providers.

Set up the VPS: Once you have set up an account with your VPS provider, you will need to configure and install the necessary software and dependencies for your chosen VPN protocol on the VPS.

Configure the VPN server: You will need to set up the VPN server on your VPS using the chosen VPN protocol like PPTP, L2TP/IPSec, or OpenVPN. This typically involves creating certificates and keys, configuring the server settings, and setting up user authentication.

Connect to the VPN: Once the VPN server is set up, you will need to connect to it from your client device. This typically involves installing the necessary client software and configuring the connection settings.

Test the VPN: Once the VPN is set up and connected, test it to make sure it is working correctly.

Remember that setting up your VPN using a VPS can be a complex process that requires technical knowledge and expertise. Using a commercial VPN service like ExpressVPN, CyberGhost, etc., may be easier and more cost-effective. When using a commercial VPN, you need to ensure full compliance with your VPS provider’s terms of service and any applicable laws or regulations related to VPN usage in your location.


Hopefully, now you have a clearer comprehension of the functions and workings of VPS hosting and VPN, especially the debate around VPS vs VPN. You know that they are very different from each other.

In essence, VPS is a server that enables users to virtually manage the server’s configurations. On the other hand, VPN serves as a network that establishes a protected connection between different devices via the internet.


Q: What is a VPS?

A: A Virtual Private Server (VPS) allows users to run their own operating system and applications while sharing the resources of a physical server. 

Q: What is a VPN?

A: A Virtual Private Network(VPN) is a network that provides a secure connection over the internet between two or more devices. It encrypts the data transmitted between the devices, making it difficult for anyone to intercept or access the information.

Q: What are the main differences between a VPS and a VPN?

A: A VPS is a virtualized server that gives users full control over the server’s configuration. A VPN is a network that provides a secure connection between devices over the internet. VPS is commonly used for hosting websites, applications, or other services, while VPNs are used for facilitating remote work, improving online privacy, and unrestricted access.

Q: Can a VPS be used as a VPN?

A: Yes, it is possible to use a VPS as a VPN by installing VPN software on the VPS.

Q: Can a VPN replace a VPS?

A: No, a VPN and a VPS serve different purposes and cannot replace each other. While a VPN provides a secure connection over the internet, a VPS offers users full control over the server’s configuration and resources.

Q: Are VPS and VPN services expensive?

A: The cost of VPS and VPN services varies depending on the provider, the features, and the resources provided. Fortunately, you can find many affordable options for both products.