Came here to say the same. I work in the cloud industry and see this all the time. Moving up the stack costs more in cloud costs, but less in human costs and time to market. Sure he is spending $1000 a month on this setup, but compared to the time and cost involved in managing machines and implementing something like Apigee it is not a lot.

This said, of course the optimal choice depends on your use case and profile. In some instances Lambda wins, in others EC2, in others something middle ground like Beanstalk or Fargate.