Comparing Office 365, then yes it is very very costly. Such services should earn money at scale. The basic plan should cost around 5$/year.
Your criticism regarding functionality might be true, but there is no reason for competitors to charge more.
I'm just a simple email user -- 50 emails per week -- and I don't keep them in my inbox. As soon as I'm done with them, I delete them. A simple 50MB inbox is sufficient for me. I just need an ad-less mail box. For me anything beyond 5$/year is expensive as hell.