VPS Pricing 101: What a $5 Server Actually Costs

The advertised price of a VPS is the number that gets you to click. The bill you pay is built from four other line items most comparison pages ignore.

The four hidden line items

Bandwidth/egress. Hetzner includes 20TB; AWS Lightsail bundles cap at 1–5TB then charge per-GB overages that can exceed the instance price. If you serve media, backups, or CI artifacts, egress terms matter more than vCPU count.

Backups. Typically +20–25% of instance price when enabled — and you want them. Some providers (Hostinger) bundle weekly backups free; most charge.

IPv4 addresses. IPv4 exhaustion made free IPs rare. An extra IP now runs $2–5/mo at most providers — more than a nano instance itself.

Snapshots and storage. Cheap until you automate them. Daily snapshots of a 40GB disk routinely add $2–4/mo.

The real comparison formula

true_monthly = instance_price
             + (backups ? 0.2 * instance_price : 0)
             + extra_ips * ip_price
             + estimated_egress_overage
             + snapshot_storage

Run your actual workload through that formula and the “cheapest” provider changes more often than not. A $5 Hetzner box with 20TB included frequently beats a $3.50 Lightsail bundle with a 1TB cap — for anything that moves data.

When PaaS beats VPS

If your ops time is worth more than $30/hr and you’d spend >2 hrs/month patching, a PaaS (Render, Railway, Fly.io) at 2–3× sticker is genuinely cheaper in total cost of ownership. The break-even is ops hours, never specs.