A long term contract is the perfect comparison because it's a similar service, you know you'll be using the capacity so you pay up front to have it 'reserved' and in exchange receive reduced prices. Normally with EC2 you'd buy 1 instance and then spin up 8 more on demand, with hetzner you just buy 9 machines and pay the same price you'd pay for 1 AWS machine. When your load spikes you've got 8 extra machines to handle the load. Voila, "auto scaling".
I don't know very many businesses that need to scale beyond 8X capacity for an afternoon. If you really think you need the EC2 API to add and remove machines on demand just install UEC.
It may be comparing apples to oranges but I can tell you that when I need fruit if apples are a $1/lb and oranges are $9/lb I buy apples.
Personally, I think the XS29 @ $299 per month would have been a much better comparison, with 15 drives you could push through some serious IO which would make it suitable for running a database on.
