APIs: What to Consider when Pricing Them

APIs started just as an acronym that only programmers knew in the 2000s. Now, they have become an important piece to ignite several innovative solutions. They unleashed several opportunities in various services to help them function more efficiently. Using APIs is easy, but many don’t understand what it takes to make it worthwhile. People are too focused on the technology part that they overlook the use cases to add value to their businesses and monetize APIs. Many overlook how it represents a way to reduce operational costs and automating business processes completely.

Ways to Monetize APIs

How do you make money from APIs, and how should you price them to get the best return? 

  • Data Collection 

Data Collection

This is Facebook’s preferred method. It involves collecting data from third-party applications to use in your advertising efforts or your products.

  • Product Adoption

It allows developers to build custom integrations that increase the value of products and keep the users locked in.

  • Developer Usage

That is the most obvious way to monetize APIs. You charge developers for API calls. Likewise, the Developer Usage model has three pricing models, so you need to think carefully and choose wisely. The first model is Pay-as-you-Go, which means that you pay per API call. Fixed quota means you pay for a fixed number of calls per month, and you are not allowed to exceed. Lastly, the Overage model is like the previous model. However, it allows developers to exceed their call limit in exchange for a small overage fee.

Each pricing model has its pros and cons, but the last one may be the best option for you. It has the scaling advantages of the pay-as-you-go model and offers the predictability of the fixed quota plan.

Of course, how much you should charge per plan depends on your business. Just consider these three C’s when pricing:

  • Cost
  • Competitors
  • Content

On pricing your APIs, determine what type of value they can deliver and your actual pricing structure. Determine how much the access is worth in conjunction with your existing web-based offering and competition, then choose the pricing model your customers will ultimately be comfortable paying. Find out how we can help here.