VPS stands for Virtual Private Server created on a dedicated server ( Physical hardware / machine located at Data center). VPS is an isolated server that share the hardware of a single physical server. You can see it as a small dedicated server because it uses its own disk space, RAM , IP address and it can also be rebooted independently so, VPS performs like a stand-alone server where you can run your own applications. Virtual Private Servers offer feature sets more like Dedicated Servers, but at a cost that is reminiscent of a Shared Web Hosting plan. VPS server can easily handle the load of medium level business web sites. This is accomplished by giving each VPS account on the server its own drive partition. Being on a separate partition allows each VPS to have root access and its own bandwidth, increasing performance and providing the ability to run custom applications. For this servers company is charging very low as compared to the dedicated server.