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Your challenge is that you need a loadbalancer. By hosting the loadbalancer yourself (e.g. on a VPS), you could also host your websites directly there...
My approach would be DNS-based. You can have multiple DNS A records, and the client picks one of them. With a little script you could remove one of the A Records of that server goes down. This way, you wouldn't need a central hardware.
The VPS remains this single point of failure :(
The DNS-based approach seems to be the best bet for my use case.
That's an interesting idea, need to check if they offer some kind of a API for that.
But then there is this other thing, what about dns cache?
Set the DNS cache time to 60 seconds.
Set the script to run on every host delayed by some time to avoid simultaneously accessing the API (e.g. run the script every other minute).
With this approach, you get automatic failover in at most 3 minutes.
Where would you host the script? If it's expected that the server that fires it off is always online and performing health checks, why not have it host a load-balancer? Or another local instance of the website? It's something fun to play around with, but if this is for anything beyond a fun exercise there are much better ways to accomplish this.
I'd host it on both webservers. The script sets the A record to all the servers that are online. Obviously, the script als has to check it's own service.
It seems a little hacky though, for a business use case I would use another approach.