I can (have) rack 2 x 1U top spec Dell servers (12 2.8ghz cores, 32gb mem, 4tb hd) with 3 year hardware warranties (next day), in separate locations with 1000mbps pipes at a grand cost of ~£200 a month over a 3 years period.

The equivalent with yourselves (max 8cores and 1tb hd) is well over £800 .. I've not spent much time looking into the advantages of cloud servers but can you at least give me a quick list of reasons you think your service is worth so much more?

I'm guessing the key is only spinning up what you need. Doing a quick calculation of peak times for my services, which is about 12 hours per day not including weekends the cost drops to about £300 per month. But this doesn't take into account the overhead of having to plan and implement something that can spin up resources when unexpected traffic hits.

I can see the value in your service for low value customers whose blogs suddenly hit the front page of HN or reddit for example .. but the cost of servers and rack space is so low I find it hard to justify the massive cost involved in cloud servers when you can just rack stupid amounts of computing power for such a low cost yourself.