Rackspace customers are facing significant price hikes for its email hosting services, with some partners experiencing increases of up to 706 percent. The company's new pricing model has been met with widespread criticism from reseller partners who have long relied on Rackspace as a reliable and affordable option.
According to Laughing Squid, a web hosting service provider that relies heavily on Rackspace for its email needs, the price increase is "devastating" and will significantly impact its ability to operate profitably. The company received notice of the price hike just over a month ago, with prices increasing from $3 per mailbox per month in November 2025 to an astonishing $10 per mailbox per month.
Other reseller partners have also reported significant price increases, with some saying they are facing rises of 110 percent to nearly 500 percent. The new pricing structure does not include volume discounts, which means that larger customers will see even greater increases.
The reason behind the price hike is unclear, but industry experts suggest that Rackspace may be trying to minimize its email hosting duties due to a recent ransomware attack that forced it to quit hosting Microsoft Exchange. With an AI-driven RAM shortage impacting the availability and affordability of computing components, including storage, Rackspace may see this as an opportunity to reduce its exposure.
In response to criticism from reseller partners, a Rackspace spokesperson said that the company's mission is to deliver quality, trusted, and reliable hosted email solutions for businesses. However, with some partners already switching to alternative providers like PolarisMail, it remains to be seen whether Rackspace can retain its market share in the face of these significant price hikes.
For reseller partners like Laughing Squid, the situation is particularly challenging. The company's founder, Scott Beale, told Ars Technica that the new pricing structure will have a major impact on the ability of small businesses to operate profitably. "We had really good reseller pricing that we negotiated with Rackspace due to the number of mailboxes we had with them and how long we had been a customer," he said. "All of that seemed to vanish when they notified us of their new pricing."
The price hike is a significant blow to the email hosting market, which has already seen increased competition from larger cloud providers like Microsoft 365 and Google Workspace. As Rackspace continues to navigate this challenging landscape, it remains to be seen whether its decision to significantly increase prices will ultimately harm or benefit its business.
According to Laughing Squid, a web hosting service provider that relies heavily on Rackspace for its email needs, the price increase is "devastating" and will significantly impact its ability to operate profitably. The company received notice of the price hike just over a month ago, with prices increasing from $3 per mailbox per month in November 2025 to an astonishing $10 per mailbox per month.
Other reseller partners have also reported significant price increases, with some saying they are facing rises of 110 percent to nearly 500 percent. The new pricing structure does not include volume discounts, which means that larger customers will see even greater increases.
The reason behind the price hike is unclear, but industry experts suggest that Rackspace may be trying to minimize its email hosting duties due to a recent ransomware attack that forced it to quit hosting Microsoft Exchange. With an AI-driven RAM shortage impacting the availability and affordability of computing components, including storage, Rackspace may see this as an opportunity to reduce its exposure.
In response to criticism from reseller partners, a Rackspace spokesperson said that the company's mission is to deliver quality, trusted, and reliable hosted email solutions for businesses. However, with some partners already switching to alternative providers like PolarisMail, it remains to be seen whether Rackspace can retain its market share in the face of these significant price hikes.
For reseller partners like Laughing Squid, the situation is particularly challenging. The company's founder, Scott Beale, told Ars Technica that the new pricing structure will have a major impact on the ability of small businesses to operate profitably. "We had really good reseller pricing that we negotiated with Rackspace due to the number of mailboxes we had with them and how long we had been a customer," he said. "All of that seemed to vanish when they notified us of their new pricing."
The price hike is a significant blow to the email hosting market, which has already seen increased competition from larger cloud providers like Microsoft 365 and Google Workspace. As Rackspace continues to navigate this challenging landscape, it remains to be seen whether its decision to significantly increase prices will ultimately harm or benefit its business.
! They're basically price gouging their loyal customers and making it impossible for small businesses to afford reliable email services. I mean, 110% to 500% price hikes? That's just extortionate 
. The whole thing makes me wonder if they're trying to scare off competitors or something... anyway, I'm definitely switching to PolarisMail ASAP 
. I'm surprised Rackspace would do this tho 
. Their reseller partners have been loyal and it's not fair to just slap these huge price hikes on them 
The ransomware attack and AI shortage were probably contributing factors 
their business will definitely suffer from this 
. Smaller businesses rely on affordable email hosting and Rackspace is supposed to be reliable 
. I hope they can find alternative providers 
. The competition in the cloud space is already heating up 
so maybe this price hike will push them out of the market 
.
. They might lose some customers and damage their reputation 
. It's not worth scaring off their loyal reseller partners 
. I wish they would have been more transparent about the price hike beforehand 
. Transparency is key in business 
.
. The email hosting market already has a lot of competition 
. I hope they can find a way to make this work 
, but right now it's looking pretty bleak 
️.
i think they're just trying to screw over their partners and small businesses. a 706% price hike is insane! who can afford that? this is a recipe for disaster, especially with microsoft exchange ransomware attack being the reason behind it. ruckspace should be paying us back or something 
anyway, hope these small businesses find new providers who can keep it affordable 
anyone else think it's just a scam to make us switch to polari mail tho? i mean i know they said its bc of the ransomware attack but come on rackspace ur not fooling anyone 
. It's like they're trying to squeeze every last penny out of them. And don't even get me started on the lack of volume discounts - nice move, Rackspace, real classy 
.
. Either way, I'm sure we'll all be watching with bated breath... or not 
.
, the last thing they need is this kind of price gouging 
It's all about profit margins for Rackspace 
. I'm keeping an eye on this situation, it's going to be interesting to see how it plays out 
#RackspacePriceHike #EmailHostingMarket #SmallBusinessStruggles
. Like, who expects a price hike just because Rackspace had some issues with hosting Microsoft Exchange? It's not like it's a reflection of their email hosting skills or anything. And now they're trying to pass on these costs to the customers, which is just unfair. I mean, don't they know that small businesses are already struggling to make ends meet? This price hike is gonna be a major setback for those guys.
for email hosting services! 
that's like, whoa 
. Smaller businesses will struggle 
but it's gonna hurt some reseller partners big time 
. They're already switching to PolarisMail 
. Competition from cloud providers like Microsoft 365 and Google Workspace is heating up 