VPS is much more expensive because you have to do all the work to provision (either manually or automatically) the software stack you are working with, configure every new instance either, configure your deployment and testing pipeline using a CI server and using git hooks, and keep the whole edifice up and running. The time overhead is very large, and it ends up taking over as the major cost driver.

Having done most of the steps you mention above for multile clients, I'd contend the time overhead is not very large - most things can be automated, and once that is done an extra instance is just a matter of spinning up a server and deploying - also you can scale a very long way on one or two instances when the hardware is beefy enough (e.g. this website), backup, deploy, testing can all be automated. There are definitely some situations where a service like Heroku or AWS makes a lot of sense, but it can get expensive very quickly; you're trading time to setup/manage for higher ongoing costs forever. VPS is cheaper but requires some setup. That's a trade-off each company has to evaluate individually given the talent and money they have.