Gregory's Server@dansup why not both? Fully hosted instances appeal to a different crowd vs the ones who are concerned about total data sovereignty and know how to spin up a VPS or compute instance and administer it.
That said, I would think your idea is more appealing to the segment of people who use the Fediverse in general. I'd like to suggest being able to set everything up with just SFTP access or some kind of API baked into the app + license key (similar to how many WordPress plugins do it).
@dashrandom I'm not so much interested in providing the hosting service itself due to liabilities and SLA, but that could change in the future.
For now, it's much easier for me to build this service that fits most use cases (established servers) and go from there!