Shared servers are generally the first step of hosting for a large number of website owners. They move on to higher level virtual private servers (VPS) as traffic and bandwidth requirements increase and shared servers are no longer able to take the load as overuse of server resources begins to impact of other clients as well. A VPS, as is commonly known, does not dedicate server machines exclusively for one client, but it does allow very few clients to own their respective storage and bandwidth (that are significantly higher than the shared server) space over which they have total control. This is like creating multiple users on a single computer for their respective use. VPS hosting plans could be managed or unmanaged. Managed VPS hosting is generally preferred by most of the entities as it permits server providers to perform all server related tasks. 

Let us first take the instance of using unmanaged servers and understand where these can be best applied. This will also help us in understanding the relevance of managed services. Unmanaged VPS service simply means that it will be you who would be carrying out all server-related tasks. These would include hosting of files, taking regular backups, installing applications and updating these on regular basis, adding suitable security measures, creating cpanels and ftps and other features. The service providers are absolved of most of the liabilities in case anything goes wrong if you seek unmanaged server hosting. These also require that the client either has a deft team to handle its operations or has good knowledge of server related tasks himself. 

However, these conditions are not fulfilled by vast majority of small and medium scale organizations and especially those who are not related to server management business. Managed VPS hosting derives its relevance from the fact all such services, on your direction, are provided by the provider. Based on your precise requirements, the server is configured, applications installed, updated and managed regularly. This does entail some extra expense but you are saved of the effort and the time required for its management. This also saves you the cost of hiring some professional for this task.  

By entrusting server management to providers using managed VPS hosting, you are able to devote time and energy on other important functions of business for scaling it up. As a business owner, you would certainly not like to get tied down to servers when more expert hands are available to handle it for you. Experience of hosting providers can come to good use and they can ensure smooth functioning of your website or online business without any hassles. Their guidance and expertise can be used to prepare in advance for future needs. Any modification required can be communicated to the providers who would perform the associated tasks on your behalf. 

Thus, whenever a choice is to be made for managed or unmanaged VPS hosting plans, their respective pros and cons shall be examined in the light of your own capabilities and requirements.