AI Compute Guide

Self-hosted LLM

Self-hosted LLM Guide

Decide when self-hosted LLM infrastructure makes sense compared with managed APIs.

Executive Summary

Self-hosting an LLM means the team takes responsibility for the model serving layer, infrastructure, security, scaling, monitoring, upgrades and cost management. It can be the right choice when data control, deployment flexibility, predictable volume or governance requirements outweigh the speed of a managed API.

It is not automatically more private, cheaper or more reliable. Those outcomes depend on architecture and operations. A managed API may be the better answer for early products, variable demand and teams without infrastructure capacity. A dedicated managed endpoint can be a middle path when a team needs more control than a shared API but does not want to operate the full stack.

Model serving

Select a serving stack, optimize batching and concurrency, manage model versions and plan rollout safety.

GPU infrastructure

Choose cloud GPUs, reserved capacity, colocation or owned hardware based on utilization and governance needs.

Security

Control network access, secrets, image provenance, audit logging, data retention and incident response.

Operations

Monitor latency, throughput, errors, saturation, queue depth, model quality and deployment health.

Cost management

Track utilization, idle capacity, storage, data movement, support and engineering time.

Governance

Document model sources, licensing considerations, evaluation results, data flows and approval processes.

Deployment Model Comparison

ModelBest forControlOperational burden
Managed APIFast product development and uncertain demandLowerLow
Dedicated managed endpointProduction workloads needing isolation or predictable latencyModerateMedium
Cloud GPU self-hostingCustom models, private networks and stable workloadsHighHigh
Owned hardwareLong-horizon utilization with strong physical control needsVery highVery high

Reference Architecture

ApplicationtrafficGatewayand authModel servingclusterGPUcapacityLogs andmetricsModel anddata stores

Pros

  • More control over model selection, deployment topology and data flows.
  • Potentially better economics for stable, high-volume workloads.
  • Can support custom models, private networks and stricter governance requirements.

Cons

  • Requires infrastructure, reliability, security and model-serving expertise.
  • Can create idle capacity and operational overhead if demand is uneven.
  • Needs disciplined monitoring, evaluation, patching and incident response.

Related Guides

FAQ

When does self-hosting make sense?

It can make sense for stable workloads with privacy, residency, customization or cost-control requirements and a team that can operate infrastructure.

When are APIs better?

Managed APIs are usually better for early products, small teams, fast iteration and workloads without strict infrastructure control requirements.

Does self-hosting guarantee lower cost?

No. It can lower unit cost for some stable high-volume workloads, but operations, reliability, security and staff time must be included.

Is self-hosting required for data residency?

Not always. Some teams can meet requirements with approved cloud regions, private deployments or dedicated managed inference, depending on policy and contracts.