Hosted APIs charge by use. Self-hosting charges for capacity whether used or not, plus the people to run it. The right choice depends on volume, steadiness and constraints.
Include in the comparison
- API: per-token cost at your real volume, rate limits and provider dependency.
- Self-hosted: hardware or rental, utilization, engineering and on-call time, upgrades and security.
- Constraints that override cost: data residency, latency, offline operation, regulatory rules.
How to decide
- Measure your actual traffic pattern: steady or spiky.
- Test candidate models on your task and compare quality first.
- Price both options on the same workload, including staff time.
Many organizations land on a mix: hosted APIs for variable and complex work, self-hosted for steady, sensitive or high-volume tasks.