Not entirely. There's room for improvement on pricing. But you have to employ a culture where being cost-effective is engrained in the company.

I like to quote the pizza chain Lil Caesar's when I discuss this, which is why my company I am building is able to provide the same core features but cost less. We look for ways to save on operational costs and resources ourselves so that we can pass the buck down to our customers without compromising on quality.

But heroku charges a pretty big multiplier over the underlying AWS resources and does a pretty large volume (I don't know if the numbers are public, so I could be wrong, but my sense is they have a LOT of customers).

It seems likely to me that their prices are more about "what the market will bear" than about what they need to support the business. There's nothing wrong with that, nobody's forcing any customers to pay for heroku, the customers think the value is there.

It just makes me surprised that nobody's competing effectively on price. Which may mean I'm wrong and you are right. But there could also be other explanations.

If they HAD competitors offering the same thing, we might think that the competitors were forced to compete on price so all maybe were charging the least they could to support the business. At least that's the theory. But that they have no real competitors offering quite what they're offering... when what they're offering has been so successful... is surprising to me.

Maybe it's just hard to create something as high-quality as heroku Or to do it without funding, or to get funding for it?