For now, paying for a VPS is relatively affordable. But as was noted elsewhere, moderation is the real cost. Last week’s terrible antisemitism and racist trolling and spam is a case in point. It led me to raise sign up effort (registration application etc). That has kind of eliminated local-instance spam by 99% and the random ones are existing users, who we kick out as they post spam stuff. The main problem now is in federating with instances that can be hijacked by such trolls and have their content propagated all over. Nothing we can do about that so far as far as we want to maintain existing federation bonds. The moderation cost is still significant as we have to take them down manually.

In the end, I think this is an ideal set up for our instance. We are not after numbers. In fact, we want to have a small number of users as a sustainable path, and hopefully support other individuals and organizations spin up their instances.