The problem is not pure cost with a competent team: It's that many companies can't even tell that the team they have is competent. And when the team is not competent, prices, and opportunity costs, are so much higher than what you describe. Imagine a world where adding the equivalent of a 4 core VM with 8 gigs of ram is going to take 6 months from the time a team say they need it, until it's actually available. The meetings, the arguments and other minutiae (like trying to get things installed on the server, because of course you need to play telephone games to get a single command run in a server) make the costs of the server look small.

And those companies are in situations where either people have no idea that their teams are performing badly, or lack the political will to do something about it. Adding the services in AWS is just easier, and might be worth every penny.

When you go to a high performing firm and explain the procedures and decisions of a low performing one, people think you must be lying, but it's true: Broken IT departments are everywhere in enterprise companies, and paying double of what a good team would take to do the right thing is a bargain, given that they can't even get a whiff at a good team.