Five reasons appear often. Each has a trade-off.
- Privacy and data control: prompts and outputs never leave your infrastructure, which matters for regulated data (health, finance, legal) or contractual restrictions. Nothing is logged by a third party.
- Cost at scale: hosted APIs are priced per token and are cheap until volume is enormous.
- Latency and locality: you can put the model next to your application, avoid network round-trips, and control tail latency instead of sharing a multi-tenant queue.
- Offline and air-gapped: on-prem, edge, or classified environments where calling the public internet is not an option.
- Control and stability: no surprise deprecations, no silent model updates changing behavior, full choice of model, quantization, and sampling.
The honest counterweight: self-hosting means you own capacity planning, GPU procurement, on-call, upgrades, and evals. A well-used API is often cheaper and better for spiky or low-volume traffic.
Rewriting in plainer words…
This answer doesn't lend itself to a diagram - it reads best . No credits were charged.
Why there's no diagram: “”
The interactive diagram is below the answer - jump to diagram ↓ · Below it, the related concept . Jump to it ↓
The diagram below the answer is the concept . Jump to it ↓
Tailored explanation · switch back to · ·
What should the new diagram focus on?