That pricing is totally feasible. I've run large Exchange implementations where a large mailbox costs around $50/year, and a small webmail costs around $20-25.
That was a few years ago, based on Exchange 2007 and 2010 -- meaning using fibre channel SAN for storage, tape backups, F5, etc. If you implemented today with Exchange 2013, you'd probably be able to cut costs 30% or more. There are a ton of costs areas embedded in there.
If you're operating a simple (ie. no calendar, no hooks into other services) service with custom code, open source infrastructure, and no (or minimal) external licensing, you can absolutely offer a $5/year 100MB mailbox profitably. They are making higher margins on the enhanced plans as well.
Probably should have mentioned free alternatives as I've signed up with Google Apps for business prior to December 2012. Also, it's still free if you use Google Education.
So, any free alternatives to Google Apps for my domain?
That was a few years ago, based on Exchange 2007 and 2010 -- meaning using fibre channel SAN for storage, tape backups, F5, etc. If you implemented today with Exchange 2013, you'd probably be able to cut costs 30% or more. There are a ton of costs areas embedded in there.
If you're operating a simple (ie. no calendar, no hooks into other services) service with custom code, open source infrastructure, and no (or minimal) external licensing, you can absolutely offer a $5/year 100MB mailbox profitably. They are making higher margins on the enhanced plans as well.