You're either ignoring the cost of engineering time, or you're underestimating the engineering time your clients might spend running their own instance. With t

You're either ignoring the cost of engineering time, or you're underestimating the engineering time your clients might spend running their own instance. With the numbers you give, running your service themselves would save them $150/yr. That's 2-3 engineer hours per year to keep it running, keep it updated, keep it secure, and troubleshoot if things go wrong. If they spend more than 2-3 hours per year, they spent more on the engineering time than they would have paying you. This is even ignoring questions like "can that $7 heroku box handle the same load as your $19 plan?" or "do your clients even know how to set up/manage Heroku?" Of course, people underestimate this effort/its potential complications, and overestimate their own abilities, so they often think this is a worthwhile tradeoff, but in reality it's usually not.