if it’s free than your the product

Providing a basic email service with small storage/traffic allowance costs in the order of cents per UserMonth.

From the business perspective, giving something for free can basically be considered a marketing (advertising) expense – essential for building a successful business.

If you get the free storage/traffic/feature allowance in the sweet spot, it’s useful enough that free users stick around and you get a good reputation, yet juuust constrained enough that users who want that little bit more convenience or features will consider a paid plan. And word-of-mouth advertising is super effective – all the happy users will recommend your paid service to family/friends/acquaintances who happen to be looking for a service provided by them.

Another benefit free services can provide to the business (especially in early stages of developing a system/business) is real-world testing at scale of your infrastructure and processes with real users.