Yes, scale is a huge factor creating the margin. I'm actually on a team that is responsible for guiding the cloud part of the company in what hardware to buy (a

Yes, scale is a huge factor creating the margin. I'm actually on a team that is responsible for guiding the cloud part of the company in what hardware to buy (among other things), and I've seen the purchase orders; it is indeed incredible the deals one can cut when one buys hundreds of thousands of things. However, whatever deal one may be able to cut there must be accounted for in terms of the rest of COGS, including salaries, taxes, and everything else. The company charges well above COGS in order to turn a sizable profit, and to give some room to compress the profit margin should another cloud provider decide to pressure them on prices. Basically, the cost would be comparable if you invoiced yourself for your time setting up your homelab, and had to pay your spouse a fee for taking up a perfectly fine closet with noisy blinking lights.