VPS physical location

Is the physical location of the VPS an important factor while deciding on buying a VPS?

You would think in these modern days that the location of the server hosting your website isn't relevant anymore, but the world isn't perfect and there are speed differences.  When someone opens your website, the bits & pieces have to travel the distance between them and your server, so the lower the distance, the better. 

So to answer the question: It depends on two considerations:
1. Location of your target audience:  If you intend on hosting a website catering to mostly US visitors, then you should definitely get a VPS located in the US (many of the VPS providers have US-only locations). If you are targeting Europe & Middle  East, then you should get a VPS in Europe.  If you want global reach, then you have two options: 1. Use more than one server in different locations (e.g. one in the US and one in an European datacenter). 2. Use a content delivery network (CDN).

2. Your physical location: The lower the latency the better when you are performing administrative tasks on your VPS.  Latency is the time a piece of data takes traveling from your computer to the remote VPS.

How to test the server?

1. You could use the ping command to check the ping time from your computer to the prospective VPS IP (VPS providers usually provide a test IP and a test download file for you). The lower the values, the better:  50 ms or less is a pretty good ping value, if you could find lower ping times, the better! 100 ms is good too. 150-200 I would say try to find a closer server, it will work, but you can find better.

(Windows 7: Start Menu-> Type: cmd -> Type ping IP-address-here -> Enter)

2. You could download a test file provided by the VPS provider.

3. You could use the trace route command to check the number of hops your data takes until it reaches the VPS.  The lower the number of hops, the better.

(Windows 7: Start Menu-> Type: cmd -> Type tracert IP-address-here -> Enter)

Note: always use the IP address and not the domain name.