I'll repeat what I said above. It's for availability (aka I don't want my customers screaming at me if the machine goes down). And no , scaling out was not our first solution, scaling up was. I have considered going bare metal so many times, but the number of things we need to build/manage by ourselves to function is too much right now.

Hopefully when we can afford to do it, we will.

In practice, until you're at a certain scale, software bugs are more of a threat to your availability than hardware failures or maintenance downtime, and the cloud does nothing for you there (in fact, the additional complexity is likely to make it worse). Modern hardware is pretty reliable, more so than a given ec2 instance, for example.