I'm totally with you on the core vs. context question, but you're missing the nuance here.
Postgres's operations is part of the core of the business. It's not a payroll management service where you should comparison shop once the contract comes up for renewal and haggle on price. Once Postgres is the database for your core systems of record, you are not switching away from it. The closest analog is how difficult it is/was for anybody who built a business on top of an Oracle database, to switch away from Oracle. But Postgres is free ^_^
The question at heart here is whether the host for Postgres is context or core. There are a lot of vendors for Postgres hosting: AWS RDS and CrunchyData and PlanetScale etc. And if you make a conscious choice to outsource this bit of context, you should be signing yearly-ish contracts with support agreements and re-evaluating every year and haggling on price. If your business works on top of a small database with not-intense access needs, and can handle downtime or maintenance windows sometimes, there's a really good argument for treating it that way.
But there's also an argument that your Postgres host is core to your business as well, because if your Postgres host screws up, your customers feel it, and it can affect your bottom line. If your Postgres host didn't react in time to your quick need for scaling, or tuning Postgres settings (that a Postgres host refuses to expose) could make a material impact on either customer experience or financial bottom-line, that is indeed core to your business. That simply isn't a factor when picking a payroll processor.
Ignoring the fact that the assumption that you will automatically have as good or better uptime than a cloud provider, I just feel like you just simply aren't being thoughtful enough with the comparison. Like in what world is payroll not as important as your DBMS - if you can't pay people you don't have a business!
If your payroll processor screws up and you can't pay your employees or contractors, that can also affect your bottom line. This isn't a hypothetical - this is a real thing that happened to companies that used Rippling.
If your payroll processor screws up and you end up owing tens of thousands to ex-employees because they didn't accrue vacation days correctly, that can squeeze your business. These are real things I've seen happen.
Despite these real issues that have jammed up businesses before rarely do people suggest moving payroll in-house. Many companies treat Payroll like cloud, with no need for multi-year contracts, Gusto lets you sign up monthly with a credit card and you can easily switch to rippling or paychex.
What I imagine is you are innately aware of how a DBMS can screw up, but not how complex payroll can get. So in your world view payroll is a solved problem to be outsourced, but DBMS is not.
To me, the question isn't whether or not my cloud provider is going to have perfect uptime. The assumption that you will achieve better uptime and operations than cloud is pure hubris; it's certainly possible, but there is nothing inherent about self-hosting that makes it more resilient. The question is your use case differentiated enough where something like RDS doesn't make sense. If it's not, your time is better spent focused on your business - not setting up dead man switches to ensure your database backup cron is running.
> Like in what world is payroll not as important as your DBMS - if you can't pay people you don't have a business!
Most employees, contractors, and vendors are surprisingly forgiving of one-time screw-ups. Hell, even the employees who are most likely to care the most about a safe, reliable paycheck - those who work for the US federal government - weren't paid during the recent shutdown, and not for the first time, and still there wasn't some massive wave of resignations across the civil service. If your payroll processor screws up that badly, you fire them and switch processors.
If your DBMS isn't working, your SaaS isn't working. Your SLA starts getting fucked and your largest customers are using that SLA as reason to stop payments. Your revenue is fucked.
Don't get me wrong, having working payroll is pretty important. But it's not actually critical the way the DBMS is, and if it was, then yeah you'd see more companies run it in-house.