A website needs VPS hosting when the website begins growing and getting more traffic and needs resource scalability.
If your website is getting more than 5,000 daily visitors then it's a good time to start moving to VPS hosting so that your website can work properly and be accessible to the visitors.
When your website is getting millions of visitors per month then you certainly need VPS hosting or cloud hosting.
The difference between shared and VPS hosting is that with shared hosting you are sharing the resources and server itself with thousands of other websites and customers.
With VPS hosting you are still sharing the same server but you also have dedicated resources and also have root access to the server.
So you're basically isolated from other hosting accounts on the VPS server and other websites from other accounts won't bring your website down.
Shared hosting is so cheap because you are sharing the same web server with thousands of other customers and websites.
The hosting company can charge less for the shared hosting and still make a profit as they can put thousands of customers on the same web server.
For example if the shared hosting has 1,000 customers and the hosting company profits $1.00 each off of the customer then they make $1,000.00 per month off that amount of customers although they tend to make around $2,000.00 to $3,000.00 per month off each web server when they pack many more customers on the same web server.
Dedicated hosting is more expensive as you are the only customer on that web server so they have to charge more.
The average cost of shared hosting is around $5.00 to $10.00 per month although some shared hosting can cost more depending on who you purchase your shared hosting account with.
Shared hosting or shared web hosting is a web hosting service where many websites reside on one web server connected to the Internet.
The overall cost of server maintenance is spread over many customers.
Shared hosting is perfectly fine for most smaller websites and websites just starting out and then eventually as your website grows and you get more website traffic then you may need to step up and move to VPS hosting, Cloud Hosting or even dedicated hosting.
Despite the number of hosting options available, shared hosting is the go-to option for most websites, particularly entry-level hosting.
In addition to sharing server space, your website shares common server resources such as RAM and CPU with many other customers.
With shared hosting a single server's maintenance costs can be distributed amongst its many users, driving down individual costs to customers.
You also have the option to pay more to upgrade to hosting services that allow more traffic, and greater resources.
Despite its affordability and accessibility, shared hosting service also has a few drawbacks, such as: Limited resources.
Sharing resources with other websites means limited storage space, bandwidth, and CPU power.
A sudden spike in traffic from neighboring sites can negatively impact your website's performance.
Some good shared hosting companies are Hawkhost, BlueHost, Hostinger and Hostgator.
A good VPS hosting company is VPSdime which is what I used to host my website.