Internal versus external APIsĮxternal-facing APIs, ones that are available to other companies outside your organization, are often charged for. Obtaining feedback from your first paying customers is also key, as they’ll have plenty of thoughts on which pricing plan will and won’t work for them. That is, how your customers will be paying. Leading thinking on SaaS pricing emphasizes the need to set prices based on three main factors: the cost of delivering your product, your competitors’ pricing and your value metrics. There’s much to be learned from the SaaS price point approach, as many API pricing strategies have their roots in broader SaaS pricing solutions. The product that you’re offering will play a key role in your pricing strategy. Ideal for a compute infrastructure such as a database or virtual machine. Resource – based on compute units or active hours. It’s a modern version of charging per user, or per seat. User-centric – pricing based on the number of active monthly unique users.This is a good approach for platforms focused on data, such as logging or storage AWS. Data volume – based on gigabytes sent or minutes processed.This is well suited to financial platforms, such as those focused on payments Stripe or expense reporting. Revenue/cost share – you charge the end user a percentage of revenue or transaction fees.It’s ideal for APIs and event-based platforms, such as in communications Twilio or analytics Moesif. Transaction volume – based on API call volume.Different usage-based billing approaches to consider when mapping out your API strategy include: Charging by API call is one common pricing metric, but it’s certainly not the only option when it comes to your pricing model. There are several ways to determine what your API is worth. For more information on treating APIs as Products check out our extensive library of documentation. By seeing how they use your product you’ll not only be better able to price your service, but it’ll also give you indispensable insights into what’s working, what’s not and what should be on your roadmap. One of the founding principles when treating your API as a Product is to understand your customer. So, by understanding the value that your API provides, you’ll be better able to build a favorable pricing strategy. As an API provider, monetizing your existing API starts with charging the end user – the company that’s utilizing your API to provide business value. Building a Pricing Strategy for your APIs Who pays for an API?Īt the most basic level it’s important to ask who actually pays for an API. In this post we’ll cover all you need to know when pricing APIs. That means understanding how you should charge for usage, whether it’s better to set your pricing by month or quarter, whether data tiers or a Pay As You Go API pricing model would work best and a whole host of other elements. Pricing APIs correctly is a key part of your API monetization strategy.
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