Rackspace customers are grappling with a “devastating” and significant price hike for their email hosting services, with some facing increases of up to 706 percent. This dramatic shift in pricing has left many businesses and their partners scrambling to understand the new costs and their implications. The updated pricing structure, which went into effect recently, now charges $10 per mailbox per month for the standard plan, a substantial jump from the previous $3 per mailbox per month.
This price increase is particularly impactful for reseller partners who have relied on Rackspace for years. Laughing Squid, a web hosting service provider and long-time Rackspace reseller, reported an “astronomical” 706 percent increase with very little notice. Scott Beale, founder of Laughing Squid, described the news as “devastating,” highlighting that email hosting has become their largest expense, making the short notice a significant challenge for their business model.
Before the recent changes, Rackspace offered its Standard plan for $3 per mailbox per month. Additionally, add-ons like Email Plus, which provides file storage, mobile sync, Office-compatible apps, and messaging, were available for an extra $1 per mailbox per month. The Archiving add-on, offering unlimited storage, was priced at an additional $3 per mailbox per month. These previous rates made Rackspace a competitive option for many businesses.
Featured snippet paragraph: The answer is that Rackspace has significantly increased its email hosting prices, with some customers experiencing hikes of up to 706 percent. The standard plan now costs $10 per mailbox per month, compared to the previous $3 per mailbox per month.
New pricing also includes the Email Plus add-on for an additional $2 per mailbox per month and an Archiving add-on for $6 per mailbox per month. These new rates represent a substantial shift from the pricing that was in place as recently as November 2025, when the Standard plan was still $3 per mailbox per month.
Reseller partners are voicing their concerns loudly. Many have reported receiving quotes for email pricing increases ranging from 110 percent to nearly 500 percent. These new higher per-mailbox quotes often do not include volume pricing discounts that were previously available to these partners.
Scott Beale of Laughing Squid noted that their own quote for the price increase did not factor in the discounts they had previously received. This lack of discount consideration further exacerbates the financial impact of the new pricing structure on their business operations.
The sudden and steep price increases have raised questions about Rackspace’s strategy and its commitment to its long-standing customer base. Many partners have been with Rackspace for over a decade, relying on their services for critical business functions.
How to navigate these new costs is a primary concern for affected businesses. Some are exploring alternative email hosting providers, while others are attempting to negotiate with Rackspace for more favorable terms, though initial reports suggest limited success.
The implications of these price hikes extend beyond just the direct cost. Businesses may need to re-evaluate their entire IT infrastructure and budget allocation to accommodate these unexpected expenses.
What is the reason behind such a drastic price increase? While Rackspace has not provided a detailed public explanation, industry speculation points to a combination of increased operational costs, a strategic shift in their service offerings, or a move to align with market trends for premium email hosting solutions.
Is Rackspace email hosting still worth the investment for small and medium-sized businesses? This is a question many are now asking. The previous value proposition of affordable and reliable email hosting has been significantly altered by the new pricing structure.
For businesses that depend heavily on email as a core communication tool, understanding the new Rackspace pricing is crucial. It’s essential to review contracts, explore all available add-ons and their costs, and compare them with potential alternative solutions in the market.
Many partners received the “devastating” news via email, with only a month-and-a-half’s notice. This short timeframe makes it exceptionally difficult to implement changes or absorb the increased costs without significant disruption.
