The traffic costs of a $500 server vs the price of ondemand pricing for an hour or two would still be in favour of the $500 dollar server.
why are we even talking about a $500 php server, that is like the 0.01% of websites, You either need really specialized requirements or to be in the top 1,000 websites to need anything near what you can get for $500/month.
That was an arbitrary number, but I don't think that is true. It doesn't take much functionality before you will start needing the power of a server in the $500 range. Many apps today do a lot more than serve up static requests. I run a php server with just a few thousand daily active users and we need a $250/mo server.
You have your app, and database, and then your logging, tracing, and tracking stack and It all starts adding up pretty quickly.
For most projects, that $4 server is great and what I would prefer. But where serverless can excel is an application that has very spikey usage.
If your $4 server gets hit with spikes of usage that would require a $500 server for an hour once or twice a month, you might be better off with serverless, rather than paying $500/month to have a server that big all the time.