It does require people with different skills to run it, which has to be taken into account.
Perhaps one thing that on-prem is bad at is efficiency: historically, companies often have too much capacity, mostly to cover for peaks of activity, but this leads to lower average server utilisation.
If you're starting a new Rails app and live in the EU, the optimal strategy is pretty clear:
Get a 64-thread box on Hetzner for 250 euro a month, allocate 20% of it to the DB, 40% to web, 40% to bg, then just forget about scaling until you're making money hand over fist.
At a certain point, self-hosting is so much cheaper than PaaS that you can way overprovision your server and not worry about it until you're making serious money.