Rackspace email price hike leaves customers reeling
▼ Summary
– Rackspace has implemented significant price increases for its email hosting services, with its standard plan now costing $10 per mailbox per month.
– A long-time partner, Laughing Squid, reports its specific pricing will increase by 706% with only a month and a half’s notice.
– The new pricing represents a major jump from previous rates, such as a $3 standard plan and lower add-on costs as recently as November 2025.
– Reseller partners are heavily impacted, with reports of quoted increases ranging from 110% to nearly 500% and the loss of previous volume discounts.
– The sudden, steep increase makes email hosting the largest expense for some partners, severely impacting their profitability.
A significant and unexpected price increase for Rackspace’s email hosting services has sent shockwaves through its customer base, particularly impacting long-term reseller partners. The company’s new pricing structure represents a dramatic shift, with the standard plan now set at $10 per mailbox per month. This marks a steep rise from the previous rate of $3 per mailbox, a figure confirmed by historical web archives. For businesses requiring additional features, the Email Plus add-on now costs an extra $2 per mailbox, and the Archiving add-on is priced at an additional $6. These add-ons have also seen substantial hikes from their former rates of $1 and $3, respectively.
The abrupt change has left many partners reeling. One prominent reseller, the web hosting service Laughing Squid, publicly detailed the financial blow, stating the new pricing constitutes a 706 percent increase for their organization. Founder Scott Beale described the notification, received with roughly six weeks’ notice, as “devastating.” He emphasized the severe operational impact, noting that email hosting has now become the company’s single largest expense, drastically affecting profitability. This contrasts sharply with a more manageable 55 percent increase the company faced back in 2019.
Across online forums and reports, other Rackspace partners are sharing similar stories of staggering price jumps, with cited increases ranging from 110 percent to nearly 500 percent. A critical point of contention is that these new per-mailbox quotes reportedly do not incorporate the volume pricing discounts that many larger clients previously relied upon. Beale confirmed that Laughing Squid’s new quote excludes the discounts they once received, compounding the financial strain. The lack of grandfathering for existing customers and the short implementation timeline have fueled widespread frustration and concern about the sustainability of continuing with the service.
(Source: Ars Technica)
