> the marginal cost of 2, 4 or 8 cores and 4, 8 or 16GB RAM isn't much when we buy our own hardware

this is the crux of it all. RENTING bare metal (eg from hetzner) is 10x cheaper than aws ec2. So, I can only imagine how much cheaper it is when you buy the hardware directly.

At a very rough estimate with Hetzner's calculator, which doesn't have exactly the systems I most recently bought, our servers cost about 18 months of renting the closest Hetzner dedicated server.

Add to that rackspace costs, staff time doing installation (or cost of remote hands etc). I don't have our figures for rackspace costs, but staff time is fairly low — an hour or two when the server is purchased and later thrown out, and maybe the same to replace a HDD at some point in the 5-8 years we keep it.

Also add the time to get competing quotes from Dell, HP etc and decide on the configuration, but then a similar process is needed to choose from Hetzner vs their competitors.