Hosted RAG wins on speed-to-start and zero operations; self-hosted RAG wins on control, predictable cost and provable compliance. For a regulated DACH enterprise, the second usually matters more — but the honest answer depends on your data and your scale. Here is the comparison without the marketing on either side.
Side by side
| Dimension | Hosted RAG | Self-hosted RAG | Edge |
|---|---|---|---|
| Data control | Your data + embeddings live with the provider; a new sub-processor | Stays in your PostgreSQL, Redis, vector store; no egress with local models | Self-hosted |
| Speed to start | Sign up and go | Stand up the stack first | Hosted |
| Cost shape | Commonly usage-metered; the bill moves with how much you use it | Predictable annual licence + your ops | Self-hosted at scale |
| Compliance & audit | Provider’s controls; a transfer to assess | Your controllership; audit logs + citations you own | Self-hosted |
| Operations | Fully managed | You run backups, monitoring, updates | Hosted |
| Lock-in | Tied to one provider’s roadmap & pricing | Open core (Apache 2.0): export and leave | Self-hosted |
When hosted is the right call
When self-hosted is the right call
How to decide
Answer three questions honestly
- Does your corpus contain regulated or personal data?
- Where will adoption land in two years — not where the pilot starts?
- Can you absorb modest operational work (backups, monitoring, updates)?
If the data is sensitive, adoption is real, and operations are within reach, self-hosting wins on the numbers and on the risk register alike. For the deeper arguments, see Why self-host your RAG platform and the TCO comparison.
Frequently asked questions
Is self-hosting always cheaper?
No. At genuinely small scale, with non-regulated data and no appetite for operations, hosted can be cheaper and simpler. Self-hosting wins as users multiply and as compliance enters the picture, because the licence is flat and the sovereignty benefits come bundled.
Can we start hosted and move to self-hosted later?
With RAGSuite the platform is the same either way and model-agnostic, so you can validate on the Community Edition and scale into a full self-hosted deployment without re-architecting. Moving off a proprietary hosted service usually means a migration.
What about a managed sovereign cloud?
An EU-sovereign managed cloud is a third option that sits between the two — managed convenience on a genuinely European substrate. It is on the RAGSuite roadmap alongside self-hosting, not as a replacement for it.
Sources & further reading
- The real total cost of self-hosted RAG vs. per-seat cloud — the cost comparison in detail
- RAGSuite vs. cloud RAG — the feature-level comparison