Start with the software
Vanilla and Paper servers generally need less memory than large Forge or NeoForge packs. Use the recommendation shown in the configurator as a starting point, then leave room for exploration, plugins and concurrent players.
When to move up
Consider a larger tier if memory remains near its limit, the server is repeatedly killed for exceeding memory, or a modpack update increases its requirements. A high player slot limit does not guarantee that every workload will perform the same way.