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OVH plans to increase the prices of several cloud services by roughly 10 percent. According to the French cloud provider, the change is necessary due to rising inflation and energy prices.

OVH is one of the largest European cloud providers. The organization provides private cloud, public cloud and web hosting services. OVH’s servers are a popular alternative to the infrastructure of large providers like AWS and Microsoft.

Founder Octave Klaba and CEO Michael Paulin revealed that OVH struggles with rising inflation and energy prices on Monday August 22. According to the organization, France’s inflation and energy prices respectively rose 40 percent and 9 percent in July. OVH plans to pass the costs on to customers.

The cloud provider’s energy contract expires in December 2022. According to OVH, the next contract will be more expensive. Customers of bare metal servers, hosted private cloud, public cloud and web hosting services can expect price increases of roughly 10 percent starting December 1, 2022.

OVH states

“This is a significant increase that we must pass on to all the services directly related to the electricity consumption of our infrastructures”, the organization described in the statement. Klaba added that the increases apply to both new and existing customers.

The exact increases vary by service and customer. The precise numbers are unknown at this time. OVH promised to announce the details “in the coming weeks”. According to Klaba and Paulin, OVH’s services are currently relatively low-priced due to energy-efficient technology. The pair emphasized that OVH will continue to invest in energy efficiency despite the increases.

Inflation and energy

Several manufacturers and service providers announced price increases in recent months. Samsung’s chip manufacturing division disclosed increases of up to 20 percent in May 2022. SAP plans to increase prices for cloud services by more than three percent.

Inflation is rising worldwide, resulting in higher material and personnel costs. Organizations pass the costs on to customers to maintain profit margins. Energy prices rose in recent months as the supply of gas declined.

The European Union imposed sanctions on the Russian government following Russia’s invasion of Ukraine. The Russian government responded by cutting gas supply to European member states. Demand for energy grew faster than supply, causing prices to rise.