I'm intrigued by Heroku (and EY Cloud), but the thing that really freaks me out is how they charge for every little extra thing. I love the idea of a turnkey solution for Rails deployment and cloud scalability, but for me personally I don't think I would do a startup on it because the value proposition is squeezed from both sides.<p>On the low-end I can get a VPS for $10-$20 month and get a Rails app up and running for a significant number of users with just that modest outlay. I can install SSL and any software I want and have a predictable amount of resources to play with. Yes, there is some sysadmining overhead, but setting up Nginx w/ passenger is like an hour of work once you've been through it a couple times, and similarly a lot of the add-ons that Heroku charges a monthly fee for are just a small one-time time investment. When I'm trying to bootstrap something really small the last thing I want is ramping up a significant recurring cash costs just to run some open source software that is really not hard enough to setup or maintain to justify recurring costs.<p>On the high-end when I'm using a lot of server resources, I'm paying a growing premium for a given amount of resources. Now don't get me wrong, it's nice to be able to magically adjust for traffic spikes, but if I have a consistently high amount of traffic, once again I'm paying a high recurring cost for actual resources that are a fraction of the cost, <i>especially</i> if I need any add-ons which are not inherently resource-intensive—maybe I'm actually just paying for SaaS of essentially open-source components. Actually I have this problem with EC2 and S3 in general to some extent, though much less so than with Heroku because the markup is lower and I've still got a large degree of control.<p>The benefit of Heroku is that they maintain an up-to-date and well-tuned Rails stack w/ add-ons on top of EC2. There is definitely value there. But in all cases there is this downside of overhead and flexibility. The clincher for me is that ultimately Heroku may end up not supporting something I need that would be trivial open-source stuff on any UNIX VPS. At that point I will need to migrate off of Heroku and all those supposed sysadmin costs hit me full in the face all at once rather than being amortized over the life of the project. Maybe I'm just turning into a cranky old man (at 31!), but VPS or dedicated servers still seem like a better value considering all risk factors. If I had VC money and was trying to ramp something up really fast I might reconsider.