It's because of IP reputation and spam blocking. You can't start with a "clean" address and send mail. You need to spend some time on "address warming" to build reputation for the address before the big providers will accept mail from it.
CEO of EmailOctopus here (sending multiple billions of emails a year) so I have a bit of experience in this area.
As others have mentioned, a lot of the cost comes down to managing IP reputation and deliverability. But there's also the infrastructure needed to send emails at scale, process billions of events (bounces, opens, clicks) and pass those events back to the caller, which all needs to happen within seconds at scale. Most users also expect click tracking, which means more infrastructure, more domains to protect against blocklists, and even more due diligence on who's sending through your platform.
That's not to say most providers aren't charging too much, IMO, but it's not quite as simple as it might first seem.
That said I haven't come across anyone charging $15 for 1,000 transactional emails, as the OP suggests. Probably a typo. For comparison, SES is $0.10 per 1,000.
Email is expensive because the tacit permission of the receiver is not handled end to end.
Yes, there is actually a way to solve the end to end tacit permission problem, which involves cryptography (obviously). And yes, there is a way to make it ergonomic in a way that users could actually use and understand it well enough that the below-average user would do fine with it.
With this problem solved, all of the anti-spam stuff and all the trouble that comes with it becomes obsolete. Until this has happened, email is going to continue suck a lot.
Because of extra services. Unlike emails, which usually come with no guarantees or support, the money-sending services are protected. Even with something like EFT, consumers have 60 days in case of actual fraud or bank mistakes, and with credit cards, you are also protected from things like product non-delivery.
Those protections exist and cost money - both to pay for customer support handing those, as well as to reimburse customer when the original money cannot be found anymore.
(And related, this is one of the big problems with cryptocurrencies: most people are not happy to know that one typo / software bug means their money is lost forever. Those protections on regular baking are there for a reason.)
It was very disorienting to be reading about “Elm development” in the context of e-mail, but having it refer to the language and not the e-mail client from the 1980s.
As others have mentioned, a lot of the cost comes down to managing IP reputation and deliverability. But there's also the infrastructure needed to send emails at scale, process billions of events (bounces, opens, clicks) and pass those events back to the caller, which all needs to happen within seconds at scale. Most users also expect click tracking, which means more infrastructure, more domains to protect against blocklists, and even more due diligence on who's sending through your platform.
That's not to say most providers aren't charging too much, IMO, but it's not quite as simple as it might first seem.
That said I haven't come across anyone charging $15 for 1,000 transactional emails, as the OP suggests. Probably a typo. For comparison, SES is $0.10 per 1,000.
I wonder if you guys are using or have considered using Apache Iggy over there https://iggy.apache.org/
Yes, there is actually a way to solve the end to end tacit permission problem, which involves cryptography (obviously). And yes, there is a way to make it ergonomic in a way that users could actually use and understand it well enough that the below-average user would do fine with it.
With this problem solved, all of the anti-spam stuff and all the trouble that comes with it becomes obsolete. Until this has happened, email is going to continue suck a lot.
Those protections exist and cost money - both to pay for customer support handing those, as well as to reimburse customer when the original money cannot be found anymore.
(And related, this is one of the big problems with cryptocurrencies: most people are not happy to know that one typo / software bug means their money is lost forever. Those protections on regular baking are there for a reason.)