Is self-hosting cheaper than an API subscription or not?
Self-hosting is almost never cheaper at low to mid volume. API providers spread hardware over millions of customers, which makes them cheaper per token than an owned GPU sitting idle 80 percent of the time. Self-hosting wins at high volume, or when data location is a hard requirement worth paying for.
Try this first
- 1Tally your current monthly API bill. Below a few hundred euros per month, self-hosting rarely pays. Above a few thousand it gets interesting.
- 2Cost out self-hosting fully: GPU cloud instance (A100 or H100 per hour), 24x7 vs business hours only, storage, networking, monitoring, and ops hours for maintenance. A cloud GPU runs roughly 2 to 4 euros per hour.
- 3Compute the break-even: if you burn 10 million tokens per day (heavy internal app), self-hosting can win. At 100K tokens per day, it does not.
- 4Add risk: an owned model ages in 6 to 12 months, ops work eats engineer time, and GPU cloud can get pricier when capacity tightens. API vendors absorb that.
- 5Hedge: data-sensitive flows on EU-only API or a local model, general work on the cloud API. It is not either-or but a mix by data classification.
When to bring us in
Want us to model the break-even for your volume and data requirements, we can put the two scenarios side by side.
See also
- Can I paste a customer file or email into ChatGPT?Depends on the account and settings. Free ChatGPT and a Team tenant behave very differently from what most people assume.
- I want a one-page AI policy for my teamA real one-pager beats a thick document nobody reads. Four headers and concrete examples.
- How do I tell if an AI answer is made up?Models sound confident even when they are wrong. A few habits catch most mistakes.
None of the above fits?
Describe your situation below. We pass your input plus the steps you already saw to our AI and return tailored next-step advice. If it's too risky to DIY, we'll say so.
Or skip the DIY entirely
Our Managed IT clients do not look these things up. One point of contact, a fixed monthly price, resolved within working hours.