For the record, those providers already charged a significant premium for the equivalent compute you could get at Hetzner and OVH. The margins have decreased but they've had a profit margin on compute for a long time.

Yes, and they will to preserve margins at some point. They're just doing a huge Mexican standoff, waiting for others to move. All smaller clouds have raised some prices already.

They'll probably wait for summer, the world cup finals, or whatever's last big US government thing is so it flies under the radar.

Step change makes sense for a smaller provider. You bait people to build on top of you with the best prices, then rug pull and hope the switching costs and economic frictions delay the attrition.

Because heroku and aws were 10x previous hetzner price

idk if you're comparing like-for-like here. I think on EC2, other customers can balloon up to fill your idle time because they're running on the same physical hardware. What this is talking about is renting hardware that is exclusively earmarked for your usage, so your compute is not fungible with other customers. It's more correctly priced against buying your own hardware and maintaining it yourself.

Contabo is still notably cheaper than it was 2 years ago. I just shut down a 2 year old VPS and made a new one because it was ~20% cheaper than it was two years ago, and I also get more CPU and more RAM

Interesting, but still very good pricing compared to the enormous increases we now see at Hetzner (plus the increase before that one). I'm wondering if they have more hardware on stock and/or better means of hardware supply.

I have a few more or less idle VMs running at different providers, and keeping an eye on the european VPS market it seems that many struggled, while contabo is relatively stable. E.g. ovh at times limited the buying process to 1 instance (now it is at 5, not sure what was the default before) and also available locations were limited at one point a few weeks back.

We (company) do the same. Though in our case the setup cost was 80 Euros (I think), less than a year ago. As the GPU proved not really suitable for any serious server workloads (it's a workstation class card), we'll soon be ditching that machine anyways (now for sure). Maybe our other inventory at Hetzner too. Not even because of the price increases themselves, but rather because the way in which they've communicated those. Personally, I've been a loyal customer and avid advocate for Hetzner, for well over a decade. They sure knew how to nuke that in record time. They can spin their story any way they like, but I'd say their board better consider sending most of their management packing, without bonuses or severance pay.

> I rent their 20GB VRAM instance GEX44, for which they now ask a 500 euro one-time setup fee

Along with the increase in monthly prices they've dropped setup fees back to more approachable levels, though not as low as they were a year ago. For the GEX44 it was €79 a year ago, now €114. Monthly price was €184 a year ago, now €234.

You are saying that like it's some kind of rag pull. This is situation of the market. The people who moved still saved the money and are still saving money because Hetzner is still cheaper and they are also paying the old prices.

It's pretty silent happiness over at the Hetzner camp.

they still save 3-5x

1. Factory limits basically. There's a limit to the amount of fabrication lines that can create ram. Combined with the market incentives right now to make high bandwidth memory (HBM) over server memory (DRAM)... HBM starts as DRAM dies, so it competes with normal DRAM for wafer starts / cleanroom fab capacity.

2. Eventually more plants will come on line. Most of the main manufacturers have announced expansions but these can take O(years) to come online.

The entire capacity of RAM production is basically booked out, for at least the next year. All fabs have sold their allocations already, and it takes years to build a new one. As a result, no it will likely not ease up if demand continues like this, again for at least a year.

> 1. What's the bottleneck in ramping up RAM production? Is it the availability of silicon itself? Or the factories are at capacity?

For a RAM manufacturer, the incentive is to ramp up production AND prices. I doubt any of the names in the business is doing any work at all to lower their unit prices.

Hardware prices, especially RAM, have skyrocketed. Priced out new baremetal servers recently and prices were 3-6x what we paid 4 years ago for the newer equivalents.

RAM prices, surely?

Is there anything to suggest these increases are not reflecting the increased baseline price of RAM, GPUs, etc?

If not then it is only a matter of time before other providers are forced into similar price hikes.