I'm of course lacking specifics, but it sounds like this take-away might not be the best solution?

A better approach to that scenario might be to split into base load and peak load infra, similar to how we do it with the power grid.

Base load could be an actual metal server that you pay x amount of money for and is fully yours, with peak load being handled by autoscaling dynamic stuff.

Both things being on a fixed budget, if that budget would run out, the service would not degrade as in "grind to a halt" but as in "slows down", which is probably not a downtime as part of a communicated SLA.

My point being that cloud and on-demand is useful, but a hybrid approach might in many cases make more sense. Though of course YMMV. I do not know what the requirements of your product are.