The question "when should I move to a dedicated server" is a question we hear all the time.
Unfortunately, the answer is not such a simple one. Sometimes a dedicated server is needed for just one site. Sometimes more than one dedicated servers are needed for just one site.
The short answer is as soon as possible. If you have one site and can afford the costs, there really is no comparison to shared hosting when you have a dedicated machine.
The long answer is that a good rule of thumb for most of you that are reseller web hosting providers, is that at a maximum of 75-125 cPanel accounts, that it should be the time to seriously start considering a managed dedicated server from GlowHost.
The sooner you get moved the better. The more accounts that you have to migrate, and the more disk space you have to migrate, can lead to several issues. Anything after those suggested numbers on a reseller host with active dynamic sites isn't going to offer you much performance, and can even lead to degraded service.
Even those of you with 20-30 sites would definitely benefit from a dedicated server. I can list some examples if anyone is interested in why I say this and why this isn't just a sales pitch.
In the mean time, let me give you a hypothetical example of someone who has 100 accounts:
Your budget should generally be able to afford an entry-level dedicated server with this number of accounts. Assume you charge $10 per account and you have 100 accounts. You can get an entry-level managed dedicated server for under $200. This leaves you a raw profit of $800 which is very good for one server.
You also now have the added benefit of full root access, and you should easily be able to expand the server to a couple hundred sites, sometimes a lot more especially if your sites are generally serving up static content.
Your clients will appreciate the performance boost that a dedicated server can offer, and will likely want to stay with your service longer, so everybody wins with an upgrade to dedicated.
There really are not many products out there that can be easily resold, on a monthly basis for such a high profit margin.
In retail stores for example, they are lucky to make 2-3 times the wholesale cost. On a dedicated server, even in this example, you will be making 5x or greater on your investment.
Its far better to spend the extra money and go dedicated, instead of staying on a shared host trying to pinch every last penny of possible profit. Your customers will be happier, and if they are happy, you should be too!