Bottom line
Running AI locally vs using APIs — we break down the real costs of self-hosting vs using OpenAI, Anthropic, and Google APIs.
The Tradeoff
- API: Pay per use, no maintenance, latest models
- Self-host: Control, no per-request costs, but hardware + ops
API Costs (cloud)
| Model | Input/1M | Output/1M | 100K requests/mo |
|---|---|---|---|
| GPT-4o | $2.50 | $10.00 | $625 |
| Claude 4 | $15.00 | $75.00 | $4,500 |
| Gemini Flash | $0.30 | $2.50 | $140 |
Self-Hosted Costs (one-time)
| Model | GPU Needed | Hardware Cost | Monthly Electricity |
|---|---|---|---|
| Llama 3.3 70B | A100 80GB | ~$15K | ~$200 |
| DeepSeek R1 671B | 8x H100 | ~$100K | ~$1,500 |
| Qwen 2.5 72B | A100 80GB | ~$15K | ~$200 |
Break-Even Analysis
Self-hosting makes sense when:
-
50K requests/month for premium models
- Need data privacy (can’t send to API)
- Need custom fine-tuned models
API makes sense when:
- Starting out
- Variable traffic
- Need latest models
Our Recommendation
- Start: API (pay as you go)
- Scale: Evaluate self-host at 100K+ requests
- Privacy-sensitive: Self-host from day one