Out of curiosity, how many concurrent users could you get with a hosting setup at that price? If let's say 10% of those 1000 users were using it at the same time would it handle it? What about 30% or 100%?

Most companies don't want to host it themselves. They want someone to do it for them, and they are happy to pay for it. If it makes their lives easier and does not add complexity, then it has a lot of value.