In SOME cases, it is cheaper than on prem. If you need a lot of compute power occasionally, it can be cheaper. If you actually scale up and down according to the load (which a lot of companies do not do), it might be cheaper. But a large amount of companies don't fall in those cases or don't do it efficiently. Some spend in a year the same amount they would have paid for on prem servers they would have kept 5 years or more.

Cloud providers offer other things like multi regional redundancy, which can be hard to achieve for smaller businesses.