How to Self-Host n8n on a Nepali Budget: Step-by-Step VPS Guide (2026)

Which VPS provider for Nepal?

Three providers consistently deliver the best price-performance for Nepali workloads:

• Hetzner (Frankfurt / Helsinki): CX22 — 2 vCPU, 4 GB RAM, 40 GB SSD — €4.51/mo (~NPR 700/mo). Excellent performance per rupee but Indian payment cards work fine.
• DigitalOcean (Singapore): $6/mo entry tier. Slightly more expensive but ~80 ms lower latency to Nepal. Great for customer-facing infra.
• Vultr (Singapore / Tokyo): $6/mo. Similar to DO but supports cheaper Cloud Compute tier in Mumbai which is best-in-class for latency.

For pure n8n we prefer Hetzner — cost wins. For n8n + a customer-facing API behind it, Vultr Mumbai or DO Singapore wins on latency.

The docker-compose.yml we ship

Copy this into /opt/n8n/docker-compose.yml. Replace the placeholder secrets and your domain.

docker-compose.yml

version: '3.8'
services:
  postgres:
    image: postgres:16
    restart: unless-stopped
    environment:
      POSTGRES_USER: n8n
      POSTGRES_PASSWORD: ${POSTGRES_PASSWORD}
      POSTGRES_DB: n8n
    volumes:
      - pg_data:/var/lib/postgresql/data
    healthcheck:
      test: ['CMD-SHELL', 'pg_isready -U n8n']
      interval: 10s

  n8n:
    image: n8nio/n8n:latest
    restart: unless-stopped
    depends_on:
      postgres:
        condition: service_healthy
    environment:
      DB_TYPE: postgresdb
      DB_POSTGRESDB_HOST: postgres
      DB_POSTGRESDB_PORT: 5432
      DB_POSTGRESDB_DATABASE: n8n
      DB_POSTGRESDB_USER: n8n
      DB_POSTGRESDB_PASSWORD: ${POSTGRES_PASSWORD}
      N8N_HOST: n8n.yourdomain.com
      N8N_PROTOCOL: https
      WEBHOOK_URL: https://n8n.yourdomain.com/
      N8N_ENCRYPTION_KEY: ${N8N_ENCRYPTION_KEY}
      EXECUTIONS_DATA_PRUNE: 'true'
      EXECUTIONS_DATA_MAX_AGE: 336
      GENERIC_TIMEZONE: Asia/Kathmandu
    volumes:
      - n8n_data:/home/node/.n8n

  caddy:
    image: caddy:2-alpine
    restart: unless-stopped
    ports:
      - '80:80'
      - '443:443'
    volumes:
      - ./Caddyfile:/etc/caddy/Caddyfile:ro
      - caddy_data:/data
      - caddy_config:/config

volumes:
  pg_data:
  n8n_data:
  caddy_data:
  caddy_config:

Caddyfile

n8n.yourdomain.com {
  reverse_proxy n8n:5678
  encode gzip
  header {
    Strict-Transport-Security "max-age=31536000;"
    X-Content-Type-Options nosniff
    Referrer-Policy strict-origin-when-cross-origin
  }
}

Backups: the part most teams skip

Without a backup, a single VPS disk failure wipes every workflow, credential, and execution history. The two-line cron that has saved more than one engagement:

Nightly Postgres backup to B2

# /etc/cron.daily/n8n-backup
#!/bin/bash
set -e
docker exec postgres pg_dump -U n8n -d n8n | gzip > /backups/n8n-$(date +%F).sql.gz
rclone copy /backups b2:my-bucket/n8n/ --quiet
find /backups -type f -mtime +7 -delete

Storage cost: Backblaze B2 at NPR 70 per 10 GB/month. For a typical SME the entire year of nightly backups costs less than NPR 500.

Production-readiness checklist

• ✅ HTTPS only (Caddy handles certificate renewal automatically)
• ✅ Strong N8N_ENCRYPTION_KEY (32+ random bytes, never lose it — without it old credentials are unrecoverable)
• ✅ EXECUTIONS_DATA_PRUNE enabled — prevent Postgres growth
• ✅ Off-host backups (B2 / S3 / DO Spaces)
• ✅ Uptime check pinging /healthz every minute, alert on 2 consecutive failures
• ✅ Global error workflow inside n8n that posts to Slack/WhatsApp on any execution failure
• ✅ Postgres + n8n versions pinned to specific tags (not :latest) for reproducible deploys
• ✅ SSH access locked down — key-based auth only, fail2ban, no root login

When to upgrade beyond a single VPS

A single VPS handles up to ~30,000 executions/day before you start hitting CPU pressure. Above that you have three upgrade paths: (1) vertical scale to CX32 (4 vCPU, 8 GB RAM) — usually buys another 5–10x headroom; (2) move Postgres to a managed service (DigitalOcean Managed Postgres at ~$15/mo); (3) split n8n into queue mode with separate worker nodes for true horizontal scaling. Most Nepali businesses stay comfortably on a single CX22 for years. For related context, see our Complete Guide to n8n Automation for Nepali Businesses post.