Every team I've worked with hits the same argument about three months after shipping something on top of an LLM: "Should we still be paying per token, or should we just self-host?"
And it's always argued on vibes. Someone read a blog post. Someone else got burned by a GPU bill once. Nobody's actually done the math. So here's the math — or at least the shape of it.
The API wins right up until it doesn't
Paying an API has one killer advantage that people forget to give it credit for: you pay for exactly what you use, and nothing when you're idle. No GPU sitting warm at 3am doing nothing. No serving stack to babysit. If your volume is low or spiky, this is basically unbeatable, and honestly you should stop reading and just use the API.
Self-hosting flips that. You take on a mostly fixed cost — the GPU (rented or amortised) plus the very real human cost of running it — and in exchange, each extra token is almost free once you've paid for the box.
