When should you self-host an LLM versus using an API?

Self-host when you need data sovereignty, when API costs exceed self-hosting at your volume, when you need custom fine-tuning at low latency, when air-gapped deployment is required, or when you need hardware-level control. Use APIs when you want zero ops, frontier quality, fast iteration, or unpredictable load. The break-even point typically arrives at millions of tokens per day.