If I understand you correctly, you say that setting up a server isn't hard, but then you seem to imply that it's hard enough that you might want to employ a team of people to do it, which seems pretty hard to me.
Setting up a server and database is not hard. Maintaining and scaling it is. I don't want to use my valuable time on these things, so Heroku is worth the cost. People who say Heroku is expensive are not in their target market -- businesses who want to avoid their team unnecessarily spending time on infrastructure instead of product.
Heroku is much, much cheaper than 1) me spending my time on these things, or 2) hiring a capable engineer to do it for me. It's build vs buy. I'd rather buy.
But that's not to say I'm not interested in a Heroku alternative. But it needs to be a *real* alternative. :)
So I'm not sure that I follow you.