If you are developing APIs, let’s find out the different ways you can monetize your API to increase your income.
APIs power many significant components of the internet these days; web apps, mobile apps, and desktop apps. This growth attracts many developers to start developing APIs – “Application Programming Interfaces”. This new popular domain allows apps to access functionality produced by third parties through software. Thanks to APIs we can track and automate buying and selling in the stock market, send and receive emails, and get current important data fast and easy.
“The Success of an API program is measured by how well it moves a business toward its goals.”
– Rob Zazueta
If you are developing APIs, you probably want to make money from your APIs, for that reason there are different models for monetization of your APIs. So, let’s find out the different ways you can monetize your API to increase your income.
Table of Contents
Charge Directly For Your API
This model focuses on charging users for their access to API. Either call volume or subscription can be used for this model. If you have the kind of data that people are interested in or provide a useful function, this model will fit best for you.
In the above example, you can see how subscription models can be created in different ways.
On the other hand, not all APIs can charge directly. They need to provide proper motivation for using your API. Lots of people are chasing for free data nowadays. For acquiring new users you may need a free subscription plan so that developers can test and understand the value of your API service and what they can build on with it. Once they hit a certain level, you can start charging. You can see this in the “Example from Marketstack” photo.
If you think that making your API “purchasable” would require a lot of work, you can easily integrate with API marketplaces with a documentation link and an API key and let them take care of payment, customer support, rate limiting, etc. You can check APILayer to see how it works and start monetizing your API.
Use API Access As An Upsell Opportunity
You do not have to make only from APIs. You may have a SAAS product where you already provide different pricing packages with a UI. For enterprise plans or custom plans for large accounts, you can provide API access as an upsell. Since many large companies have their own internal tools and systems they may need to integrate your product (at least the value you create from your product) to their own systems. At this point, you can charge extra for API access to create more value.
Using API access as an upsell, you have to make sure the customer is interested in integrations and APIs. By fine-tuning pricing and experimenting with different key accounts, you can find a sweet spot for monetizing your API.
Drive Revenue-Generating Activities Through API
APIs actually allow apps to drive leads, and these are pay leads. And you can track your customer’s usage of your API. And you can attribute back to your API. Usually, message and email APIs are best for this plan. Because usually, this kind of API doesn’t drive money over the usage of APIs. It’s driven by contacts and users sending emails to those contacts.
If you plan to go with this plan, you should follow the complete chain of app usage and understand the API’s call impacts and with this knowledge, you can develop more effective APIs that can make a profit. And keep in mind that not all calls directly lead to revenue!
Generate Revenue and Increase Distribution Through Partners
Your customers will use your API for their customers, and they will eventually bring you more customers. Or with a partnership, you can make a profit with a simple exchange for this partnership.
In the picture, you can see, that FalconX is an APi-driven startup that mainly works on blockchain technologies. As you can see in the picture it has great partnerships with some other institutions. In a shorthand, you might want to partner up with some other institutes for the exchange of data with API usage. With this, you can generate more access or wider distribution for getting more access to new customers.
With this plan, you have to focus on new customers brought in through partners and need to be careful about partnerships of exchanging data. How will data will affect you and your partner?
“Well built and well designed API will help you build apps faster!”
– Rob Zazueta
Improve Operational Efficiency And Decrease Time Spent
With a Well-built and well-designed API, you can get the benefits of; faster onboarding, and deeper access to data and you can build applications quickly and test them.
With these benefits, you can take risks that used to be huge and would take months to complete. You can try your ideas with this and see if it is working or not. If it is not, still okay because not a lot of time and money is spent.
Last but not Least
For monetizing your API you don’t only need to choose one model for you, you can create your own you can pick all these models or you can pick one. API models are like fingerprints, each is individual, and you need to go and find the best one that fits you well.
For the last lines, I am sharing with you a table of API Business Plans that John Musser made. You can see in the table there are many more ways to make money from APIs.
