No go-to-market strategy is complete without having a way to generate revenue from your product. APIs are no different. Indeed, in today’s flourishing API economy, you have a great opportunity to unlock revenue and really make your API work for you. All you need is a sound strategy to commercialize your API product and the right tools to support your monetary goals.
Whichever vertical you’re in: biotech, telecom, healthtech, web3/blockchain, DaaS, SaaS, etc, we’ll get you the API commercialization essentials you’ll need to release revenue fast.
Build and Sell Your API
In the for-profit corporate world, there’s no point in building a product if you can’t be remunerated for it. When developing an API there’s certain core considerations that need to be taken into account if you want the end result to be sellable. Clearly, your product needs to be useful - it needs to meet a need that your users are willing to pay for. But it also has to be easy for them to discover and interact with. An API that fulfills a particular function, but comes with poor documentation, a weak user experience or is not in the major API marketplaces will quickly lose out to competitors’ products.
But the building side of the process is only half the battle. You also need to think about delivering revenue if you want to successfully commercialize.
Did You Know You Can Make Money by Selling Your APIs?
The precise way that you monetize and sell your APIs will likely depend on your industry. After all, different verticals often have distinct parameters they like to bill around. To successfully commercialize your product, you first need to understand which parameters you want to bill against, and then put a solution in place to do so.
It can be particularly difficult to decide how to bill for APIs. You might have to really dig into the calls’ payloads to extract the parameters your vertical cares about. This introduces a conundrum – do you commit time to building a billing solution in-house, thus lengthening your time to market, or accept that buying an existing solution is a necessary and a worthwhile expense?
For example purposes, let’s consider a business in the web3 vertical. Such an enterprise will have a whole host of KPIs that it could bill against - ones that are unique to the distributed nature of web3 - as well as parameters that businesses in other verticals might utilize. This could include metering on any relevant metric, including transactional, security, or reconciliation KPIs, with billing on: number of miners, number of transactions, hash rate, number of fraud detection/alerts, number of data breaches prevented, number of on-time reconciliations, number of aging reconciling items, percentage of automated reconciliations, and so on.
Building a solution in-house to monitor all of these will take plenty of time and resource away from concentrating on core API development. This is where the flexibility of Moesif comes into play. Moesif built its monetization capability on top of an analytics tool – that means that it’s designed from the ground up to bill for any parameter. You just need to decide which parameters are most meaningful and/or profitable in your vertical, then you can use Moesif to bill your API consumers accordingly. It’s an easy solution for generating revenue.
Should I List in an API Marketplace?
If you build your API product, will they come? Philosophical questions notwithstanding, as an API provider you -do- need to promote and market your product so that prospective API consumers can discover it. Unless you’re building an internal API, the first port of call should be to add your API to an API marketplace. Technical marketplaces, as popularized by the AWS marketplace, serve as central repositories where developers can discover, access, and manage software products.
API marketplaces, like the one run by Rapid API, do increase your API product’s exposure and, if timing is right, can put you in front of an end user who’s ready to buy. That’s why both API developers and enterprises use API marketplaces to sell their APIs, reach their target audience, and increase their revenue.
What Are the Challenges of Selling APIs?
Assuming you’ve built a secure, discoverable, and easily usable API, then the real challenge you will face when it comes to commercializing and selling it will be accurately quantifying customers’ usage so that you can charge them appropriately.
Business-to-business sales intelligence firm SalesIntel is one company that has embraced the potential of API commercialization. The firm’s databases consist of a wide variety of account intelligence, such as firmographics, intent, technographics, and more. This helps SalesIntel’s customers refine their ideal customer profile. In order to accurately quantify their customers’ usage and assess rates to charge them, SalesIntel bases its pricing on the characteristics of queries or data, using Moesif to provide global account visibility to enable this.
What are the challenges of selling APIs, aside from quantifying usage? Well, jumping into the API economy also means providing some form of customer support for your API product. You’ll also need to think about ongoing development. Taking on an API product manager as you scale can be a smart move in this respect. Finding the right API gateway and API management solution is also important. Finding a solution that avoids vendor lock-in, doesn’t hide essential features behind a paywall, and won’t vastly ramp up your costs as you grow, may not feel like a key priority when your company is small. However, this can have a significant impact further down the line, so make sure you think long-term when it comes to bringing in such solutions.
How Do You Ensure the APIs Actually Deliver Business Value and Agility?
Ensuring your APIs deliver business value and agility means examining your customers’ use of them at a granular level. This is the only way that you can assess the impact of metering based on different parameters, and the value that doing so will contribute to your bottom line.
Broadly speaking, metering based on number of API calls, length of VoIP calls, search criteria or accessing a unique endpoint, will meet a wide range of businesses’ needs. Implementing metering based on these metrics means measuring every count. You may also need to use data in the request and response body to calculate usage to be billed for. This is where buying in a billing solution based on in-depth analytics really comes into its own, when compared with trying to build a solution with that level of granularity yourself.
Of course, once you’ve established which parameters you should be billing on to ensure your business gains maximum value from the commercialization of your API, you still need to think about things like pricing plans customer support packages, service level agreements, and more. Decisions around these factors need to build in agility and the ability to scale, just as your API itself does. This ensures that you are future-proofing your business model by being able to flex and grow in response to shifting market conditions and continually evolving technology. As such, be sure to use a billing solution that molds to your specific needs, but also provides flexibility to meet future changes.
How Can Your API Drive Revenue for Your Business?
We’ve looked at web3/blockchain and DaaS examples of how an API strategy can drive revenue for your business, but there are plenty more verticals where this is happening. API integration is widespread across the globe, from the logistics sector, to telecoms and to the fintech industry.
If you want your API to deliver revenue for your business, you need a clear, commercialized billing and invoicing system in place. In the biotech sector, the bioinformaticians at BioLM are doing this by using Moesif with Stripe:
“Moesif monitors consumption of APIs and pipelines and pro-rates them… Ultimately, that data is sent to Stripe, where billing and invoices are securely handled.” Nikhil Haas, CEO, BioLM
The BioLM model enables drug discovery utilizing cloud-based GPUs and AI modeling, accessible through unique endpoints. As the company wanted to charge based on calls made to specific API endpoints, it needed detailed insights into which users were accessing its API and how. Using Moesif to meter and block usage provided a one-stop solution for this in terms of BioLM’s user analytics stack. This powered the transformation of BioLM’s API-based platform from a tool to a product, driving revenue for the business by giving biotech researchers the ability to drive new innovations without overloading BioLM’s GPU framework.
What Is Your Business Objective in Creating an API?
Key to ensuring that your API drives revenue for your business is a clear business objective behind the creation of that API and a clear API monetization strategy. In the communications vertical, conversation intelligence firm Symbl.ai exposes simple endpoints that directly screen both real-time and recorded audio, analyzing millions of conversation minutes every day. They opted to use Moesif rather than building an in-house solution, with Symbl.ai CEO Surbhi Rathore pointing out:
“When you’re small as a company it’s very hard to focus 20% of your continued engineering efforts on building a dashboard for yourselves.”
Symbl.ai is using Moesif’s advanced analytics to track the number of API calls and the number of conversation minutes within those calls, with both a clear business objective and a clear commercialization approach.
Do You Have More Ideas or Examples of Ways an API Can Increase Revenue?
There are examples of increasing revenue using APIs across every vertical. In the healthtech sector, for example, Paul Fung, GM of Developer APIs at Nexhealth, comments:
“We were soon able to start billing our customers for the API usage using Moesif and it quickly became a revenue generator for us.”
Nexhealth has taken a multi-faceted approach to commercializing its APIs to increase revenue. The company accesses HIPAA-compliant health records from multiple providers over a single API platform. By exploiting the extensive flexibility of Moesif’s analytics, Nexhealth has implemented both flat-rate and usage-based pricing plans. The firm is also testing billing based on additional usage metrics, such as the number of practices onboarded per customer and the number of API calls a practice uses per day.
These are all examples of ways in which an API can increase revenue for your business. Obviously, the way in which you commercialize your API will depend on your particular vertical and on the needs of the API consumer within that vertical. The common factor is the need for in-depth analytics in order to monetize your API based on granular data. You can do so based around the idiosyncrasies of your business, in line with clearly defined objectives and a detailed understanding of how to realize your API’s value.
Commercialize Your API
Product builders often overlook the difficulty of how exactly to bill for their product in order to make money. But generating revenue is crucial when building a sustainable business. To commercialize and monetize your API, contact Moesif today.