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hosted api or a $290/mo gpu box for 2.4m tokens a day

You are missing utilisation, which is the whole argument.

2.4M tokens a day spread evenly is about 28 tokens/second sustained. A 24GB card running a quantised 7-8B model with proper batching will do many multiples of that. So you would be renting a machine that sits idle most of the time, and you pay for idle at exactly the same rate as work.

The hosted API charges you for tokens. The box charges you for time. Self-hosting wins when you can keep the box busy - which means either much higher volume, or bursty work you can queue up and run flat out for four hours a night rather than trickling all day.

Your workload is actually a good candidate for that second shape, because you said nothing is real time. Batch it. If you can process a day's documents in a 90 minute window at high throughput, the economics change completely, and you could even use a cheaper spot instance because you do not care about interruptions.

Costs you did not list on the self-hosted side:

  • your time. Model updates, driver issues, the OOM at 3am, the retry logic for a box that is not five nines. Call it 3-4 hours a month at a minimum, more in the first two.
  • redundancy. One box is one failure away from your pipeline stopping. The hosted API's uptime is somebody else's problem and that is worth something you should price honestly.
  • the evaluation work to prove the open model is actually good enough at your task. This is real and people skip it.

At a $50/month delta, the hosted API is cheaper once you value your own time above zero. Come back to this at 20M tokens a day, where the delta is large enough to pay for the operational burden.

86 · in/cloud-bill-shock ·