That's not unusual. First off, sometimes 1000 extra dollars will get you a ton more compute you need so why not and second, on prem tends to be extremely inelastic so you buy a ton of compute because you never know when compute requirements change.
If we're talking on the scale of $1,000s then it's cheaper to run on-prem than in the cloud. It's really easy to spend $1,000 on managed kubernetes and have very little actual compute.
