Running costs & reality in Australia
Private AI is not free. The bill shifts from monthly SaaS to hardware, power, heat, and your time. This page helps you sanity-check ROI without spreadsheet cosplay.
Cost buckets
| Bucket | What to include | Notes (AU) |
|---|---|---|
| Hardware | GPU / Mac, RAM, NVMe, PSU, UPS, networking | Amortise over 24–36 months for hobby; 36–48 for business pilots |
| Electricity | GPU + CPU load hours × kWh rate | High-end GPUs can draw hundreds of watts under load — check your tariff |
| Cooling / environment | Air-con uplift in summer | Especially QLD / humid NSW offices |
| Bandwidth | Model downloads, updates | One-time spikes; plan NBN evening usage |
| People time | Setup, patching, user support | Often the largest business cost |
Simple electricity sketch
Example (illustrative only): a system averaging 300 W under inference for 3 hours/day uses about 0.3 × 3 = 0.9 kWh/day ≈ 27 kWh/month. At $0.30/kWh that is roughly $8/month for compute power alone — before idle draw and cooling. Scale the watts and hours to your box.
Rough formula:
(kW draw × hours/day × days × $/kWh) + (hardware ÷ months)
Vs cloud seats
Compare like-for-like: number of active users, sensitivity of data, and whether you need frontier quality. A roughly $20–$30/user/month cloud seat (ChatGPT, Claude, Gemini, Copilot, or Grok team plans — check current vendor pricing) can beat a ~$4,000 workstation class if three people rarely paste sensitive data. The same seat can look expensive if ten people hammer private corpora all day and policy forbids public tools. The $0.30/kWh figure above is an orientation — use your own bill. People-time is still usually the largest business cost. Hobby hardware: think 24–36 months. Business pilots: 36–48.
When private wins financially
- High volume of private inference after hardware is paid
- Heavy document Q&A on internal knowledge (RAG) replacing many API calls
- Long-lived always-on internal tools with predictable load
When cloud wins financially
- Spiky or experimental usage
- Need frontier models you cannot host
- No one to maintain a private box