Often when I read cost comparison of cloud-vs-self, it's "get everything with a click on AWS" vs. "set up your physical data center from scratch". The (plausible) argument is that on-prem setup requires substantial effort which offset the mark-up of AWS etc. 

However, a middle ground is bare-metal hosting: abstracting the physical work while still saving money (50-80% reduction) vs. AWS. 

Is there a reason not to use such setup? Is there an inherent/practical issue with bare-metal hosting/colocation  in general. 

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We think to move away from AWS mainly due to lack of benefit from the increased costs, and are looking for bare-metal as our approach.
If you are just using AWS to run VMs then it is always going to be more expensive than other models. You have to transition to services instead of servers to see any cost savings.