If you’ve ever looked at the costs at any of the major proxy services like Luminati, then you’ll probably have noticed that the residential proxies are much more expensive than the datacenter ones.  There’s actually a very simple reason for this, but first we should define what these two sorts of proxies are –

• Residential Proxy – consists of a standard proxy server which uses IP addresses from a residential range when making outbound connections.
• Datacenter Proxy – a standard proxy server which uses IP addresses from commercial/corporate ranges when making outbound connections.

Not much of a difference really, when you think about and it seems little to justify what’s often a very big price differential.   However the single most important factor in these proxies is the IP address, both in how they operate and what they cost.

Just to clarify, it’s  not important what IP address is actually registered to the proxy itself or where it’s actually located.  In fact confusingly you can locate a residential proxy in a datacenter if you wanted!  The crucial factor is that when a proxy server makes it’s outbound connection on your behalf it does so either using a datacenter or residential IP address.

Why Being Able to Switch IP Addresses is Important

The reason most of us use proxies is to hide our own identity and to operate as another.  The proxy server gives us the opportunity to function online using a whole range of different identities.  Each one of these identities could be completely different, based on the proxy server we use.

Take for example a French marketing company who wants to research global advertising opportunities online for it’s corporate client.   The very first issue that they’ll experience is that when they browse the web from their base in Paris, their experience is based on their French IP address.  Many sites across the world, including Google will tailor their experienced based on their location.    Which in many cases is fine, but not if you want to check out advertising opportunities in Chicago for a Canadian company.

What can they do? Well simply invest in a proxy which can switch their location as they require.  By changing their external IP address to a US one, then suddenly they’ll see adverts targeted at US browsers not those targeted at someone from Paris!  Switching locations is one of the very important functions that proxies can perform for us.

Using proxies mean that your identity is not limited to a single address locked to your physical location.  It means you can unlock multiple identities all over the world for a variety of different purposes.   Even ordinary browsing under the IP address of a different country can be a completely different experience.  You’ll see different adverts, different search results and when you connect to a website often completely different pages too.

I started using a proxy routinely about 12 years ago, for a very simple reason.  When I was outside the UK I wasn’t able to access my favorite TV stations online.  Even though I paid my TV license (it’s a UK thing) the fact that I was physically in the USA meant that the BBC iPlayer website wouldn’t work anymore.  However as soon as I used a proxy then I was able to enjoy the BBC in the USA without problems.

Location isn’t Everything – Residential IP Addresses are Important Too.

Unfortunately the freedom and flexibility of proxies isn’t popular with everyone! Most websites don’t like them as they take control away from them. Instead of being able to track, monitor and log their visitors –  they just see the proxy addresses that are chosen.  Which is why it’s vitally important in many situations to hide the fact you’re using a proxy server to hide your identity.

For example as soon as you visit Instagram using a proxy server, your account will be flagged.  Most of  the time it won’t matter if but if you are managing multiple accounts or posting a lot it could get your account punished.  Basically if you’re detected using a proxy then you’r under special scrutiny, it’s not great for marketers who want to push the boundaries a little!

The solution of course is to hide the fact you’re using a proxy server somehow.  There’s one single important piece of information which is used to identify proxies – the classification of the IP address you’re connecting with.  Most proxies (and almost all VPNs) use IP addresses registered to datacenters or commercial organisations.  These can be looked up easily by any web site with very little effort.

Using an IP address registered to a datacenter is the single, simplest way to identify the use of a proxy server.

Why Residential Proxies Will Always Be More Expensive than Data-Center proxies

Which means that if you want to hide your proxy use then you need to ensure your connection doesn’t use one of these addresses.  There are alternatives but by far the most effective is to use a residential IP address normally allocated to ordinary home users. When you use a proxy armed with a residential IP address then there’s two important changes to your connection –

• The proxy server cannot be detected (if the server set up securely).
• Your IP address looks like a standard home user.

The residential proxy doesn’t get registered as a proxy and your connection won’t be flagged as using one either.   It’s the ultimate solution if you need to look like a standard home user simply surfing the web.

The main drawback is that these residential IP address ranges are normally only allocated to ISPs.   So that most proxy service providers simply haven’t got access to these addresses.

Which brings us back to our initial question about why residential proxies cost so much more than datacenter ones.  It’s simply because residential IP addresses are  much harder to obtain and consequently much more expensive.  There’s little you can do about this currently, especially if you want the genuine anonymity that residential proxies offer.

The costs of course do vary from different providers. There’s various technologies have been adopted to help improve the efficient of sharing these residential addresses like – rotating residential proxies which can reduce the cost. Firms like Storm Proxies have been curating these addresses for so long that they’ve been able to minimize their prices too. There’s no doubt though, you will always pay more simply because of the scarcity factor. Datacenter IP addresses are easy to obtain and as such there’s no great price premium to pay. However if you do want to keep your proxy use hidden then you’ll have to find a residential proxy that’s for certain.