I'm sure they have spreadsheets and math to back this up, and I'm going to wager that they decided that less customers in a higher tier is beneficial. The smaller customer base is not only made up for by the higher prices, but also the lesser overall customer acquisition costs and the typical lower cost to support this smaller group of customers, lots of whom may have staff of their own to field some of the basic support questions, before hitting up GitLab's support team.
But it _does_ make me sad that there's just no step in-between. I don't need to be a complete free-loader, but you quickly exceed the 5-user limit of the Free plan, after which $12x12=$348 per user/year is a steep jump up, for which I wish (and have pleaded with them) there to be an intermediate option.