Posted on Nov 29, 2017 | By Hosting4Real
As of 01-01-2018 – the pricing for existing customers will go up by 4%, this is to even out the price differences we’ve seen over the last 5 years.
This post will explain the reasoning behind the price increase we apply.
One of the things that changed over the last 5 years is the EUR/USD exchange rate, in mid-late 2014 we saw a considerable change in the exchange rate between EUR and USD over a couple of months the euro’s value dropped a lot compared to the USD.
Most hardware and software used within many IT businesses get their market pricing based on USD, so a significant change to the exchange rate will reflect the direct cost towards European suppliers and customers.
The EUR/USD exchange rate as of 28-11-2017 is 1.185 where back in 01-01-2013 the exchange rate used to be 1.3197 or a decrease of 10.20%
This means if we used to purchase something at 1000 USD the price in January 2013 would be 757.8 euro, making the exact same purchase today would be 843.9 euro.
DRAM and NAND chips which are used in RAM, SSDs and NVMe drives have over the last 18 months increased due to a shortage of chips, thus bringing up the pricing – as a result, this means our hardware pricing goes up as well.
If we take a few examples:
In June 2016 the price for 16 gigabytes of DDR4 memory was 80 USD, today we’ll pay 210 USD for the same amount of memory – a 162.5% increase in pricing. (Source)
In June 2016 the price for 1TB (consumer) SSD went from 320 USD to 420 USD today – a 31.25% price increase. (Source)
We highly depend on memory and SSDs in our shared hosting infrastructure. As a result, the pricing gets affected when there’s a shortage. The shortage isn’t something that’s easy to solve and won’t be resolved at least within the next 12 months.
There has been a general consumer inflation over the past five years, which means general pricing goes up over the years as well by a small percentage.
If we look overall throughout the 5 years, we’ve seen pricing from our end significantly exceeding the 4% increase we’re applying to all customers, we try as much as we can to avoid possible price changes due to inflation, exchange rates and price changes on hardware. We did, however, get to a point where we have to put some of the costs on our customers as well if we don’t want to affect the general quality of our products and service we provide.