Physical Server vs Virtual Server Cost Comparison

Virtualization must be the 21st century’s most rapidly evolving technology in the IT industry. And it is now widely favored by enterprises. If you are about to start a business, how would you choose between virtual servers vs physical servers? In this article, I will provide you with a cost comparison to help you make a better choice.


By Crystal / Updated on March 8, 2023

Share this: instagram reddit

Introduction to physical servers and virtual servers

What would come to your mind when you talking about data centers? Huge server rooms and black, bulky servers with frequent flashes of cold inorganic light?

Over the years, numerous industries have relied heavily on the computing resources provided by servers, and have grown their businesses by leaps and bounds.

Server room

There was a time when data centers were filled with only dedicated physical servers, each of them focused on their own thing. However, many organizations found that dedicated servers have not make an effective use of computing resources. As a result, out of concern for cost saving, virtual servers were introduced.

What would you like to choose today to be used in data centers? Physical servers or virtual servers? What’s the difference between cloud servers vs physical servers? To help you make a satisfactory choice between them, I will provide you with a physical server vs virtual server cost comparison. Before you start, let’s review the pros and cons of them respectively.

What is a physical server

Physical server refers to the bare metal server that includes the motherboard, processor, memory, hard drives, IO-controllers, network connection, and the operating system (OS) running on it, etc.

A physical server runs only one single instance of an operating system directly on the bare metal.

Physical server


  • Good and stable overall performance.
  • Top data security and privacy.
  • No additional training for employee skills.


  • Wasted computing resources.
  • High cost of physical space and hardware.
  • Long time to purchase, update and configure.

What is a virtual server

Virtual server, or virtual machine, is a software-based representation of a physical server. Multiple virtual servers can be run on one single physical server.

With virtualization, an abstraction layer is added between bare metal and the operating system. And you can use a hypervisor to allocate specified computing resources.

Virtual server


  • High utilization of physical hardware computing resources.
  • Highly flexible and easily scalable.
  • Low cost of hardware updates.
  • Convenient failover and disaster recovery.


  • Low and unstable performance.
  • High initial hardware and software investments.
  • Skill training costs are required.

Physical server vs virtual server cost comparison

For most organizations and enterprises, cost is a necessary consideration in order to find a suitable solution. Choosing between virtual servers vs physical servers is no exception.

Having read this far, you already know the pros and cons of each of them. To help you make up your decision, here I will provide a clearer physical server vs virtual server cost comparison.

The main cost differences can be summarized in the following points.

Cost Physical Server Virtual Server
Physical server room ++ +
Initial hardware ++ +
Initial software license + ++
Configure and maintenance staff + ++
Skill training + ++
Update and expansion ++ +
Copy and migration ++ +
  • Initial investments: As you can see, the initial investments of virtual servers cost higher than physical servers. Build a virtual server may cost less on physical space and hardware, however, it costs more on software licensing, server maintenance, and staff skills training.
  • Upgrade and expansion cost: Physical servers cost higher than virtual servers on hardware upgrade and expansion. To upgrade or expand a physical server you may need additional new hardware. Whereas multiple virtual servers can run on a single physical server, so new hardware are not necessarily required for virtual servers.

In general, virtual servers cost less than physical severs.

How to choose between virtual servers vs physical servers

How do you choose between physical server vs virtual machines? Actually, the answer is not absolute. Today, many organizations apply a combination of physical servers and virtual servers. To be precise, physical servers and virtual servers are suitable for different stages and scales of businesses.

The sheer performance of physical servers makes them the preferred choice for demanding workloads. If your business is in a period when processing speed or volume are your primary considerations, dedicated physical servers are ideal for use as your workhorses.

Virtual servers are masters of scale. When your business is in a period when you need the flexibility to scale resources up and down, virtual servers can do a better job while saving costs.

How to migrate physical server to virtual server/machine

When your business is at the stage of scaling up, you may choose virtual servers/machines to reduce expenses. Therefore, you may need to convert or migrate your workloads from physical servers to virtual servers/machines. This process is known as P2V, refers to “physical to virtual”.

There are few ways to do this. For example, if you are migrating your workloads to virtual machines on VMware’s virtualization products, such as VMware ESXi or Workstation, there is a free official software VMware vCenter Converter available.

You can go to the official site to download the newest version vCenter Converter 6.3.0.

Download VMware vCenter Converter 6.3.0

The new VMware vCenter Converter supports the following platforms:

Install vCenter Converter  Hyper-V Servers VMware Products and Versions

Windows Server 2012 (64-bit)

Windows 8.1 (32-bit and 64-bit)

Windows Server 2012 R2 (64-bit)

Windows 10 (32-bit and 64-bit)

Windows Server 2016 (64-bit)

Windows Server 2019 (64-bit)

Windows 11 (64-bit)

Windows Server 2022 (64-bit)

Windows Server 2012 (64-bit)

Windows Server 2012 R2 (64-bit)

Windows 10 (64-bit)

Windows Server 2016 (64-bit)

Windows Server 2019 (64-bit)

Windows 11 (64-bit)

Windows Server 2022 (64-bit)

VMware vSphere 6.5 (Update 3)

VMware vSphere 6.7 (Update 3)

VMware vSphere 7.0

VMware vSphere 7.0 (Update 1)

VMware vSphere 7.0 (Update 2)

VMware vSphere 7.0 (Update 3)

VMware Workstation 16.x

VMware Fusion 12.x

If you are not using the above versions, you can also consider an affordable alternative way – file-based backup. By installing a backup agent on the physical server and virtual machine, you can backup everything on the physical server and restore them on the virtual machine, you can also migrate the workloads. For more details and steps you can refer to this article: VMware P2V migration.


In this article, I introduced the pros and cons of physical servers and virtual servers, and made a cost comparison between them. Compared to physical servers, virtual servers may cost more on initial investments such as software licensing and skills training, but they also cost less on updating and expansion.

In summary, virtual servers are suitable for most enterprises that are ready to scale up. To further save maintenance and staff skills training cost, some third-party software can help you.

Here I introduce you to a free virtual machine backup software -- AOMEI Cyber Backup. It is a professional backup software that centrally backup and restore multiple VMs with simple steps.

Crystal · Editor
Crystal is an editor from AOMEI Technology. She mainly writes articles about virtual machine. She is a positive young lady likes to share articles with peolpe. Off work she loves travelling and cooking which is wonderful for life.