Part of this value is that their service keeps running. That is, you could set-up their service yourself (a process which expects to be pinged periodically, and emails/SMSs you if it isn't), but what if that service itself fails? (who shall watch the watcher)
It's not perfect: your periodic task might ping them, but not work fully (e.g. backup script runs, but didn't actually backup). You need some kind of verification (test-code) for your tasks that must succeed before you ping them. This is something they could help customers with - using blogs, articles, case-studies, and especially example code for common tasks (e.g. backup) etc. This would really help people (and incidentally publicize their service). Also, I love this copy: "Once you use it, you realize you've been doing it wrong for years."
What I will say is that I probably would want to be able to set up 3-5 snitches before I'd feel comfortable committing to setting a bunch more up, which incidentally, is also the point I'd be willing to start paying money.
It is very easy to be notified when something happens (for example, MAILTO in cron) but it's hard to know when something DOESN'T happen, especially if you work on a lot of sites.
There are plenty of ways to be notified when something doesn't happen if you are willing to use a little elbow grease... we use one of them to make sure DMS itself is working properly.
The right price is the price your target consumers are willing to pay. And if like another commenter you are doing to build it yourself instead of forking $19, you obviously are not the consumer. (and neither am I - I'll stick to cron :-) !)