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Database hosting is often the costly and complex part of hosting. I have played with the idea before of setting up a Hetzner VPS with 2CPU/8GB RAM and harden the it and setting up backups and then use it for all my databases. I don't have performance/scalability concerns, but I would be concerned with reliability and potentially security.

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I pay for a single RDS instance with daily backups and just shove all my dbs into that.

Same, but with DO managed Postgres. One place to do backups, monitor and easier to move apps between hosts if needed if they just talk to an external database instance not hosted on the same server.

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