Hosting Explained for Business Owners: VPS, PaaS and BaaS

Posted by Neil Ludlow on Tuesday, 30th September 2025

Time to read: 6 minutes

Intro

When you start talking to developers or agencies about your project, one topic that often gets overlooked is hosting. It may not sound exciting, but it can have big consequences for your business. The good news is: you don't need to be technical to understand the basics.

The choices sound technical, but they have real business consequences. The aim here is to understand enough so you don't get blindsided.

Types of Hosting for a Backend or API

These are some types of hosting you might encounter for a backend or API. The backend is the thing that talks to the database, so these types of hosting all have "compute" ability so that they can use the live data.

Here is list with a quick analogy...

• VPS - "bare plot of land" - you build the house yourself.
• PaaS - "apartment with utilities" - you move in with your own furniture and appliances (code), but don't worry about the plumbing (infrastructure).
• BaaS - "ready-made home with everything you need" - you just start living.

You would typically use any of these as an API, then you would connect them to something like a frontend or a mobile app. These are not the only types of hosting that exist, but they are common and likely to be the ones you will hear about when starting most projects.

You may never hear these acronyms, so let's break it down a bit more...

VPS (Virtual Private Server)

Example services: AWS Lightsail, Linode, Digital Ocean

This is the most common form of "compute" hosting. It like an empty field waiting to be built on. It's versatile, but relies on your developer to set everything up and maintain it.

• You rent part of a server.
• Your developer sets it up and keeps it running.
• Usually cheaper per month, but more hands-on work is needed.

This can work well if you already have reliable technical support, but does need maintenance. This kind of hosting may well work for a couple of months with no maintenance, but eventually it will need working on. Ideally, this kind of hosting would be getting worked on regularly so that all the software would get regular updates.

PaaS (Platform as a Service)

Example services: Netlify, Vercel, Render

This is basically the same as a VPS in terms of what it can do. The main difference is that instead of a developer setting it all up and having to maintain the software, all that is done automatically without you or a developer doing anything.

• You pay for a managed service where most of the server setup and maintenance is done for you.
• Your developer focuses on building your app, not fixing the server.
• Costs a little more per month, but saves headaches.

This is a great fit for most small businesses. It gets you up and running quickly and can scale as your customer base grows. With this kind of hosting, once the project is up and running it doesn't matter too much if no-one is working on it regularly as no maintenance is required.

BaaS (Backend as a Service)

Example services: Firebase, Supabase

Similar to the PaaS, there is no maintenance required. But, this is very different to either a VPS or a PaaS.

• You build directly on someone else's system.
• Very quick to launch.
• But: you're locked into that company's tools.

Here's the catch: if your business grows and you want to move away, it can be very hard. You might need to build an API to replace the BaaS, which can be significant extra expense. It's like renting a shop where the landlord owns the walls, the tills, and the shelves: you can trade today, but moving later might mean starting from scratch.

Because of the speed of development this is perfect for tests or prototypes. It can be used for production applications, but most businesses should weigh the long-term risks before committing.

Other Types of Hosting

There are other popular types of hosting, for example...

• Dedicated servers – renting a whole machine, expensive, usually for bigger businesses.
• Static hosting (like AWS S3, Netlify static) – best for storage and simple websites/frontends.
• Serverless hosting (like AWS Lambda, Vercel Functions) – runs code only when needed, often cheap and very scalable.
• Shared hosting – (like GoDaddy, BlueHost) traditional web hosting, cheap but limited.

There are also hybrid, managed products and other types of hosting not mentioned here.

Think About the End From the Start

The biggest mistake I see small businesses make is focusing only on launch day. The real question is: what happens after it's built?

• Who will maintain it long term if your agency moves on?
• What if you want to switch to another developer or agency later?
• How do you make sure you're not locked into something you'll regret?

This is where contracts matter. Ask your developer or agency to include clauses that guarantee their cooperation if you ever want to transition your project elsewhere. A good partner will support this because they want your business to succeed, even if your needs change.

The truth is, moving between VPS and PaaS is fairly straightforward - the code is the same. What you want to avoid is being trapped in a hosting model (like BaaS) or in a developer relationship with no exit plan.

Hosting Gotchas

So, when you're starting out it really doesn't matter whether you go for a VPS or a PaaS.

The main thing to understand is that if you go with a VPS, it might not last for 5+ years without the underlying software getting maintained. Some VPS might just exist like a time capsule, so when you put the software on it, as long as you don't change the code at all they'll just keep working, but that's quite rare. Even if that is true, there are often other services that your system uses that will need updated software in order to work.

Sometimes, you might get the project built by an agency and that agency has a deal with a particular hosting company, so that put you on a VPS with that hosting company. If that is the case, just understand what you are being sold from the beginning. Once they've finished their work, are you free to shop around for hosting or are you tied to the hosting company, and the development agency?

Similarly, I've seen frontends being put onto a VPS. The issue with that is a VPS tends to cost a lot more than static hosting, and the frontend only needs static hosting. It doesn't really matter how it's hosted, but you don't want to be paying a needless £100 every month, if you don't need to.

Even if you go with a VPS, and that's the right choice for your project, there are a whole range of products available. Asking about why you're using a particular product can be useful.

Bottom Line

When you're talking to developers or dev agencies:

• If they recommend BaaS, ask them: “What happens if I want to move away later?”
• If they recommend VPS, ask them: “Who will maintain it, and how much will that cost me in time and money?”
• If they recommend PaaS, ask them: “How does this scale as I grow?”

Always think about the long-term plan. Hosting isn't just a technical detail - it's part of your business continuity.

My mission is to make sure non-technical people go into software development with their eyes wide open. This article is talking about a specific part of software development: hosting. If your hosting will cost £100's per month, then ask questions, why does it cost so much? There may be valid reasons. Are there options? To begin with a lot of projects can be launched very cheaply then scaled up. For many small apps or websites, hosting can start as low as £20-50 per month and only grow as your audience grows.

Hopefully, this article explains a little bit about some of the different types of hosting.

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About This Series

This article is part of the Client Survival Guide, a series designed to help business owners and entrepreneurs cut through the jargon and make smarter decisions when working with developers or agencies.

If you'd like guidance on bridging the gap between the technical and non-technical sides of your business, feel free to reach out - this is exactly where I help clients find clarity and confidence.