Things like this pricing difference between VM and App Service which run on the same dedicated hardware, not sure why its still 2x the price? http://i.imgur.com/KgNotp6.png
Talk to a Microsoft rep. There are several categories of Microsoft customers. One category is enterprises using Microsoft products internally. Another is software/SaaS companies using Microsoft products to develop or deliver a product. The prices you see are for that first group. The prices for the second group tend to be _heavily_ discounted.
Shoot me a message (email in profile) if you have questions. I do not get heavily involved in licensing discussions, but can try to answer more questions if you have them. If you want to build a SaaS on Azure, though, you are the customer Microsoft wants - take advantage of that.
with App Service you're basically paying for a managed server (patched etc.) and a host of capabilities that VMs don't have out of the box (autoscaling, monitoring etc.)
We love Azure, and we would like to use it for all our web projects, but it is hard to justify it with the current pricing.