Free, open source software is available that is suitable for email marketing. It is important to be aware of the limitations of free email marketing software. Most open source alternatives to commercial email packages will not boast the same speed and features, but can be used for basic newsletter and one-time-offer marketing.
The biggest gun in the open source email marketing pantheon is OpenEMM. This is the free, open-source version of Agnita's commercial email marketing platform. It features a full suite of CRM and list management tools, event-driven email capabilities, click tracking, open tracking, split testing and grouping, bounce processing, and a full featured editor. This gives you all the email marketing features you would expect from a commercial package costing thousands of dollars for free.
While it is full-featured, all the features come at a cost. Administration and installation of an OpenEMM system is not for casual users. It requires a solid working knowledge of SMTP, and the ability to and install and administrate a full-featured Windows or Linux server with the Java platform available. This precludes most shared hosting, and may even be difficult with a managed dedicated server.
A reasonably powerful alternative for shared or managed hosting is PHPList. This venerable package should work in any LAMP, WIMP or WAMP server configuration, including most shared hosting. In fact, many shared hosting providers have PHPList included in Fantastico or other application installers. In this case, PHPList can be a plug-and-play solution for newsletter or one-time offer list marketing.
The downsides? Bounce processing is not sophisticated, but relies on message parsing, which is not as reliable as VERP bounce processing.
Pommo is a similar package, also available via control panel installation with many shared hosting providers. Pommo is easier to use, with a simple, well-designed interface. It is primarily intended for sending newsletters; there is no integration of tracking whatsoever. List management capabilities are minimal. Scalability may be an issue. PHPLists boasts capabilities into the hundreds of thousands of subscribers. Pommo is suitable for smaller lists.
Finally, if you have a Wordpress blog, the simplest and most powerful solution might be a plugin away. Mailpress has an amazing array of features available, and as it's a Wordpress plugin can be used in combination with any Wordpress blog. Of course, as a plugin, it offers a look and feel that Wordpress users will be comfortable with, and tight integration with Wordpress is possible, such as automatically sending blog posts via email.
There are cavaets to keep in mind with Mailpress. Although Mailpress boasts a sophisticated feature set, it is still just a plugin, and needs to operate within the confines of Wordpress. This may have plugin compatibility or performance ramifications that are difficult to anticipate. The tight integration with Wordpress can also be a disadvantage; Pommo and PHPList are general-purpose mailers, with the flexibility of a standalone application. Mailpress is obviously joined at the hip with Wordpress, and conforms to Wordpress concepts and metaphors, making it potentially more difficult to administrate.
If open source software meets your mailing needs, there is no reason to spend thousands of dollars on a commercial mailing platform or incur monthly fees from an email service provider. On the other hand, if you require advanced CRM functionality, large lists, and sophisticated tracking, open source email applications will prove inadequate.