Rackspace’s email hosting prices have jumped dramatically, with some partners facing hikes of over 700%. The company’s standard plan now costs $10 per mailbox/month, up from $3 as recently as November 2025. Resellers like Laughing Squid say the increases are financially devastating.

The price surge includes mandatory add-ons like Email Plus and Archiving, pushing total costs higher. Long-term customers who previously enjoyed negotiated discounts report those deals have vanished. Rackspace said it needs to raise prices to maintain service quality, but gave partners little advance warning.

Industry experts note that email hosting has become a low-margin, high-effort business. Many providers are shifting focus to managed services built on platforms like Microsoft 365. Rackspace’s move may signal a retreat from infrastructure-heavy offerings, especially after its 2022 ransomware attack.

Laughing Squid is already transitioning customers to PolarisMail, a cheaper alternative. Other resellers are likely exploring similar options. Businesses reliant on Rackspace for email may face tough choices between absorbing costs or switching providers.