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API vs self-hosted inference
Managed API (OpenAI, Anthropic)
- —No infrastructure to manage
- —Pay per token — expensive at scale
- —Latest models immediately available
- —Data leaves your infrastructure
- —Use for: prototyping, low-volume, cutting-edge models
Self-hosted (Ollama, vLLM)
- —Full data privacy — nothing leaves your network
- —High fixed cost (GPU servers), low marginal cost
- —You manage updates, scaling, reliability
- —Slower to access new models
- —Use for: production at scale, sensitive data, cost optimization
$0.002
GPT-4o per 1K output tokens
$0.0004
self-hosted llama3 per 1K
5×
cost reduction self-hosted
★
API for speed to market; self-hosted for cost at scale and data privacy — most orgs run both.
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