The basic concept of Web hosting on a shared computer environment consists of hosting many different Web sites on one computer system. The shared environment offers economic benefits to both the WPP and the customer. Because the Web-hosting environment is the same for all customers, the provider gains economic benefits from allocating portions of the total cost of the hardware, software, maintenance and operation, and customer support amongst all customers. Therefore, the total fixed cost is less on a per-customer basis than with dedicated hosting. The customer gains economic benefit by the reduced price of the Web-hosting service.

The essential components of Web hosting on a shared computer environment are the same as with dedicated hosting, except for the configuration of the software and the management of system resources. There are two basic ways to configure Web-server software for multiple Web sites. The first method is to configure the Web server with each Web site's specific configuration information. The second method is to operate multiple Web-server software on a single computer environment. The first method—a single configuration file with all of the Web site's information—has greater scalability but does not provide a means of limiting the resources consumed by each Web site. Therefore, a combination of both methods is ideal for creating a scalable shared-hosting service. A combination is achieved by using the single configuration file method for Web sites requiring small amounts of resources and using the multiple Web-server method to limit the resources consumed by Web sites that demand large amounts of resources.

When a Web site demands large amounts of system resources, the logical next step is to move the Web site to a dedicated computer system (i.e., dedicated hosting).