As of February 25, Rackspace (News - Alert) has lowered its prices on its cloud storage, network bandwidth and content deliver services in order to better compete with Amazon Web Services and Microsoft’s (News - Alert) Windows Azure services.

Rackspace reduced its pricing by 33 percent, from $0.18 per GB to $0.12 per GB, for transferring data and content over its Rackspace Cloud network and the Rackspace content delivery network (CDN).

Current Rackspace customers won’t be able to take advantage of the reduced bandwidth pricing until their monthly bill has rolled into the new billing period. However, for new customers the entry level price of $0.10 per GB for the very first TB has not changed.

If you’re a volume user, the price declines after the first TB instead of increasing. Rackspace implemented this structure to incentivize larger customers to use more storage, confirmed by Rackspace CTO John Engates. 

The new pricing plan is as follows: the next 49 TB are $0.19 per GB; the next 150 TB is $0.085 per GB, so on and so forth.

The new restructured prices are still just slightly higher than Amazon Web Services (News - Alert) S3 or Google when comparing storage costs. But a recent report recites Engates’ point that “Rackspace, while slightly higher, uses a simpler pricing model than some of its competitors and contains no "hidden" charges, such as a fee for hard-to-predict calls to the storage API or I/O charges.”

Microsoft’s content delivery network charges $0.01 for every 10,000 transactions on the network and $0.15 per GB for each GB of data transferred from a United States or European location into the network. Amazon charges $0.12 per GB for the first 10 TB’s for data transfers into its CloudFront service in the United States. It also charges $0.0075 for every 10,000 HTTP requests.

Engates said that Rackspace doesn’t impose such charges.