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>Our use case does not really need instant scaling all that much since we're a B2B business [...] His arguments are [...] we will scale to more production machines it would be easier to just start another VM than wait for a new dedicated server.

For most B2B businesses offering a SaaS product, I don't think on-demand variable "web scalability" is the decision framework for AWS/Azure/GCP.

Instead, it's really about faster product development iteration. If new SaaS product features can be delivered to market faster because it can leverage many of the higher-level managed services in the AWS/Azure tech stack portfolio like DynamoDB or Cosmos DB -- without your 5 dev team building the equivalent tech stack from scratch, that's when paying the profit margins to AWS/Azure are worth it.

In other words, your CTO and the devs have to look at your future product roadmap and see which features would require extra developer costs in re-inventing aspects of AWS/Azure that may negate the cost savings of a "dumb" IaaS like Hetzner.

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