I currently have koha running on a "low end vps" 2 cpu cores with 512mb ram
which is dynamic to 1gb. with an offloaded mysql hosted database. I
currently pay 6.95US$ per month and maybe cheaper ones are available.

Performance per dollar is acceptable. rebuilding an index with 45000 items
takes about 15minutes. my local installation takes about 10mins.

I think you should look up "low end vps box" and see what you can find.

Amir
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