Open Source or Closed Source? A Guide to Choosing a Model

How Do the Cost Structures Differ?

Closed-source models are generally offered through APIs billed per use, which keeps the up-front cost low but means expenses grow linearly as usage rises. Open-source models, when run on your own servers, require a fixed hardware investment — but at high volume they can work out cheaper over the long run.

Data Control and Privacy

For organizations working with sensitive or confidential data, being able to host an open-source model on your own infrastructure is a major advantage. Your data never leaves your own system. Closed-source providers typically offer data processing agreements and enterprise privacy guarantees too, but ultimately you have to trust a third party.

Performance and Maintenance Burden

Closed-source APIs are continuously updated by the provider and usually give you instant access to the latest model performance, with almost zero maintenance burden. Running open-source models on your own infrastructure brings extra responsibilities — hardware management, scaling, updates — but gives you far more control over how the model behaves.