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From what I've read if you had a single instance of a lambda function running 24/7 it's still cheaper than the micro EC2 instance. You have warm-up time on initial requests if the functions been idle for awhile, but otherwise the response time is fairly quick <25ms and it scales up with your traffic directly. It's cheap for a web application served primarily from CDN with serverless for backend logic and easy entry to using other AWS services with secure access per function. Starting a web app through serverless would be insanely cheap barrier to entry with serverless considering you only pay for processing time.

Whether this works well depends largely on the architecture of the application and if it's done right. You can absolutely have a serverless application that would be much better served with elastic beanstalk or ECS perhaps but to say serverless is useless or too expensive all around is not true.