Digital Event Horizon
Rackspace's recent price hike for its email hosting services has sent shockwaves through the small business community, leaving many resellers reeling from the devastating blow. With increases of up to 110 percent or nearly 500 percent, Rackspace is raising prices despite its commitment to delivering high-quality service. As small businesses struggle to adapt to the new reality, one thing is certain: this price hike will have significant consequences for the company's customers and reputation.
Rackspace recently increased its email hosting services by $10 per mailbox per month, with additional add-ons starting at $2/month. The price hike is more than twice as much as the 55% increase in 2019 and has left many resellers reeling. Some Rackspace partners are facing even steeper price hikes, up to 110% or nearly 500%, depending on volume pricing discounts. The price increase is a significant blow to small businesses, which often rely on email hosting services as a critical component of their operations. Rackspace's decision to prioritize profits over customer value has sent shockwaves through the small business community.
Rackspace's recent price hike for its email hosting services has sent shockwaves through the small business community, leaving many resellers reeling from the devastating blow. According to Laughing Squid, a web hosting service provider and Rackspace reseller that has been using the platform since 1999, the price increase is nothing short of astronomical.
The new pricing structure, which went into effect in November 2025, sees the standard plan now costing $10 per mailbox per month. Businesses can also pay for additional add-ons, such as file storage, mobile sync, Office-compatible apps, and messaging, for an extra $2/mailbox/month. The Archiving add-on, which provides unlimited storage, adds a further $6/mailbox/month to the bill.
Laughing Squid's founder, Scott Beale, described the news as "devastating" when it arrived via email on Wednesday. The company had previously received a 55 percent price increase in 2019, but this latest hike is more than twice that amount. Beale noted that Laughing Squid was given only a month-and-a-half's notice of the price change, which he believes is insufficient.
Online reports suggest that Rackspace partners are facing even steeper price hikes, with some quoted increases of up to 110 percent or nearly 500 percent. These figures do not include volume pricing discounts, and Beale noted that Laughing Squid's quote does not reflect the discounts it previously received from Rackspace.
The price hike is a significant blow to small businesses, which often rely on email hosting services as a critical component of their operations. Email has grown increasingly complex over the years, requiring time and expertise for proper management at scale. As such, many cloud companies are opting to focus on selling managed services on top of offerings like Microsoft 365 or Google Workspace, allowing larger companies to handle infrastructure costs and complexities.
However, Rackspace's decision to increase its prices despite its stated commitment to delivering quality, trusted, and reliable hosted email solutions for businesses remains a mystery. The company's mission statement emphasizes the importance of delivering high-quality service, but it appears that this may not be translating into better value for its customers.
In recent weeks, Rackspace updated its pricing structure, which has left many resellers reeling from the devastating blow. The price hike is particularly concerning given the current AI-driven RAM shortage, which is impacting the availability and affordability of other computing components, including storage.
Rackspace's decision to minimize its email hosting duties may be a contributing factor behind the price hike. The company quit hosting Microsoft Exchange following a costly 2022 ransomware attack, and it appears that this has led to a reevaluation of its pricing strategy.
Meanwhile, Laughing Squid is increasing prices for Rackspace mailboxes and offering services with a different email provider, PolarisMail, to customers at lower prices. Beale said he had reached out to Rackspace about the new pricing but had not heard back yet.
As the dust settles on this latest price hike, it remains to be seen how small businesses will adapt to the new reality. One thing is certain, however: Rackspace's decision to increase its prices has sent a clear message that the company is prioritizing profits over customer value. The question now is whether this will have long-term consequences for its business.
Related Information:
https://www.digitaleventhorizon.com/articles/Rackspace-Email-Price-Hike-A-Devastating-Blow-to-Small-Businesses-deh.shtml
https://arstechnica.com/information-technology/2026/01/rackspace-raises-email-hosting-prices-by-as-much-as-706-percent/
https://laughingsquidhosting.wordpress.com/2026/01/15/irackspace-email-pricing-increase/
Published: Fri Jan 16 17:33:45 2026 by llama3.2 3B Q4_K_M
