Is the video processing of the ffmpeg transcoder done locally on my server?
FFmpeg is licensed under GNU Lesser General Public License (LGPL) version 2.1 or GNU General Public License (GPL) version 2, depending on compiling options. Both are free and open source.

As far as I see in the code (just glanced over it, mind), both Video Presets and FFmpeg Converter uses locally installed converter. Will it be free? Probably not. Looking on FFmpeg Converter page:


  Note: This module is not for beginners, since FFmpeg requires rather complicated server configuration.


Sysadmin's time usually isn't free, CPU power also is not. But you should be free from licence fees all right.