top of page

Got a Project in Mind? Let’s Talk!

  • Writer's pictureFelipe Jaramillo

The AI Dilemma: OpenAI API vs Open Source Models vs Build Your Own?

Updated: Apr 23

Startups and technology companies' owners often are confronted with a critical choice: leveraging third-party AI APIs like OpenAI, adopting open source models, or investing in developing proprietary AI solutions; what's the ideal choice?

This article will look at different options when using AI models. We'll consider costs, engineering resources, and how long a model will last.

The AI Dilemma_ OpenAI API vs Open Source Models vs Build Your Own

Choosing the right approach for integrating AI into your business can significantly influence your operational efficiency and innovation capacity.

We'll discuss how to weigh the pros and cons, clear up some common misunderstandings about AI, discuss whether to host the framework yourself or use a third party, and look at how AI systems change over time. 

This helps businesses make informed decisions about how to use AI in their operations.

Understanding the 'Open' in OpenAI and Open Source Models

Knowing the difference between open-source and closed-source solutions is super important in AI stuff.

Like a community garden, open-source language models are based on collaboration and transparency. Anyone with the required programming language skills can contribute to or modify the code.

But closed-source solutions are like private lands. The access is restricted, and the source code is kept under lock and key.

Even though both offer good benefits, there are a few things to consider when choosing between open-source and closed-source AI applications. These include your team's expertise, the specific needs of your project, and your long-term strategy.

Here's a simple breakdown to help you weigh your options:

Open-Source Models:

  • Active Community-driven development

  • Access to source code

  • Flexibility in customization

  • Potential cost savings

Closed-Source Models:

  • Proprietary technology

  • Vendor support and maintenance

  • Streamlined integration

  • Potential for exclusive features

Is "Open" AI Closed-Source Company?

Well, yes. The name "OpenAI" might suggest that the organization operates entirely in the open-source domain, but this interpretation requires clarification.

OpenAI was initially founded with the mission to promote and develop friendly AI in such a way that it would benefit humanity as a whole. Initially, the idea was to openly share discoveries and research to accelerate progress in the AI field.

This ethos contributed to the 'Open' in OpenAI, symbolizing transparency, collaboration, and widespread access to AI technology.

However, as the organization evolved, especially after transitioning to a capped-profit model, OpenAI's operational approach shifted towards a more closed-source strategy for its advanced frameworks like GPT-3 and GPT-4.

This decision was made based on various reasons, such as concerns regarding misuse, responsible management of powerful AI technologies, and commercial feasibility.

While OpenAI continues to contribute to the AI community through research, partnerships, and specific open-source projects, its main products are proprietary and not open-source. This strategy enables OpenAI to regulate the distribution and usage of its models, addressing both safety considerations and business goals.

The 'open' in AI doesn't just refer to the accessibility of the code. It also encompasses the ethos of sharing knowledge and building upon the work of others to push the boundaries of what's possible. They often consider themselves a "semi-closed source" company.

Principles outlined in OpenAI's Charter

OpenAI API: Efficiency and Simplicity

OpenAI's API provides access to advanced models like the world-famous GPT-4, offering a straightforward path for businesses to integrate AI capabilities.

This approach is best for companies looking for quick deployment and minimal technical overhead.

The Enterprise Attraction: Microsoft and OpenAI

As you consider the AI solutions for your business, the alliance between Microsoft and OpenAI offer some impressive AI solutions.

The integration of OpenAI's models into Azure's cloud services offers a seamless blend of cutting-edge AI capabilities with robust cloud infrastructure.

This partnership has made it easier for enterprises to adopt AI without the overhead of managing complex AI models themselves:

  • Ease of Integration: It simplifies the deployment of AI models.

  • Scalability: Azure's cloud infrastructure supports scaling AI solutions effortlessly.

  • Security: Microsoft's commitment to privacy and data governance ensures your data is protected.

Leanware's focus on AI integration aligns with enterprises seeking reliable partners to enhance their software solutions.


  • Quick Deployment: The API is ready to use, which drastically reduces the time needed for implementation.

  • Low Maintenance: There is no need to manage or update the AI models, as OpenAI handles all aspects of infrastructure and model improvements.


  • Recurring Costs: The API operates on a pay-as-you-go basis, where costs are calculated based on the amount of text processed, which can become expensive with extensive use.

  • Limited Customization: The API's capabilities are fixed, and while prompt engineering offers some flexibility, it does not allow for deep model customization or fine-tuning​.

Open Source Models: Customization with Commitment

Open-source AI models, such as those available through platforms like Hugging Face, provide more customization. They are ideal for organizations that require specific modifications or enhancements to the AI's capabilities.

Open-source solutions often have a strong community of developers contributing to their improvement. Businesses using these models can benefit from ongoing updates and enhancements without relying solely on a single provider.

So, choosing an open-source model with reliable support can be a good option for startups specializing in a particular niche.


  • Full Control Over Customization: Users can modify every aspect of the model, from architecture to training datasets, allowing for precise tailoring to specific needs.

  • Cost-Effective in the Long Run: There are no licensing fees, and while the initial setup requires a significant investment, ongoing costs can be managed more effectively compared to commercial APIs​.


  • Complex Setup: Setting up and maintaining an open-source model requires a robust IT infrastructure and a team capable of managing the complexities of AI model training and maintenance.

  • Higher Initial Investment: The cost and effort to establish an operational AI system using open-source models can be substantial, particularly regarding hardware and skilled personnel.

Insights from Open Weights and Open Source Models

A recent video by Christopher Penn discusses the distinction between genuinely open-source models and models with open weights, such as LLaMA.

While LLaMA provides access to its model weights, allowing for modifications and fine-tuning, it doesn't fully embody open-source principles as it does not include access to the training data used to build the model.

Despite this, Meta's Llama AI solutions are a solid choice, allowing businesses to leverage advanced capabilities while maintaining control and customization.

Meta developed the Llama model to handle complex tasks such as natural language processing, image recognition, and recommendation systems.

Principles outlined in Meta’s Llama Responsible Use Guide

Leanware's full-stack app development services, integrate advanced AI projects such as the closed-source GPT-4 from OpenAI and the open-source LLaMA from Meta. This diverse offering underscores the importance of selecting the appropriate AI technology that aligns with your company's strategic objectives.

Choosing between open-source models like LLaMA and closed-source alternatives such as GPT-4 involves weighing factors such as customizability, control, and initial investment required.

The Financial Implications of Proprietary vs Open Source AI

Costs are usually the most considered factor when deciding whether to use proprietary models or open-source AI.

Closed-source or proprietary solutions come with licensing fees, which can be quite high, especially for startups or small companies.

On the other hand, open-source AI, like Llama 2, can provide a cost-effective alternative with the added advantage of community support and transparency.

While Meta's open-source Llama models are cheaper than OpenAl's premium offerings, they are slightly pricier to run than GPT-3.5 Turbo, the basic but powerful OpenAI solution.

The next chart shows each model's price to generate a million tokens.

Price to generate a million tokens with GPT4 and Llama 2
• Source: Baseten, The Information Reporting.

In summary, consider the long-term implications of your choice:

  • Cost: Depending on the model, proprietary solutions may seem convenient, but they can lead to higher expenses over time due to licensing and potential vendor lock-in.

  • Flexibility: Open-source AI allows for more customization and adaptability, which can be crucial as your business evolves.

  • Skill-sets: Ensure you have the engineering talent to manage and maintain open-source solutions, as they can require more hands-on involvement.

While open-source AI may require a steeper learning curve and more in-house expertise, the potential for cost savings and increased control can be significant for those willing to invest the effort.

Building Your AI: Ultimate Flexibility and Control

Building a custom AI from scratch is the most involved option, suitable for organizations with particular needs that pre-existing models cannot meet.


  • Tailored Solutions: Completely custom solutions can be designed to meet the exact requirements of your business, potentially leading to better performance and integration.

  • Independence from Third-Party Providers: Building your own AI negates dependency on external platforms, giving you full control over every aspect of the technology.


  • Significant Resource Requirements: This approach demands substantial resources, including a team of AI development and data science experts and considerable time investment.

  • Ongoing Commitment: Beyond initial development, continuous testing, updates, and improvements are necessary to keep the AI effective and secure.

So, if your startup needs a custom AI form that allows us to create highly specialized solutions that perfectly align with your unique requirements, Leanware specializes in custom AI development, providing you with the ultimate flexibility and control over your AI solutions.


Choosing between OpenAI's API, open-source models, or building a bespoke AI system hinges on multiple critical factors, such as budget constraints, the desired degree of control, technical capacity, and specific organizational needs.

Each pathway presents unique advantages and demands varying levels of investment and expertise. Therefore, it's imperative for businesses to thoroughly assess their long-term objectives and operational capabilities to select an AI integration strategy that best aligns with their strategic goals.

The decision extends beyond financial considerations; it's about striking the right balance to meet your organization's unique needs and capabilities. Are you ready to handle the ongoing costs and dependencies associated with proprietary models, or do open-source AI's autonomy and potential innovation better suit your strategic vision? This choice will shape your technological landscape and directly influence your competitive edge in the evolving market.

Frequently Asked Questions

What are the primary considerations when choosing between OpenAI API, open source models, and building your own AI?

The main considerations include cost, the engineering skill sets required, the scale of your AI needs, and the potential need for customization.

Is it more cost-effective to use third-party APIs or to self-host open-source AI solutions?

Why do enterprises often opt for solutions like Microsoft's Azure in partnership with OpenAI?

What does 'Open' in OpenAI and open source AI models mean?

What are the trade-offs of using self-hosting versus third-party AI APIs?


bottom of page