Don't compare the cost of Lambda per 100ms to the cost of a virtual machine per month since Lambda only charges as you use it. You'd have to have the CPU pegged at 100% usage to make that a fair comparison. Mind you even if you took the cost of Lambda per 100ms and multiplied that out for a monthly cost it's still about the same as an EC2 instance of the same capacity. (Eg. if I had a 1GB Lambda running for a total of 1 month compute time in the uswest2 region it'd cost $32).
Oh and the cost of API gateway is $3.50 per million requests and the bandwidth cost is completely negligible for us (we redirect to the resized image hosted on S3, fronted by cloudfront). We get 3 million image resizing requests a day. That's over 30 per second. It would take a lot of VMs to handle that (image resizing isn't trivial). Or we could just pay the whole $11.50.
I have to ask have you done the math? Lambda beats everything in cost except for some funky solutions using unreliable and less scalable lowendbox.com services.