The marginal costs may be low, but overall the value is in their ease-of-use, reports and analytics, and time saved in not worrying about email deliverability.

I think it depends on what features you need and how much time you want to spend on it. I recently set up their RSS to email feature, which is really cool. When I write a blog post that I want to be sent in an email campaign, I just give it a certain tag ("newsletter") and then the next day it automatically goes out to my list.

It costs a lot when you aren't sending out regular emails like Skribit. If you have a monthly subscription you can send out as many emails you want to 50,000 subscribers in a month for only like $240 dollars. It is a matter of economies of scale.

Humans are involved with approving emails to make sure the user is complying with terms, general application use support, and making sure the e-mail gets delivered. Often times customers that pay less demand more from support, creating less incentive to try to lower prices. There are less expensive competitors out there.

I'd also be interested in seeing some of the competition. Does anybody know of any relatively decent and comparable services?