You might be right about what the pricing communicates. As a bootstrapper, I do object to the notion that $1200/yr is an untenable expense. I expect that number is less than what Patrick "5 hours a week" McKenzie spent on hosting while still a Japanese salaryman.
But: you're probably right that this pricing says, "if you can't afford to cough up $1k for your hosting, we're not a good fit for you". And I think that's probably a very very smart move. This is a low margin, support-intensive sector. A startup entering it should probably not make things harder for themselves than they need to.
Total agreement regarding segmentation, by the way. This is why it costs nothing to have me write an email and five figures to copy that email into a PowerPoint. I do not do this because PPT is hard; I do it because if you need a PPT from me you're a Serious Business and I charge to match.
See, Heroku is the elephant in the room. Initially, I saw DotCloud as the Heroku for Django (and other platforms), but the pricing, and how you describe it, says otherwise. There unfortunately appears to be some market confusion, as they seem to be targeting a different market segment than many people thought. The challenge is for DotCloud to educate the market that they aren't necessarily a Heroku-type service, but something else that justifies a $99/month price.
But sure, maybe $99 is too high for real hosting. My only argument is that there shouldn't be a super-cheap option for running the "Free" account with a custom domain.
And if you really can't afford it, get in touch about your project, we'll probably give it to you for free anyway.
