April 13, 2020

Sell API products to external customers

Context

A lot of companies we work with want the holy grail of monetizing their APIs. They want to apply a business model and a specific pricing on top of their APIs. Quite often, they want to adopt a pay per call approach for their APIs. The number of APIs represent the generic use cases that they believe external companies are willing to pay for.



Problem

One size-fits-all is almost never the right solution. There are two sides for the monetization. First, packaging your API into complementary, adjacent products and modular items that can be used by your different customer segments based on their exact needs. Indeed, you must create API products that can mirror the different use cases and usage customers can have from your API and the value it provides for them. If you do not make API products modular at a granular level your pricing strategy will not be optimum to capture maximum profit. If API products are not properly created or with only a few options not adapted to all needs of customers, you will not be able to acquire all potential customers with prices maximizing your profit. If you do not have enough API products and flexibility for creating those API products, you are in a trouble. You can have only as many prices and business models that your have API products and identified customer segments. Indeed, why a customer should pay more for the same product if there is a cheaper option. API providers try to find a medium price for their APIs. You end up in a situation where your high-end customers pay less than they should compared to value, and long tail customers barely use your APIs. In other words, if you are not able to quickly create API products and adapt to new requests from customers, you are just leaving money on the table.

Second side of monetization is the pricing and business model to apply. Having a pay per use business model based on the number of API calls seems acceptable. However, it means as well that you consider providing value every time a customer calls your API. You know it is not true. In this case, you are just transferring the risk to your customers. Value of the content of an API product is contextual and cannot be streamlined to a fixed cost per call. In order to capture the value provided by your API products, you need the right tool to capture this value and put a price tag and a business model in front.



How we solve it

We built the solution for API product managers/owners so they can independently create API subsets of the API that we call API products. They have the full flexibility to define those API products through a graphical interface determining which endpoints, data fields, data values, data result should be included or modified. They can as well add datapoints to the original API easily. It means that the flexibility is back in the hands of the product managers who are the closest persons to the users or customers to adapt to their needs in minutes.

In addition, they can apply any business model ranging from pay per use, subscription to value-based pricing. Our solution helps them to define the business models for API products and apply it to customers.

We have advisory services about pricing and business models who can help in the definition and implementation of the optimum strategy to maximize your profit.



Value provided

  • Create API products to segment your offering
  • Maximize your revenue coming from APIs

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