Rackspace, a cloud computing company, has implemented a price hike of 706% for its email hosting services, sending shockwaves through the industry. The new pricing structure will make it increasingly difficult for businesses to afford reliable and secure email solutions.
One reseller partner, Laughing Squid, which has been using Rackspace's email services since 1999, described the price increase as "devastating." Scott Beale, founder of Laughing Squid, stated that he received the news via email just a month-and-a-half ago, giving him insufficient time to adjust his business plans.
The price hike is attributed to Rackspace's Standard plan, which will now cost $10 per mailbox per month. Businesses can also opt for additional add-ons, such as file storage, mobile sync, Office-compatible apps, and messaging, for an extra $2/mailbox/month, and unlimited storage for $6/mailbox/month. In contrast, Rackspace charged just $3/mailbox/month for its Standard plan in November 2025.
Rackspace's reseller partners have been vocal about the negative impacts of the new pricing structure. Beale noted that the price increase has a significant impact on his business's ability to generate revenue due to the increased cost of email services. He also expressed disappointment with Rackspace's lack of notice, stating that they only gave him a short window to adjust.
The company claims that its mission is to deliver quality, trusted, and reliable hosted email solutions for businesses. However, critics argue that the prohibitive pricing will deter small businesses from adopting such services, opting instead for cloud providers offering managed services on top of their offerings.
With Rackspace facing an AI-driven RAM shortage impacting computing component availability and affordability, it is unclear what prompted the price hike. The company has recently shifted its hosting for Microsoft Exchange following a costly ransomware attack in 2022. As a result, Laughing Squid will be increasing prices for Rackspace mailboxes and offering alternative services with PolarisMail to customers at lower prices.
The news highlights the challenges of email hosting as an industry, which requires significant expertise and management capabilities. With many businesses focusing on selling managed services on top of cloud offerings, Rackspace's price hike may have unintended consequences for its own success.
One reseller partner, Laughing Squid, which has been using Rackspace's email services since 1999, described the price increase as "devastating." Scott Beale, founder of Laughing Squid, stated that he received the news via email just a month-and-a-half ago, giving him insufficient time to adjust his business plans.
The price hike is attributed to Rackspace's Standard plan, which will now cost $10 per mailbox per month. Businesses can also opt for additional add-ons, such as file storage, mobile sync, Office-compatible apps, and messaging, for an extra $2/mailbox/month, and unlimited storage for $6/mailbox/month. In contrast, Rackspace charged just $3/mailbox/month for its Standard plan in November 2025.
Rackspace's reseller partners have been vocal about the negative impacts of the new pricing structure. Beale noted that the price increase has a significant impact on his business's ability to generate revenue due to the increased cost of email services. He also expressed disappointment with Rackspace's lack of notice, stating that they only gave him a short window to adjust.
The company claims that its mission is to deliver quality, trusted, and reliable hosted email solutions for businesses. However, critics argue that the prohibitive pricing will deter small businesses from adopting such services, opting instead for cloud providers offering managed services on top of their offerings.
With Rackspace facing an AI-driven RAM shortage impacting computing component availability and affordability, it is unclear what prompted the price hike. The company has recently shifted its hosting for Microsoft Exchange following a costly ransomware attack in 2022. As a result, Laughing Squid will be increasing prices for Rackspace mailboxes and offering alternative services with PolarisMail to customers at lower prices.
The news highlights the challenges of email hosting as an industry, which requires significant expertise and management capabilities. With many businesses focusing on selling managed services on top of cloud offerings, Rackspace's price hike may have unintended consequences for its own success.
They're basically pricing small businesses out of the market with a 706% increase 
. I mean, I get that they had to pay for an AI-driven RAM shortage and ransomware attack, but come on! 
. And now this? It's like Rackspace is taking advantage of them 
. I don't blame them for wanting to switch to PolarisMail at lower prices 
.
. I'm worried about what this means for Rackspace's long-term success... and for businesses like Laughing Squid 
.
Those reseller partners are right to be devastated 
What's next? Raising prices on everything else too? It's just not fair 
. So like Rackspace used to be pretty affordable for email hosting but now its like 7 times more expensive? 
. I mean, come on, give 'em some decent notice, right? Instead they just drop it like a hot potato and expect everyone to just roll over 
. This is gonna hurt small businesses big time 
. They can't afford to pay that kind of money for email hosting. It's like Rackspace doesn't care about their customers anymore... or if they do, they don't care enough to try and make it work 
. I feel bad for Laughing Squid, been with Rackspace since 1999 
how are people supposed to afford reliable email solutions now? 
they must be devastated 
anyway, i hope laughing squid's alternative services can compete with the big dogs 
I'm actually kinda glad Laughing Squid is jumping ship to PolarisMail - now that's competition! 
It's like they're playing a cruel joke on small businesses and resellers 
Like Scott Beale said, it's devastating 
That's not even enough time to get their heads around the new pricing structure 
But now it seems like you're just trying to squeeze every last penny out of them 
Like that's not enough stress on their systems already?!
Maybe Rackspace should consider offering more affordable options or bundling services to make it easier for small businesses to stay afloat 
.
...
. The fact that they only gave him a month-and-a-half heads up to adjust was super rude 
That's got to be totally fine and reasonable, right? I'm sure it has nothing to do with the fact that Rackspace is basically begging for customers to switch to one of its reseller partners who are offering similar services at lower prices. 
. It might have somethin do with that AI shortage tho... can't afford the RAM to support all those mailboxes 