I use 1Password for not only credentials but as a document vault for everything from passports, birth certificates, anything else that falls under "needed after the house burns down". It's one of the most elegant pieces of software I've ever used.
I ask because I use iCloud heavily. Nearly 1TB of photos/videos and now use 1Password with iCloud sync.
Has Apple made mistakes when designing iCloud, allowing unauthorized access to accounts? Yes.
The newest version of the Windows app doesn't support creating or opening local vaults, only storing data in their cloud.
They also no longer offer perpetual/non-subscription licenses, including for the older version that supports local vaults.
At the very least the first would be a requirement for any sort of "self hosted" setup.
It was not an elegant process, and the friction kept me from following through for more than a few months.
I finally pulled the trigger, spent the time and hassle migrating everything, and am now glad that I did.
1) passwords are a serious stuff, so you want serious people to to some serious work behind your PM (AKA, it can't be free); 2) passwords are a too fundamental tool of our digital existences to have a monthly-based subscription. The idea of being locked out of your services when you can't afford to pay the monthly fee is just horrible.
That said, over the time horizon of many years, $40 doesn't cover much at all. For the reasons you mentioned, I felt a sense of relief when I moved over to the monthly model.
I'd happily pay them $5/mo to continue using their product as I've been using it - with local vaults, not with their cloud product.
I won't take their product for free if it comes with a forced "upgrade" to the cloud service.