I have heard from a staffer on the GCE team that they deploy three CPU cores for every user facing core. That might have something to do with the cost.
GCE provides significantly more reliability promises to us, from the PoV of user - As far as I know, DigitalOcean and RamNode don't provide things like no-downtime host maintenance (hell, AWS doesn't provide that)
Interestingly, the "3 cores for 1 user acing one" would explain the pricing of "preemptible" instances - which can cost as little as 1/3rd of full instance. And the main difference is that they are fully rescheduled every 24h or more often, and there's no live-migration for maintenance...
… I am now wondering if GCE runs fault-tolerant VMs. Because if it does, holy moly
Except they don't. You give up reliability and uptime and not being on oversold hosts for a tiny bit more money?? So some real world benchmarks between DO and GCE. Not the same ballpark.
I'm aware of one similar company that used to fit sixty $20/mo VPS in 1U. They were working on a couple hundred in 2 or 3U when I left (harder than you'd think), but they also have a cheaper tier now because of competitors pushing VPS down. Margins on VPS, even without oversubscribing RAM, are pretty decent once you get past the capital but they are decreasing in a race to the bottom just like shared hosting before it.
GCE seems poorly engineered if the profit margins are indeed low (normal, that is).