Email Service Costs are Skyrocketing

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Question from a Reader: The cost of email services seems to be skyrocketing. Is that my imagination? What are some other alternatives to Gmail and Microsoft 365?

Answer: It is not your imagination. Prices for business email are climbing, and the major platforms are leading the way. There are alternatives, especially if you mostly need solid email and a calendar. This note does not review products, but it does lay out recent price hikes and a few lesser-known options beyond Gmail and Microsoft 365.​

1. Gmail & Microsoft 365: What You’re Really Paying

Both Google Workspace (Gmail for business) and Microsoft 365 have raised prices in recent years. They now bundle AI and security features that many small firms barely use, but still pay for.​

Google Workspace (Business plans – typical US pricing)

• Business Starter: about $8.40 per user per month on flexible monthly billing, or about $7 on an annual commitment.​

• Business Standard: about $16.80 monthly, or about $14 on annual.​

• Business Plus: about $26.40 monthly, or about $22 on annual.​

Exact pricing varies by region, currency, and promotions, but the pattern is the same: annual billing usually trims roughly 16–20%, and new customers sometimes see short-term discounts. Google has increased Workspace prices on flexible (monthly) plans and raised pricing on tiers that include AI features such as Gemini, often adding roughly $1–4 per user per month depending on plan and billing type. As of early 2026, there is no broad Workspace price hike announced for this year, though many customers report active upsell efforts into higher-priced tiers.​

Microsoft 365 (Business plans – typical)

• Business Basic: about $6 per user per month with an annual commitment.​

• Business Standard: about $12.50 per user per month with an annual commitment.​

• Business Premium: about $22 per user per month with an annual commitment.​

A price increase is scheduled for July 1, 2026: Business Basic rises from about $6 to about $7 (roughly 16.7%), and Business Standard from about $12.50 to about $14 (roughly 12%), while Business Premium stays at about $22. Consumer plans (Personal/Family) already saw a sizable bump in early 2025. Many SMB owners feel boxed in — paying for Office apps, Teams, SharePoint, and compliance tools when all they really wanted was reliable business email.​

2. Cost-Saving Moves Before You Switch

Before you rip out your current system, there are three simple levers to try.

• Pay annually where it makes sense.
  Many providers offer meaningful savings if you commit for a year instead of paying month-to-month. For example, Google Workspace Business Standard drops from about $16.80 to about $14 per user per month on annual billing, which adds up once you have a few mailboxes.​

• Cut features you do not use.
  If your team only needs email and a basic calendar, a lighter plan or a pure email host often beats paying for Teams, Office apps, and large cloud-storage bundles that sit idle. A simple audit of what your staff actually uses will usually uncover unused features that quietly leak money.​

Ask for a deal
For annual renewals or 10+ seats, many resellers and providers will discuss discounts or bundles if you ask and are prepared to commit. The worst outcome is that they say no and you are no worse off than before.​

3. Practical Alternatives to Gmail & Microsoft 365

If you mostly need business-grade email with a custom domain and a calendar, several providers can do the job at lower prices. Exact numbers vary by region, currency, and term, so think of the prices below as typical ranges rather than fixed quotes.​

1. Proton Mail (privacy-first)

   • Free tier: Available, but with limited storage and features.​

   • Paid plans: Typically start around $4 per user per month for Mail Plus and rise to about $10–15 per month for higher-storage and multi-user plans, depending on region and term.​
     Good if: Privacy and security matter more than tight integration with Google or Microsoft.​
     Tradeoffs: Less storage on lower tiers and fewer direct integrations with common business tools.​

2. Fastmail

   • Plans generally run in the $4–10 per user per month range (Basic, Standard, Professional), with annual or multi-year commitments reducing the effective monthly rate.​
     Good if: You want a clean interface, custom domains, and strong privacy without ads.​
     Tradeoffs: Less integration with third-party apps; storage is solid but not on the scale of the largest suites.​

3. Zoho Mail

   • Free tier: Offered for small teams in some regions, with limited storage.​

   • Paid business email typically starts around $1 per user per month (Mail Lite) and about $4 for Premium.​

   • Zoho Workplace bundles (mail plus apps) generally run roughly $3–7 per user per month on annual plans, with prices varying by region and currency.​
     Good if: You want low-cost custom-domain email and are open to a lighter productivity suite.​
     Tradeoffs: The interface may feel less polished, and some advanced features live only on higher tiers.​

4. Rackspace Email

   • Business email is now around $10 per user per month for basic mailboxes, with Plus mailboxes about $12 and archiving add-ons roughly $6 per user per month.​

   • These prices reflect a jump from roughly $3–4 per mailbox and about $3 for archiving, effective in March 2026.​
     Good if: You want straightforward hosted email and already know Rackspace.​
     Tradeoffs: After the 2026 price jump, it is no longer a budget option for most small firms, and it does not bundle collaborative apps.​

Web host – bundled email
Many web hosts (especially those using cPanel-style setups) include basic email at low or no extra cost with hosting plans.​
Good if: You have a small team, tight budget, and someone comfortable with basic server settings.​
Tradeoffs: More technical setup, less friendly administration, and usually weaker spam filtering and collaboration tools than the big SaaS platforms.​

4. What You Give Up and What You Save

For most SMBs, the tradeoff is simple: fewer bells and whistles in exchange for lower monthly bills.​

For teams that mainly need email and a shared calendar, moving from Google or Microsoft to lighter providers can often cut the email line item by 30–70%, although later price hikes at the alternatives can narrow that gap over time.​

5. How to Switch Without Losing Mail

Moving email providers is not hard, but it rewards a little preparation.​

• Export important old mail.
  Use IMAP or your provider’s export tools to pull down a copy of key mailboxes.​

• Import into the new service first.
  Bring that archive into the new provider before touching DNS, so staff can see familiar history on day one.​

• Update DNS carefully.
  Change MX and related records at your domain registrar or DNS provider to point to the new service, following their instructions line by line.​

• Run both systems briefly.
  Keep the old account or forwarding alive for at least 1–2 months so any straggling messages still reach you.​

• Test before you announce.
  Send and receive test messages from several devices and accounts before you tell customers and vendors about the change.​

Here is what the rough annual math looks like per user, using typical published prices:

On those rough numbers, moving one typical user from Google Workspace Standard to Zoho Mail or Fastmail can trim about $100–$120 per user per year, before you factor in any time or risk involved in the move.

For a small shop with 10–20 mailboxes, that is real money and worth at least a careful look.​

Editor’s Note: We don’t do product reviews, but we do try and carefully research and answer our reader questions. We only have experience with Google Workspace and Microsoft 365. Switching email service providers is a very tough decision and task for most small business owners. We encourage you to do your own research!

Have an interesting business question and need a free bit of advice? Send your question to [email protected]. No confidential info, please!