Originally published on AI Tech Connect.
The breakeven nobody calculates before they self-host Most teams that decide to self-host an LLM do it for the wrong reasons. They self-host because the API bill arrived and felt large, or because a board member asked why a strategic capability sits on someone else's infrastructure, or simply because running your own model feels more like engineering than calling an endpoint. These are emotional inputs, not numerical ones, and they tend to produce a decision that looks bold and costs more than the thing it replaced. The decision is, for the most part, arithmetic. There is a token volume at which owning the hardware becomes cheaper than renting tokens, and below that volume self-hosting loses on cost almost every time. Layered on top of the arithmetic are a small number of hard constraints…
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