Hetzner Online, a major European infrastructure provider known for its competitive pricing, is significantly increasing its costs, with some services seeing price hikes of up to 50 percent. The changes, slated to take effect on , apply to both new and existing customers across its datacenters in Germany, Finland, the US and Singapore.
The price adjustments reflect a broader trend of rising costs within the IT sector, particularly concerning hardware, and infrastructure. Hetzner cited “drastic price increases” as the primary driver for the changes, stating that the costs to operate its infrastructure and acquire new hardware have “increased dramatically.” The company emphasized that it had absorbed these costs for as long as possible but can no longer compensate for the strain on its operations.
The increases aren’t uniform across all services. While some charges will rise by over 30 percent, others will jump as high as 50 percent. Specific examples include a rise from €2.99 to €3.99 per month for the entry-level CX23 cloud instance in Germany and Finland, and a similar increase for Arm-based CAX instances. Dedicated servers will also see price increases, with the popular EX44 climbing from €42.30 to €47.30 per month in Germany, and GPU server pricing on the GEX44 increasing from €182.30 to €212.30.
The move by Hetzner comes as the demand for high-performance computing, fueled by the rapid growth of the artificial intelligence industry, puts significant pressure on the supply of critical components. Hyperscalers are struggling to secure sufficient quantities of high bandwidth memory (HBM), flash storage, and AI-specific silicon, notably Nvidia’s GPUs. This demand, coupled with chipmakers prioritizing high-margin production, has led to widespread shortages.
Recent reports confirm the severity of the component price increases. DRAM and NAND flash memory prices are expected to double this quarter, while server CPUs are in short supply, and hard drive manufacturers have already sold out their projected production for the year. These factors directly contribute to the challenges Hetzner faces in maintaining its historically low prices.
Omdia Senior Research Director Vlad Galabov believes the price increase is justified given the current market conditions. “The 50 percent increase, while steep for users, reflects the brutal reality of the current hardware supply chain,” he told The Register. He predicts that other providers will likely follow suit, but suggests that hyperscalers, with their long-term direct agreements with vendors, will be less immediately affected.
Galabov further explained that the market is developing a two-tiered system. “The massive hyperscalers (AWS, Microsoft, Google) negotiate long-term, direct-to-vendor agreements that insulate them from these immediate price shocks. However, smaller and mid-sized providers who lack that immense buying leverage – like Hetzner and OVHcloud, which already announced a price hike – have no choice but to pass these costs directly to their users.”
The reaction from Hetzner’s customer base has been mixed. On the Reddit Hetzner forum, users expressed concerns about the impact on their costs and the availability of resources. One user, neptrio, noted the significant increase of 36 percent and expressed a need to explore alternative providers due to both the price hike and ongoing capacity constraints. Another user, ProfessionalJackals, pointed out that Hetzner’s object storage pricing is now less competitive than alternatives like Backblaze and Wasabi.
However, other users acknowledged the challenging circumstances. Gasp0de argued that the price increase is reasonable considering the substantial rise in RAM prices, ranging from 80 to 400 percent. JacqueMorrison maintained that Hetzner continues to offer a strong price-to-performance ratio compared to its competitors.
Hetzner’s price adjustments signal a significant shift in the European cloud market. For years, the company has been a key provider for cost-conscious developers, startups, and small businesses. This move suggests that the era of ultra-low-cost cloud hosting may be coming to an end, at least in the short term, as infrastructure providers grapple with escalating hardware costs and supply chain disruptions. The long-term impact will depend on the duration of these shortages and the ability of providers to find alternative solutions or negotiate more favorable terms with hardware vendors.
