It's a good point: a cloud provider could choose to try to under-provision disks instead. The problem though is that (some) disks are local to the machine; it'

It's a good point: a cloud provider could choose to try to under-provision disks instead. The problem though is that (some) disks are local to the machine; it's not easy to move physical hard disks around when the calculations are wrong (and if you have to get it right on a per-host basis, it's more likely to go wrong). It is however easy to move chunks of data around, particularly if you use something like erasure coding to give you a huge amount of flexibility. In short, your way is a good alternative, but my guess is that buying the full capacity and selling the surplus is probably roughly cost-equivalent, and considerably less likely to end up with you not being able to sell the full capacity of any given host.