Open-source vs closed-source LLM for business comes down to three forces: data residency, unit economics, and customization. Most B2B teams start closed-source and only migrate when one of those forces is large enough to justify GPU operations overhead.
When closed-source wins
- Moderate volume (most B2B SaaS features).
- You want the best model available without operating GPUs.
- Your customer has no objection to US cloud LLM vendors.
- Time-to-market matters more than per-query cost.
When open-weights wins
- Data cannot leave your perimeter (GDPR, HIPAA, defense, fintech).
- Inference volume so high cloud LLM pricing erodes margin.
- You need to fine-tune the model and own the weights.
- Customer procurement requires sovereign infrastructure.
What you take on with open-weights
- GPU operations: capacity planning, scaling, monitoring, on-call.
- Model selection cadence: keeping up with releases (Llama, Mistral, Qwen).
- Quantization and serving stack: vLLM, TensorRT-LLM, TGI.
- Compliance documentation: model card, eval evidence, retraining log.