Can Your Business Afford Self-Hosted AI? Cost Breakdown

AI has a pricing problem. ChatGPT charges 20 dollars per user per month for the team plan. Claude charges 30 dollars. For a 15-person business, that is 300 to 450 dollars per month, every month, forever. The alternative is self-hosting, where you buy the hardware once and run the models for free. But can a small business actually afford the hardware? The answer depends on what you want to do and which model size you need.

The Model Size Reality

AI models are measured in parameters, which roughly corresponds to their intelligence and their hardware requirements. A quick guide to what you can run at each tier:

The key insight: 7-billion-parameter models like Mistral 7B or Llama 3.1 8B are genuinely useful for everyday business tasks and run on hardware a small business can afford. You do not need a supercomputer to get value from self-hosted AI.

Option 1: CPU-Only on a VPS (Budget: $30-80/month)

Ollama runs on CPU. It is slower than GPU inference but fast enough for occasional use. A VPS with 16GB RAM and 4 vCPUs costs roughly 30 to 80 dollars per month depending on the provider. On this hardware, a 7B model generates roughly 5 to 10 tokens per second, which is fast enough for typing-speed responses. For a team of five people using AI occasionally throughout the day, CPU-only inference is functional and affordable.

Run Ollama on the VPS, point Open WebUI at it, and your team gets a private ChatGPT interface at their browser at yourcompany.com/ai. No per-user fees. No data leaving your server. No OpenAI reading your documents.

Option 2: Dedicated GPU Server (Budget: $1,500-2,000 upfront)

A single RTX 4090 with 24GB VRAM runs 13B to 20B models at 30 to 50 tokens per second, which is faster than most SaaS AI products. The upfront cost is 1,500 to 2,000 dollars. Over three years, that is 42 to 56 dollars per month. Compare to 300 dollars per month for 15 ChatGPT Team seats. The GPU pays for itself in six months and then generates savings for the next 2.5 years.

Install Ollama and Open WebUI on the GPU server. Your team of 15 can use it simultaneously because inference tasks are queued and processed one at a time. For most small business use, where AI use is intermittent throughout the day, a single GPU handles 15 to 20 users without noticeable queuing.

Option 3: Cloud GPU Rental (Budget: Variable, On-Demand)

If you cannot justify buying a GPU, rent one by the hour. RunPod and Vast.ai offer RTX 4090 instances for 0.34 to 0.50 dollars per hour. If your team uses AI for 100 hours per month total (roughly 3 hours per day across 5 people), that is 34 to 50 dollars per month. Significantly less than ChatGPT Team pricing. The trade-off is that you need to manage the instance (start it when needed, stop it when done) or write a simple script to automate it.

This model works well for businesses that use AI in bursts: batch processing documents, weekly content generation, or project-specific research. Spin up the GPU, run your workload, spin it down. Pay only for what you use.

The Real Comparison

Self-hosting AI is cost-competitive with ChatGPT at the 3-person mark. At 15 people, it is dramatically cheaper over any multi-year horizon. The hardware is the only cost, and hardware gets cheaper every year while SaaS pricing goes up.

VPS1 deploys Ollama and Open WebUI on your own hardware or VPS. We handle the setup, the model selection, and the integration with your existing stack. Your team gets private AI. OpenAI gets nothing.