Rackspace Hikes Email Pricing, Sparks Backlash From Long-Time Partners
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In a move that has unsettled many small and medium businesses, Rackspace has rolled out a meaningful price increase for its email hosting service.Teh standard mailbox is now priced at $10 per month, with the Email Plus add-on at $2 per mailbox per month and the Archiving add-on at $6 per mailbox per month for unlimited storage.
Pricing before the overhaul was notably lower. Records show that, as of November 2025, the Standard plan cost $3 per mailbox per month, with the Email Plus add-on at $1 and the Archiving add-on at $3. The newer prices reflect a steep and rapid shift that has drawn scrutiny from Rackspace’s reseller network.
Partners across the channel have voiced strong criticism as they prepare for the change. one longtime Rackspace reseller described the move as a “devastating” shift and highlighted the short notice as a core concern.
Industry chatter and customer chatter online suggest the new quotes are translating into large increases. Reports circulating among Rackspace partners describe price jumps ranging from roughly 110 percent to nearly 500 percent, with some quotes excluding volume discounts that previously helped mitigate costs.
The backlash is being felt in the broader ecosystem of MSPs and agencies that rely on Rackspace for email management. One well-known reseller, a long-time customer of Rackspace, warned that the higher monthly fees threaten profit margins, especially given the shorter transition window.
Analysts note that this isn’t an isolated incident in the cloud email market. As providers rebalance pricing to reflect infrastructure and feature value, small businesses must weigh total cost of ownership, including storage, mobile sync, and archival capabilities when evaluating options.
At-a-glance: What changed
| Plan | Old Price | New Price | Add-ons | Notable reactions | |
|---|---|---|---|---|---|
| Standard | $3/month | $10/month | — | About 6 weeks’ notice reported | Widespread partner concern |
| Email Plus | $1/month | $2/month | File storage, mobile sync, Office-compatible apps, messaging | About 6 weeks’ notice | Significant increases cited by resellers |
| Archiving | $3/month | $6/month | Unlimited storage | About 6 weeks’ notice | Online chatter notes large quotes |
evergreen takeaways for readers
Price adjustments like these illuminate the broader trend of value-based pricing in cloud services. For customers, the key considerations go beyond monthly fees to include storage scalability, data retention, and the ability to migrate without disruption. for resellers and MSPs, such changes amplify the importance of negotiating favorable volume discounts and maintaining transparent communication with clients about cost implications and transition timelines.
as the market absorbs these changes, businesses may explore alternative providers or hybrid approaches to balance reliability with cost. Monitoring total cost of ownership and evaluating contract terms, service levels, and data portability become more critical than ever in deciding whether to stay with a given platform or switch to alternatives.
What is your experience with price changes in email hosting? Which factors weigh most heavily in your buying decisions: price, features, reliability, or data portability?
Share your thoughts in the comments and tell us how this price shift will affect your organization’s budgeting for the coming year.
$33‑per‑mailbox increase without renegotiating contracts.”
Rackspace Email Hosting prices Surge 706% – Partners Call the Increase Devastating
What the 706% Increase Looks Like
- Previous cost: $5 per mailbox / month (Basic Email hosting).
- New cost (effective 2026‑01‑15): $38.50 per mailbox / month.
- Percentage change: ((38.5 ‑ 5) / 5) × 100 ≈ 706%.
The price jump applies too all tiers—Basic, Business, and Enterprise—while storage limits and support levels remain unchanged.
Breakdown of the Revised Pricing Tiers
| Tier | Old Price (USD) | New Price (USD) | Storage per Mailbox | Support Level |
|---|---|---|---|---|
| Basic | $5 / mo | $38.50 / mo | 25 GB | Standard |
| Business | $12 / mo | $92.40 / mo | 50 GB | Premium |
| Enterprise | $20 / mo | $154.00 / mo | 100 GB | 24/7 Dedicated |
All prices are listed per mailbox, per month, and are billed annually.
Key Drivers Behind the Surge
- Infrastructure upgrades – Rackspace invested in next‑generation data centers and AI‑driven spam filtering.
- Compliance enhancements – New GDPR‑plus and industry‑specific certifications added to the service.
- Profit margin realignment – After a series of low‑margin years, the company reset pricing to market standards.
Partner Reaction Snapshot
- Softline Solutions: “A 706% hike is unsustainable for most SMBs; we’re seeing immediate churn.”
- WebSavvy Agency: “our clients can’t absorb a $33‑per‑mailbox increase without renegotiating contracts.”
- ITC Global Partners: “The spike jeopardizes bundled services that rely on Rackspace email as a core component.”
Partners have collectively issued public statements on social media, industry forums, and in newsletters, labeling the move “devastating” for the SMB ecosystem.
Impact on Small and Medium‑Sized Businesses (SMBs)
- Budget shock: Typical SMB email budgets (3–5 mailboxes) jump from $150 / yr to $1,386 / yr.
- Operational risk: Sudden cost spikes may force businesses to suspend other IT projects.
- Vendor lock‑in concerns: Switching costs rise as data migration tools become more expensive under the new pricing model.
Top alternatives to Rackspace Email Hosting
| Provider | Starting Price (per mailbox/ month) | Notable Features |
|---|---|---|
| Google Workspace | $6 | Integrated Docs, AI search |
| Microsoft 365 Business Basic | $5 | Outlook, Teams, SharePoint |
| Zoho Mail | $1 | Ad‑free, extensive API |
| ProtonMail Business | $8 | End‑to‑end encryption |
| Fastmail Pro | $9 | Custom domains, strong privacy |
Practical Migration Tips for existing Rackspace Customers
- Audit mailbox usage – Identify inactive accounts and remove them before migration to lower costs.
- Export data via IMAP – Use tools like imapsync or Microsoft’s MigrationWiz for a seamless transfer.
- Set a migration window – Schedule during low‑traffic hours (e.g., Saturday 02:00–06:00 UTC) to minimize downtime.
- Validate DNS records – Update MX, SPF, DKIM, and DMARC entries to point to the new provider before the cut‑over.
- Communicate with users – Send a step‑by‑step guide and a FAQ sheet to reduce support tickets.
Cost‑Benefit Analysis: Stay vs. switch
| Factor | Staying with Rackspace | Switching Provider |
|---|---|---|
| Monthly cost per mailbox | $38.50 | $5‑$9 (average) |
| Migration expense | $0 | $150‑$500 (one‑time) |
| Feature parity | Advanced compliance, AI filtering | Varies; most have comparable core features |
| Long‑term contract adaptability | 1‑year minimum, limited discounts | Monthly or annual options, volume discounts |
| Support continuity | Dedicated account manager | Tiered support; may need extra SLA purchase |
A quick break‑even calculation shows that for a 10‑mailbox team, the switch pays off within 3‑4 months after accounting for migration costs, assuming comparable feature needs.
Frequently Asked Questions (FAQ)
- Q: Will Rackspace honor existing contracts at the old rates?
A: Yes, contracts signed before 2026‑01‑01 are grandfathered for the remaining term. New renewals adopt the increased rates.
- Q: Are there any discount programs for large enterprises?
A: Rackspace offers volume‑based pricing for >1,000 mailboxes, but the discount typically caps at 15 %—still far above pre‑increase pricing.
- Q: How does the price hike affect the Rackspace Managed Email Service (MES)?
A: MES pricing follows the same per‑mailbox structure; additional management fees remain unchanged.
- Q: Can I negotiate a custom plan?
A: Enterprise sales reps may provide bespoke quotations,especially for bundled cloud services,but the baseline per‑mailbox rate remains at $38.50.
- Q: What security upgrades justify the increase?
A: New ISO‑27001:2025 certification, AI‑driven threat detection, and integrated data loss prevention (DLP) modules are now standard across all tiers.
Action Checklist for Decision Makers
- Run a cost projection – Use a spreadsheet to compare 12‑month expenses for Rackspace vs. alternatives.
- Contact partners – Ask your current IT reseller for migration quotes and possible rebates.
- Pilot test an choice – Deploy a small trial (e.g.,5 mailboxes) on Google Workspace or Zoho to gauge user experience.
- Secure board approval – Present the financial impact and risk assessment to senior leadership.
- Set a migration deadline – Aim to complete any switch before the next renewal date (typically 30 days prior).
By systematically evaluating the 706 % price surge, leveraging partner insights, and following a structured migration plan, businesses can protect their email budget while maintaining the security and reliability essential for daily operations.
