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Reseller says Rackspace plans to charge it 706 percent more.
Credit: Thomas Fuller/SOPA Images/LightRocket via Getty Images
Rackspace’s new pricing for its email hosting services is “devastating,” according to a partner that has been using Rackspace as its email provider since 1999.
In recent weeks, Rackspace updated its email hosting pricing. Its standard plan is now $10 per mailbox per month. Businesses can also pay for the Rackspace Email Plus add-on for an extra $2/mailbox/month (for “file storage, mobile sync, Office-compatible apps, and messaging”), and the Archiving add-on for an extra $6/mailbox/month (for unlimited storage).
As recently as November 2025, Rackspace charged $3/mailbox/month for its Standard plan, and an extra $1/mailbox/month for the Email Plus add-on, and an additional $3/mailbox/month for the Archival add-on, according to the Internet Archive’s Wayback Machine.
Rackspace’s reseller partners have been especially vocal about the impacts of the new pricing.
In a blog post on Thursday, web hosting service provider and Rackspace reseller Laughing Squid said Rackspace is “increasing our email pricing by an astronomical 706 percent, with only a month-and-a half’s notice.”
Laughing Squid founder Scott Beale told Ars Technica that he received the “devastating” news via email on Wednesday. The last time Rackspace increased Laughing Squid’s email prices was by 55 percent in 2019, he said.
“The price increase has a major impact on the ability to make money due to the fact that email is now our largest expense, and we were only given a month-and-a-half notice,” Beale told Ars.
Online, there are reports of Rackspace partners being quoted email pricing increases of 110 percent to nearly 500 percent. The reports say that the new, higher-per-mailbox quotes don’t include volume pricing discounts. Beale noted that Laughing Squid’s quote doesn’t include discounts that the company previously received.
“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. All of that seemed to vanish when they notified us of their new pricing,” he said.
Ars contacted Rackspace asking about the 706 percent price hike that Laughing Squid says it’s facing, why Rackspace decided to increase its prices now, and why it didn’t give its partners more advanced notice. A company spokesperson responded, saying:
Rackspace Email is a reliable and secure business-class email solution for small businesses. To continue delivering the service levels our customers expect, effective March 2026, Rackspace Technology is increasing the price of Rackspace Email. We have a support team available to help our customers to discuss their options.
The spokesperson added that Rackspace’s “mission is to deliver quality, trusted and reliable hosted email solution for businesses.”
Email hosting is a tough business
Despite Rackspace’s stated commitment to email hosting, the prohibitive pricing seems like a deterrent for a business being viewed as high-effort and low-margin. Email has grown complex over the years, requiring time and expertise for proper management at scale. It’s become simpler, or more lucrative, for some cloud companies to focus on selling their managed services on top of offerings like Microsoft 365—as Rackspace does—or Google Workspace and let the larger companies behind those solutions deal with infrastructure costs and complexities.
Rackspace’s price hike also comes as an AI-driven RAM shortage is impacting the availability and affordability of other computing components, including storage.
With Rackspace, which went public in 2020, also having quit hosting Microsoft Exchange following a costly 2022 ransomware attack, the Texas-headquartered company may be looking to minimize its email hosting duties as much as possible.
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 has reached out to Rackspace about the new pricing but hasn’t heard back yet.
Credit: Thomas Fuller/SOPA Images/LightRocket via Getty Images
Rackspace’s new pricing for its email hosting services is “devastating,” according to a partner that has been using Rackspace as its email provider since 1999.
In recent weeks, Rackspace updated its email hosting pricing. Its standard plan is now $10 per mailbox per month. Businesses can also pay for the Rackspace Email Plus add-on for an extra $2/mailbox/month (for “file storage, mobile sync, Office-compatible apps, and messaging”), and the Archiving add-on for an extra $6/mailbox/month (for unlimited storage).
As recently as November 2025, Rackspace charged $3/mailbox/month for its Standard plan, and an extra $1/mailbox/month for the Email Plus add-on, and an additional $3/mailbox/month for the Archival add-on, according to the Internet Archive’s Wayback Machine.
Rackspace’s reseller partners have been especially vocal about the impacts of the new pricing.
In a blog post on Thursday, web hosting service provider and Rackspace reseller Laughing Squid said Rackspace is “increasing our email pricing by an astronomical 706 percent, with only a month-and-a half’s notice.”
Laughing Squid founder Scott Beale told Ars Technica that he received the “devastating” news via email on Wednesday. The last time Rackspace increased Laughing Squid’s email prices was by 55 percent in 2019, he said.
“The price increase has a major impact on the ability to make money due to the fact that email is now our largest expense, and we were only given a month-and-a-half notice,” Beale told Ars.
Online, there are reports of Rackspace partners being quoted email pricing increases of 110 percent to nearly 500 percent. The reports say that the new, higher-per-mailbox quotes don’t include volume pricing discounts. Beale noted that Laughing Squid’s quote doesn’t include discounts that the company previously received.
“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. All of that seemed to vanish when they notified us of their new pricing,” he said.
Ars contacted Rackspace asking about the 706 percent price hike that Laughing Squid says it’s facing, why Rackspace decided to increase its prices now, and why it didn’t give its partners more advanced notice. A company spokesperson responded, saying:
Rackspace Email is a reliable and secure business-class email solution for small businesses. To continue delivering the service levels our customers expect, effective March 2026, Rackspace Technology is increasing the price of Rackspace Email. We have a support team available to help our customers to discuss their options.
The spokesperson added that Rackspace’s “mission is to deliver quality, trusted and reliable hosted email solution for businesses.”
Email hosting is a tough business
Despite Rackspace’s stated commitment to email hosting, the prohibitive pricing seems like a deterrent for a business being viewed as high-effort and low-margin. Email has grown complex over the years, requiring time and expertise for proper management at scale. It’s become simpler, or more lucrative, for some cloud companies to focus on selling their managed services on top of offerings like Microsoft 365—as Rackspace does—or Google Workspace and let the larger companies behind those solutions deal with infrastructure costs and complexities.
Rackspace’s price hike also comes as an AI-driven RAM shortage is impacting the availability and affordability of other computing components, including storage.
With Rackspace, which went public in 2020, also having quit hosting Microsoft Exchange following a costly 2022 ransomware attack, the Texas-headquartered company may be looking to minimize its email hosting duties as much as possible.
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 has reached out to Rackspace about the new pricing but hasn’t heard back yet.
