What is a Residential Proxy & How it Works?

Roberta Aukstikalnyte

Last updated on

2025-03-12

7 min read

Researching proxy types can get overwhelming, as there are so many different ones available. Nonetheless, there’s one type that always stands out, and that is residential proxies. With their high price point and the fact that they come from actual people’s houses, there are a lot of questions and myths surrounding this specific proxy type. Why are they so expensive? What are they used for? Are they legal?

In today’s article, we’ll cover all said questions and myths, so strap in. Let’s begin with a quick and short explanation of what residential proxies are, so all the nitty gritty details down the line make sense.

How residential proxy works

Like any other proxy type, a residential proxy server works as an intermediary between a user and the internet, hiding their real IP address and ensuring anonymity. The only difference is that residential proxies use IPs from real residential locations which makes them less susceptible to blocks.

Here’s a step-by-step process of how residential proxies work:

The client makes a request to access the target website.
Instead of connecting to a specific webpage directly, the request is first sent to the residential proxy.
The proxy server intercepts the request and forwards it to the intended destination.
The target processes the request and sends it to the proxy.
The proxy forwards the response back to the client.

Now that it’s clear how a proxy works, here are a few benefits of this process:

Enhanced anonymity: The proxy hides your real IP address, making it difficult for websites to track your activity back to your true location.
Bypass geo-restrictions: By using IP addresses from specific regions, proxies allow access to content that might be unavailable in your location.
Reduced risk of blocking: Residential proxies successfully avoids IP bans or rate limits, as they are great at mimicking organic user behavior.

What are residential proxies?

A residential proxy is an intermediary server between people and websites. They use a real IP address assigned to real people by their internet service provider. These proxies can be used to enhance your online privacy. Or for scraping public online data from more difficult targets where other proxy types do not suffice.

What is a residential IP?

Residential IPs are associated with physical devices, including mobile phones, tablets, and computers. These IP addresses are assigned by Internet Service Providers (ISPs) and are registered in public databases, enabling websites to identify the device's ISP, network, and geographic location.

Residential proxy types

While a residential proxy server in itself is a specific type, these proxies can also be split into different sub-categories.

As the name implies, shared residential proxies are shared between multiple users simultaneously. As a result, these proxies are among the cheapest on the market. Surprisingly, even though they’re shared by several users, shared residential proxies are quite speedy, all thanks to their robust network architecture.

On the other hand, shared residential proxies don’t give as much security and privacy. They’re more likely to get blocked by websites, too.

1. Mobile residential proxies
Mobile proxies use the IP addresses of mobile devices. Similar to dedicated residential proxies (more on that later), mobile residential proxies are highly reliable and speedy. Of course, that comes at a cost – these proxies are known to be on the more expensive side.

However, it’s not uncommon for mobile proxies to get blocked by websites.

2. Rotating residential proxies
Rotating residential proxies automatically switch IP addresses randomly after certain periods of time. As a result, they’re highly secure and difficult for websites to detect, making them one of the priciest proxies on the market.

3. Static residential proxies
Static residential proxies use a real residential IP address from an actual internet service provider (ISP) rather than proxy server farms. Since these IP addresses are under contract from an actual ISP, your online activity appears to be regular traffic to any server you visit.

	Pricing	Speed	Blocks	Security level
Mobile residential proxies	Expensive	High	Uncommon	High
Rotating residential proxies	Expensive	High	Uncommon	High
Static residential proxies	Less expensive	Depends on a provider	More common	High

What are dedicated residential proxies?

Another common type is dedicated residential proxies; these private proxies deserve their own separate explanation for how common they are, especially in the web scraping world.

Dedicated residential proxies are gateways that you route your traffic through, just like other types of proxies. The difference is that these specific proxies provide you with IP addresses that are exclusively yours, with no one else accessing them.

With that, dedicated residential proxies are the way to go if your priority is speed, privacy, and reliability. The only downsides are the price (they can get quite expensive) and the complexity of the setup process, requiring a certain level of technical expertise. In terms of web scraping, dedicated residential proxies are often used to work with complex targets, especially if you weren’t able to retrieve public data with other types of proxies and got blocked by a website.

Residential vs. datacenter proxies

Another highly common proxy type is datacenter proxies, which are often compared to residential ones. Although they both have the same core functionality – changing your original IP address and routing your traffic through it – they’re quite different in terms of their source, pricing, and other factors. Let’s take a look at the main differences.

Sourcing. Unlike residential proxies that have the IP addresses of real people provided by their internet service provider, datacenter proxies come from data centers or cloud hosting services.
Pricing. Seeing as residential proxies use real people’s IP addresses, they are more difficult to acquire and upkeep, thus increasing their price. Datacenter proxies are more low-maintenance in that sense, so they’re not as pricey. For example, Oxylabs Residential Proxies Micro plan costs 99 USD/month, while our Datacenter Proxies start at 50 USD/month. Even so, our residential network offers the best in considerably cheap residential proxies, providing premium quality, robust features, and unparalleled stealthiness that datacenter proxies lack when it comes to scraping challenging websites.
Likelihood of blocks. Residential proxies allow you to simulate organic behavior, so it’s more difficult for websites to detect and block you.

On the other hand, datacenter proxies are artificial, making it easier for websites to determine if someone’s connected to one. However, if they come from legitimate premium providers, blocks from the majority of websites shouldn’t be an issue.

For a more extensive comparison between these two proxies, check out our blog post:

Datacenter Proxies vs. Residential Proxies

	Sourcing	Pricing	Blocks
Residential proxies	Real people IPs	Expensive	Less likely
Datacenter proxies	Hosted in data centers	Cost-friendly	More likely, depends on the provider

Residential proxies use cases

Residential proxies can be used for the majority of web scraping-related use cases. However, there are specific ones that work better with residential proxies, so let’s take a look at them.

Price monitoring – the process of collecting, processing, and analyzing competitors' prices. Businesses monitor pricing data to keep track of the ever-changing market and stay ahead of the competition. With residential proxy networks, you can imitate real-life scraping and gather public data from any e-commerce marketplace while avoiding blocks.
Ad verification – the process of ensuring that online ads are displayed as intended and in compliance with industry standards. This way, advertisers can gauge if their ads are seen by the right audiences at the right time. Ad verification can be performed on different targets; therefore, it’s often split into such types as Facebook ad verification, Amazon ad verification, Google ad verification, and so on. Residential proxies are a perfect digital ad verification solution because they provide unique, organic, and diversely geo-located IP addresses for accessing content overseas.
Review monitoring – the process of checking what customers talk about the brand all over the internet. It involves monitoring brand mentions, negative reviews, or clients' feedback on multiple review sites. Residential proxies allow you to collect reviews from any location in the world without blocks.
Anti-phishing – this use case involves identifying and analyzing potentially malicious websites that mimic legitimate sites to steal sensitive information. With their global coverage, almost 100% uptime, and superior performance, residential proxies help to imitate real user behavior and protect businesses around the clock.
Real-time product monitoring – the foundation of competitive intelligence for large and small e-commerce businesses. Residential proxies help in this use case by ensuring a continuous, uninterrupted flow of real-time product data, even on websites with sophisticated anti-scraping mechanisms.
MAP (Minimum Advertised Price) monitoring – the process of tracking product prices worldwide and ensuring MAP policy compliance. Residential proxy services allow you to access various e-commerce platforms from multiple geographic locations to detect MAP violations and protect brand integrity.

Are residential proxies legal?

When it comes to residential proxies, the question that comes up all the time is, “Are they legal?” Given the fact that residential proxies use real people’s IP addresses, it’s only natural that the legality of it is questioned.

Truthfully, there isn’t a single straightforward way to answer this question. First of all – this goes without saying – you shouldn’t be using a residential proxy server for any illegal activities (e.g., scraping copyrighted data). We always advise you to seek out legal advice from a professional about your specific case. This way, you’ll be certain you aren’t breaching any laws.

Secondly, it’s important to choose a legitimate residential proxy provider that is transparent about how they source their IPs – you have to be sure they come from legitimate sources.

For example, scrapers often use residential proxies to make it harder for websites to block them. It’s legal to use a residential proxy to scrape websites that are publicly available but illegal to scrape content from private websites.

For more details, head over to our blog post “Is Web Scraping Legal?” where we have this topic covered.

Choosing an ethical provider is crucial

Another crucial factor to take into consideration is how the residential proxies are sourced and whether the provider is transparent about it. At the very least, it’s essential that the proxy provider acquires documented and explicit consent granted by fully aware users and, if possible, rewards proxy network participants.

Oxylabs has ethical and transparency standards regarding residential proxy acquisition. We have a dedicated blog post on this very topic:

Oxylabs Sets Clear Standards for Residential Proxy Acquisition

The proxy market is missing clarity and standards when it comes to the residential proxy procurement process. Oxylabs, as a strong advocate of ethical business practices, operating strictly within the capacities of established legitimate proxy pools, accepts the responsibility to bring order to the chaotic industry.

Final word

Although expensive, coming from legitimate, premium providers, residential proxies make perfect tools for acquiring public data from difficult targets and avoiding blocks.

However, it doesn’t necessarily mean that you can only use this specific type if you scrape public data from complex websites. If you’re unsure which proxy type to choose, feel free to reach out at support@oxylabs.io or check our article on ISP proxies vs. Residential Proxies.

You can also easily get proxy server on our dashboard or request a free trial - here’s more information on it. There is also an option to try out our 5 free proxies!

Frequently asked questions

Can you use residential proxies anywhere?

Yes, you can. Residential proxies work by connecting your devices to residential IP addresses, which can be remote from the physical location you reside in, technically allowing you to connect from anywhere. However, in certain countries, using a proxy to bypass internet censorship, for example, may be illegal. That said, you should study the local laws or seek professional legal advice.

What is a residential proxy IP used for?

A residential proxy is used to mask your IP address and make your internet traffic appear to originate from a real residential location. This contributes to bypassing geo-restrictions, avoiding IP bans, and performing web scraping without being detected by target websites.

What is the difference between a residential VPN and a residential proxy?

A residential VPN encrypts all of your internet traffic and routes it through a VPN server, providing broader privacy and security. A residential proxy, on the other hand, typically only handles traffic from specific applications (like a browser or scraper) and does not encrypt your entire connection.

Are proxy servers legal?

Yes, residential proxy servers are legal. However, using them for illegal activities, such as hacking or scraping under the login is prohibited. Additionally, when using a residential proxy service, you need to make sure that the provider you’re using is trustworthy and offers a high-quality residential proxy network.

How to get residential proxies?

You can obtain residential proxies by subscribing to residential proxy providers. These companies manage a network of residential IP addresses and offer access to them for a fee, often with options for rotation, geo-targeting, and authentication. You can also find a free residential proxy to test it, but this kind of proxy is usually not suitable for large-scale operations.

About the author

Roberta Aukstikalnyte

Senior Content Manager

Roberta Aukstikalnyte is a Senior Content Manager at Oxylabs. Having worked various jobs in the tech industry, she especially enjoys finding ways to express complex ideas in simple ways through content. In her free time, Roberta unwinds by reading Ottessa Moshfegh's novels, going to boxing classes, and playing around with makeup.

Learn more about Roberta Aukstikalnyte

All information on Oxylabs Blog is provided on an "as is" basis and for informational purposes only. We make no representation and disclaim all liability with respect to your use of any information contained on Oxylabs Blog or any third-party websites that may be linked therein. Before engaging in scraping activities of any kind you should consult your legal advisors and carefully read the particular website's terms of service or receive a scraping license.