Comment by eugenekolo
10 days ago
It really is an absolute massive jump. Have no clue what's going on in the back to warrant a 3x increase... 25-50%, sure.. but 3x is wild.
10 days ago
It really is an absolute massive jump. Have no clue what's going on in the back to warrant a 3x increase... 25-50%, sure.. but 3x is wild.
They might have had delivery contracts from before the prices increased, so they didn't have to pass them to customers. Maybe the last servers from those contracts got delivered already and any new orders need to be bought at much higher prices.
Another possibility: They were growing too fast and need to slow down. At some point additional growth might become too risky, or even exponentially more expensive. It might require fundamental organizational changes.
I’m not a business person, but they’re already at the “hundreds of thousands of servers” scale, what about the 41st data center be organizationally far more expensive than the first 40?
Simple example: Pizza delivery service. The company runs very well, customers are happy, demand increases. At some point the demand gets so high, that they need to buy a second car for deliveries and a second pizza oven.
They look at the numbers and see the risk of making less profit than before, if they expand. Especially if demand decreases at some point, instead of growing further. So they decide to just raise the prices, lower demand and make even more money without additional risk.
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It's a business that seems to have high operational leverage. Effectively, similar to airlines. Enormous capital outlays with low marginal costs, so once the current infra has been built at cost x, the additional data centre at cost 5x (or whatever multiple) might mean that it's not profitable to keep serving at the current prices.
Businesses charge their customers as much as they can. Businesses want to raise prices almost regardless of what their input costs are.
It is wrong to believe that a product's "correct" price is simply its cost plus a reasonable markup.
There's other factors that might limit how much a business can charge their customers. But an ideal business acts more like a monopoly and charges far far more than is 'fair'.
In theory competition keeps prices in check: in practice competition doesn't work as advertised.
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> Have no clue what's going on in the back
Hetzner and OVH and other bare metal but low cost providers use commodity hardware. When that commodity hardware increases there is simply no other option. The secret to the success of these providers is using common off-the-shelf hardware instead of specialized server hardware, which is now being cannibalized.
doesn't this imply that they buy massive hardware and thus replace their hardware constantly? At what rate? It seems the rate is massive. I'd gladly use a 4year old server for the old price.
Then check out the Serverbörse https://www.hetzner.com/de/sb/ that's exactly what you're asking for. Used servers, some of them with Skylake (2015) processors, some even with Haswell (2014) processors.
Hetzner keeps running the old machines as long as they can find customers for them, which means they have entire buildings of 10+ year old machines still running.
> thus replace their hardware constantly?
Yes? How else do you think it works? At scale, hardware breaks all the time and must therefore be replaced all the time.
This is true even at Hetzner's scale.
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The lowest prices are for hardware much more than 4 years old though: take OVH's Kimsufi, they use CPUs that first launched in 2015, 2017, 2018, ...
They are luckily only applying this to:
> The price adjustment applies to new orders and cloud instance rescales starting from 15 June 2026; 8 AM CEST.
> For orders placed before 15 June 2026, but delivered after 15 June 2026, the previous prices will apply.
I am surely/definitely happy that the price doesn't increase for me. If it increased for everyone, I'd expect a much smaller jump. Also I'm not sure how much flexibility they have to increase the price for everyone without notice, given that they are in EU.
The AI bubble has increased the prices of nand and ram by a factor of 4, so a 3x increase seems reasonable. Companies that are not big enough to have long term contracts with ram/nand vendors have been hit really, really hard by this.
These prices have absolute nothing to do anymore with memory prices. Do not forget that Hetzner already increased the setup fees by a factor of 4x before to compensate for the price. And also servers getting price increases.
It seems they have shifted by reducing the setup fees, and increasing the monthly costs. As this generates more revenue. And its easy to prove this...
AX42 ... Its 8700GE that has gone from 65 Euro to 225 Euro. With the setup fee now being 112 Euro instead of 225 Euro. It has 64GB memory, and 1TB storage. The storage even in todays market is 100 Euro. The memory is 644 Euro.
Do the math ... Hetzner servers had a hardware payback periode of between 9 to 11 month if you took the market value. This calculation has always been very stable over the 20 years i used Hetzner.
This new price, reduced the hardware payback periode to ~4 month. It seems to be that Hetzer is trying to use the memory price issues, as a excuse. The revenue of those same servers now increased to a insane level. More revenue with less hardware.
The real issue is that a lot of companies are moving from US hosting to EU hosting because of the problems with the US. Hetzner sees this as the perfect time to cash in on Enterprise customers.
They have been trying to replace the "cheap" normal consumers with enterprise. This trend has been going on for a while already.
Every customer that now leaves, is a server they can rent out to business customers.
If you want to see the same thing, look up what happened to Microsoft/Github Copilot where they turn around has been sudden and very strong, with a clear goal of moving everything to enterprise.
The big increases here are for their cloud product, which is hourly billing with no setup. In that context it seems more reasonable. I guess we need to remember that hourly billing and flexible prices cut both ways, eh?
> It seems they have shifted by reducing the setup fees, and increasing the monthly costs.
Monthly costs have gone up as well. Payroll has seen significant increases in Germany, construction has exploded far beyond inflation and, most importantly, electricity prices are still ridiculous due to merit-order and the refusal of splitting up Germany into multiple power pricing regions.
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Also, a price increase like this can be used to address over-subscription/under-utilization .. there will be a lot of dormant chaff blown off by this, or in other words the provisioning demand will also be adjusted by this aggressive price change, imho.
Its not only RAM. I have seen people who are vibe coding their app and instead of choosing Vercel as default they are learning about dedicated server hosting, docker etc and moving to providers like Hetzner. This is why whenever someone says - with AI everyone is going to write their own SaaS, I am always like - and what happens to hosting? Even Vercel might increase their costs if that comes to pass.
It's a bit higher than 4 now.
They probably also have to factor in the pricing trajectory to avoid changing their pricing too often.
I almost pulled the trigger on a 2x64GB 6400MHz CL36 kit for about $650 last August. It's been insane since the spike happened, but went down somewhat last month. I just checked and it has gone up $1500 since then to $5000.
So that's over 7.5x what it was when I (sadly) did not buy it. Totally not kicking myself for dragging my heels on that purchase...
Cheapest 2x48GB kit I can find here now is $1500, yay. That's 5200MHz CL48 stuff.
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There is no AI bubble
There is an engineered scarcity, billion dollar companies can't ramp up production?
Murica is stuck depending on the good will of Korea and China for thinking rocks? le fucking mao
As I understand it ramping up a new fab takes a couple of years and several billion dollars. The last time they ramped up production prices had crashed back down by the the time the new fab was fully up and running, so this time they're betting that the scarcity will resolve itself like it did last time.
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All the money in the world won't spin up a fab in a year, much like all the women in the world couldn't take a child from conception to birth in a month. Some things do just have a latency to them.
>billion dollar companies can't ramp up production?
you're a semiconductor manufacturer who wants to take advantage of the current boom. your options are:
A) invest a hundred cubic meters of money into doubling your manufacturing capacity
B) raise prices by 100%
I can't really blame them for going with B. the blame lies entirely with America's ability to invest billions of its infinite money into companies that make no profit now and have no plausible path to profitability in the future.
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ARM instances (CAX) are all consistently at 30%.
It seems to be 2-tier pricing. You can pay 4x for guaranteed delivery... they may have excess capacity at some point (-LTD SKUs) and then you can pay 1.1x while stocks last.
It's so bad I will be looking at moving off Hetzner at this point. 3x is too much.