Possible theory why they did it: To my understanding, you don't pay for traffic, you pay for network capacity. Maybe US instances aren't getting the uptake they had hoped for, and they are looking lower some costs by reducing their network capacity (they are a very German company and care a lot about efficiency).
Hetzner is very cheap and still profitable because classic "economy of scale" and vertical integration. They own, build, and operate all their data centers. This comment goes into more details[1], but it's possible this doesn't really work out in a foreign location like US.
That doesn't explain a 20x regional pricing difference for the same service (outgoing bandwidth). It's either a malicious change to extract exorbitant rent from customers (hostages at that point) or buying enough bandwidth is whole lot more expensive than they calculated and it reflects costs to provide the product (a virtual machine a specific traffic cap).
If its mostly the later case they really fucked up their customer communication. They should care enough to provide their customers with time to respond and transparency to (re-)earn the trust a hosting provider requires.
Counterpoint: They could've lowered their capacity without changing plans if they were indeed seeing lower uptake, and increase capacity as/when it's needed if it did indeed ever pick up. They wouldn't be the first provider to put products out of stock whilst they scale back up.
This seems to be a huge PR blunder. As a single data point, I have to say that my first reaction is illogical.
I have two hetzner shared instances and I am royally pissed by the 20x reduction in traffic allowance. It is also irrelevant to me: over the last 12 months I never exceeded 1TB. My unhappiness on the traffic reduction is purely of a "what if I start using more" type. For which two rational answers is "well you can explore alternatives then" and "d'oh, your average is way under 100GB, it's not going over 1TB". But I still started looking at alternatives.
My feeling is that the reduction is aimed at a small group, but upsets a much larger set of customers who now will start looking for alternatives. Which indicates a typical marketing screwup. My 2c.
But then, I have looked at alternatives before they even offered their US locations (and also for a CA one) and couldn't find anything decent for even nearly the price.
So we can pay a little more and get a little less, or move somewhere else and either pay a lot more or get a lot less
Is traffic generally much more expensive in the US than in Germany? This seems to be a US-only change and I'm wondering a bit about the reasoning here and whether to expect this to also change in other regions.
Not really, CDNs with regional pricing usually charge almost if not exactly the same amount for NA and EU traffic. It's the other regions that tend to be more expensive.
I wonder if this has anything to do with how Hetzner operates in each region, they run their own EU datacenters but AFAIK they just rent rack space in the US, so they're more at the mercy of upstream providers.
From Cloudflare blog about why EU prices are lower (around 50% cheaper than US at least according to cloudflare)
The value of an exchange depends on the number of networks that are a part of it. The Amsterdam Internet Exchange (AMS-IX), Frankfurt Internet Exchange (DE-CIX), and the London Internet Exchange (LINX) are three of the largest exchanges in the world.
In Europe, and most other regions outside North America, these and other exchanges are generally run as non-profit collectives set up to benefit their member networks. In North America, while there are Internet exchanges, they are typically run by for-profit companies. The largest of these for-profit exchanges in North America are run by Equinix, a data center company, which uses exchanges in its facilities to increase the value of locating equipment there. Since they are run with a profit motive, pricing to join North American exchanges is typically higher than exchanges in the rest of the world.
I wonder why English decided to narrow its meaning. Well I guess a language doesn’t decide anything, but I think you know what I mean. In many EU countries it simply means “cost list” or “price list” which can be for import duties but also for a range of other things.
It’s very nice to have it called tariff in basically every EU country though. We get green energy tariffs and if it was called something different in each country they wouldn’t be fun.
So it seems that trying to compete with duopoly isn't working.
Can we assume it is cause there is only few big corporations dominating internet infrastructure in US compared to EU with tons of medium sized and even small business that do it?
I would love some good read about US infrastructure, especially why costs are so high compared to EU?
"Until this change, customers who have used fewer resources have covered the costs, in a way, for other customers who have used much more resources." ... This argument does not make sense. I use very few resources but have to pay more.
I wonder what proportion of traffic is AI model weights being served. They are huge files, lots of mostly duplicated + fine tuned versions, lots of interest to download the latest and greatest, lots of ML aficionados grabbing them.
Was also disappointed after receiving this update today, price increases across the board and gone are the days of generous 20TB free traffic which we've been enjoying for over a decade. Our Hetzner VMs now limited to 1-3TB free traffic, feels like the end of an era.
But some examples of things that are profitable under the old regime, but maybe not at 20x the limit:
API services that consume media, whether to do some business logic specific thing or something specific, e.g. Transcriptions for videos, file conversion API, OCR API provider, etc.
If you try a video app without using WebRTC and peer traffic your bandwidth can blow up too. Even if you use something like push notifications with base64. There are lots of traps that use Bandwidth.
We have about 50TB for about 500.000 users per month. Our Hetzner costs are about 2k per month. Similar setup at aws would cost us about 10 to 20k per month. No joke.
> Until this change, customers who have used fewer resources have covered the costs, in a way, for other customers who have used much more resources.
That is utter nonsense. If the customers who are 'covering the costs' have a problem, they can move? Yet even still they are charging those SAME customers who now actually receive less resources, even if they were using them or not.
The problem with their old pricing structure is that it attracts high-utilization customers who will max out their transfer every month. But yes, they raised prices for all of us. Their pricing was so low, my guess is it was never profitable enough to be worthwhile long-term. It brought them a lot of business, some of which they'd be happier without under the old terms.
The reasoning the gave still doesn't pass the smell test. If it's as they say, then they wouldn't increase the price they would tariff the traffic. Like other providers.
Don't increase prices and claim it's to help the little guy.
Probably pretty reasonable as a way to price in risk when doing business in a remote mafia state that is about to get a possibly very volatile government.
Possible theory why they did it: To my understanding, you don't pay for traffic, you pay for network capacity. Maybe US instances aren't getting the uptake they had hoped for, and they are looking lower some costs by reducing their network capacity (they are a very German company and care a lot about efficiency).
Hetzner is very cheap and still profitable because classic "economy of scale" and vertical integration. They own, build, and operate all their data centers. This comment goes into more details[1], but it's possible this doesn't really work out in a foreign location like US.
[1]: https://forumweb.hosting/13663-why-are-hetzners-dedicated-ho...
That doesn't explain a 20x regional pricing difference for the same service (outgoing bandwidth). It's either a malicious change to extract exorbitant rent from customers (hostages at that point) or buying enough bandwidth is whole lot more expensive than they calculated and it reflects costs to provide the product (a virtual machine a specific traffic cap).
If its mostly the later case they really fucked up their customer communication. They should care enough to provide their customers with time to respond and transparency to (re-)earn the trust a hosting provider requires.
Counterpoint: They could've lowered their capacity without changing plans if they were indeed seeing lower uptake, and increase capacity as/when it's needed if it did indeed ever pick up. They wouldn't be the first provider to put products out of stock whilst they scale back up.
This seems to be a huge PR blunder. As a single data point, I have to say that my first reaction is illogical.
I have two hetzner shared instances and I am royally pissed by the 20x reduction in traffic allowance. It is also irrelevant to me: over the last 12 months I never exceeded 1TB. My unhappiness on the traffic reduction is purely of a "what if I start using more" type. For which two rational answers is "well you can explore alternatives then" and "d'oh, your average is way under 100GB, it's not going over 1TB". But I still started looking at alternatives.
My feeling is that the reduction is aimed at a small group, but upsets a much larger set of customers who now will start looking for alternatives. Which indicates a typical marketing screwup. My 2c.
Fair I felt similar about it.
But then, I have looked at alternatives before they even offered their US locations (and also for a CA one) and couldn't find anything decent for even nearly the price.
So we can pay a little more and get a little less, or move somewhere else and either pay a lot more or get a lot less
OVH is comparable and has locations in North America.
Is traffic generally much more expensive in the US than in Germany? This seems to be a US-only change and I'm wondering a bit about the reasoning here and whether to expect this to also change in other regions.
Not really, CDNs with regional pricing usually charge almost if not exactly the same amount for NA and EU traffic. It's the other regions that tend to be more expensive.
I wonder if this has anything to do with how Hetzner operates in each region, they run their own EU datacenters but AFAIK they just rent rack space in the US, so they're more at the mercy of upstream providers.
From Cloudflare blog about why EU prices are lower (around 50% cheaper than US at least according to cloudflare)
The value of an exchange depends on the number of networks that are a part of it. The Amsterdam Internet Exchange (AMS-IX), Frankfurt Internet Exchange (DE-CIX), and the London Internet Exchange (LINX) are three of the largest exchanges in the world.
In Europe, and most other regions outside North America, these and other exchanges are generally run as non-profit collectives set up to benefit their member networks. In North America, while there are Internet exchanges, they are typically run by for-profit companies. The largest of these for-profit exchanges in North America are run by Equinix, a data center company, which uses exchanges in its facilities to increase the value of locating equipment there. Since they are run with a profit motive, pricing to join North American exchanges is typically higher than exchanges in the rest of the world.
There _are_ non-profit neutral exchanges in the US (eg https://en.wikipedia.org/wiki/Seattle_Internet_Exchange), but they're just not as dominant as they are in Europe.
Bit annoying that the word tariff differs between the continents. Was thinking it related to possible trade tariffs
I wonder why English decided to narrow its meaning. Well I guess a language doesn’t decide anything, but I think you know what I mean. In many EU countries it simply means “cost list” or “price list” which can be for import duties but also for a range of other things.
It’s very nice to have it called tariff in basically every EU country though. We get green energy tariffs and if it was called something different in each country they wouldn’t be fun.
So it seems that trying to compete with duopoly isn't working.
Can we assume it is cause there is only few big corporations dominating internet infrastructure in US compared to EU with tons of medium sized and even small business that do it?
I would love some good read about US infrastructure, especially why costs are so high compared to EU?
Oof, that reduction in bandwidth is huge.
Am I correct that this only applies to outgoing WAN traffic? Incoming/internal is still free?
That is correct, incoming traffic is still free
"Until this change, customers who have used fewer resources have covered the costs, in a way, for other customers who have used much more resources." ... This argument does not make sense. I use very few resources but have to pay more.
The argument would make sense if the prices of any Hetzner service decreased (no longer necessary to substitute high traffic users).
But all prices in this message increase.
I wonder what proportion of traffic is AI model weights being served. They are huge files, lots of mostly duplicated + fine tuned versions, lots of interest to download the latest and greatest, lots of ML aficionados grabbing them.
[dupe] Earlier: https://news.ycombinator.com/item?id=42264427
duplicate: https://news.ycombinator.com/item?id=42264668
What their announcement does not cover is whether or not the 1 EUR/TB price above the free quota will still be active in the US.
Was also disappointed after receiving this update today, price increases across the board and gone are the days of generous 20TB free traffic which we've been enjoying for over a decade. Our Hetzner VMs now limited to 1-3TB free traffic, feels like the end of an era.
This is only for USA, isn't it?
But, really? What are you doing, that your VMs need more than 1TB of data per month? That's a huge amount! That's 23MB per minute, continuously.
If you have a website with that kind of reach, the prices seem entirely reasonable.
I agree it is still reasonable.
But some examples of things that are profitable under the old regime, but maybe not at 20x the limit:
API services that consume media, whether to do some business logic specific thing or something specific, e.g. Transcriptions for videos, file conversion API, OCR API provider, etc.
If you try a video app without using WebRTC and peer traffic your bandwidth can blow up too. Even if you use something like push notifications with base64. There are lots of traps that use Bandwidth.
You can get pretty cheap servers with massive storage (2x2TB for example) and use them as backup targets.
We have about 50TB for about 500.000 users per month. Our Hetzner costs are about 2k per month. Similar setup at aws would cost us about 10 to 20k per month. No joke.
It was expected considering during the last year everyone on Twitter was shouting left and right that everyone should use Hetzner because it is cheap.
Yeah it was cheap - only because the demand was low and they were competing on price.
Now it will only go up.
Its still a really good price though.
> Until this change, customers who have used fewer resources have covered the costs, in a way, for other customers who have used much more resources.
That is utter nonsense. If the customers who are 'covering the costs' have a problem, they can move? Yet even still they are charging those SAME customers who now actually receive less resources, even if they were using them or not.
The problem with their old pricing structure is that it attracts high-utilization customers who will max out their transfer every month. But yes, they raised prices for all of us. Their pricing was so low, my guess is it was never profitable enough to be worthwhile long-term. It brought them a lot of business, some of which they'd be happier without under the old terms.
Maybe that's exactly what happened. So now nobody is covering the free loaders and they need to charge them.
> That is utter nonsense.
Hardly. Some level of cross subsidisation happens in all service of this nature. Depending on use youre either paying or receiving
Most Providers and customers just ignore it as inconsequential though.
The reasoning the gave still doesn't pass the smell test. If it's as they say, then they wouldn't increase the price they would tariff the traffic. Like other providers.
Don't increase prices and claim it's to help the little guy.
Probably pretty reasonable as a way to price in risk when doing business in a remote mafia state that is about to get a possibly very volatile government.