The hardware cost is the same. 128 * $5 == $640, they charge a fixed $10/GB RAM.
They do have higher support costs, credit card transaction fees, and ip address costs. They would probably lose money if the primary users of the $5/month plans were doing punishing things like video encoding, but my guess is the vast majority are no load users.
I once read someone that was doing hosting, said the larger plans were actually more challenging. 4 high volume forum sites on the same host would cause IO contention. Digital Ocean has SSDs and they mix and match sizes on the physical host, so it should be less of a problem for them.
They do have higher support costs, credit card transaction fees, and ip address costs. They would probably lose money if the primary users of the $5/month plans were doing punishing things like video encoding, but my guess is the vast majority are no load users.
I once read someone that was doing hosting, said the larger plans were actually more challenging. 4 high volume forum sites on the same host would cause IO contention. Digital Ocean has SSDs and they mix and match sizes on the physical host, so it should be less of a problem for them.