If you are treating cloud services as purely an apples-to-apples cost comparison then you've missed the point of deploying to (insert your favorite cloud provider here). What you get with cloud services is flexibility and speed. If the OP wants to undertake a new project that they have no idea of the resulting workload or popularity, they need to guess about the required underlying infrastructure. If you miss on your guess, you can either kill momentum for that new project, or you can wind up overprovisioning and paying way way too much on hardware.
I'm not sure how quickly their colo provider could spin up new hardware for this hypothetical new project, but you can assume it's not the dynamism that you get from deploying to an elastic cloud environment. Again, you're paying a premium on day-to-day costs in order to have this freedom to create and deploy. That's what cloud infrastructure is about.
To give an example -- I have a very-CPU-heavy workload that started its life out on prem. As more and more customers signed up, I would go through tiers of adding more hardware to a rack, where my overall margins looked like a sawtooth waveform when I would provision more hardware. I started out moving to EC2 and then finally to ECS/Fargate. If I want to spin up a new piece of functionality for my users, I don't need to provision any new hardware, set out any real new infrastructure, or do anything that you would consider prework in order to get that new functionality deployed. My margins are much much more predictable and I get faster time-to-market on feature development. That's what you're paying the premium for, that ability to just move faster.