Cheatsheet 05 — Open-Source vs Commercial Models
The build-vs-buy of models. Full: Phase 5.01, Phase 6.
The tradeoff at a glance
| Dimension | Commercial API (OpenAI/Anthropic/Google) | Open-weight self-hosted (Llama/Qwen/Mistral) |
|---|---|---|
| Quality ceiling | Usually highest (frontier) | Strong, narrowing gap |
| Speed to start | Instant (API key) | Slow (infra/ops) |
| Cost at low volume | Cheap (pay per token) | Expensive (idle GPU) |
| Cost at high volume | Expensive (per-token adds up) | Cheaper (past break-even) |
| Data control / privacy | Data leaves your boundary (DPA/ZDR matters) | Full control (data never leaves) |
| Residency / air-gap | Limited (provider regions) | Full (run anywhere, on-prem) |
| Customization | Limited (their fine-tune API) | Full (LoRA/full FT, your stack) |
| Ops burden | None (managed) | High (you run GPUs) |
| Model choice | Their catalog | Any open model |
| Vendor lock-in | Yes | No |
Choose commercial when…
- You're early / need speed; low or spiky volume.
- You want the frontier quality ceiling.
- You don't have GPU/ops capacity.
- Data-use terms (no-train tier + DPA/ZDR) satisfy your privacy needs (Phase 14.02).
Choose open-weight self-hosted when…
- Data residency / privacy / air-gap is required (healthcare, defense, finance) (Phase 14.07).
- High, steady volume → past the self-hosting break-even (Phase 15.05).
- You need deep customization (fine-tune the weights, Phase 13).
- You want no vendor lock-in / full cost control.
Hybrid (common in production)
- Commercial for hard/rare requests, self-hosted for the cheap bulk (route, cheatsheet 13).
- Commercial now, migrate hot paths to self-hosted as volume grows.
- Open-weight for sensitive tenants (on-prem/VPC), commercial SaaS for the rest.
License gotchas 🚩
- "Open weights" ≠ "open source" ≠ "free for commercial use" — read the license (some restrict commercial use, competing-model training, or scale).
- Llama community license, Apache-2.0, MIT, custom RAIL — each differs. Verify before shipping.
Interview line
"Commercial for speed and the quality ceiling at low/spiky volume; open-weight self-hosted for residency, deep customization, and cost at high steady volume. Most production stacks are hybrid — route the cheap bulk to a self-hosted model and the hard tail to a frontier API."
Next: 06 — Quantization · Full: Phase 5.01